Sugar Prices Rise in India: Festive Sweets, Biscuits and Chocolates May Get Costlier

Consumers may have to pay more for sweets, biscuits, cookies, chocolates and other sugar-based products during the festive season as rising sugar prices increase pressure on food manufacturers and sweet makers.

With demand for sugar typically increasing ahead of major festivals, companies are considering a combination of price hikes and smaller pack sizes to manage higher raw material costs. This could mean consumers either pay more for their favourite festive treats or receive less quantity for the same price.

Government data shows that sugar prices have risen significantly in recent months. The all-India average retail price was around Rs 62 per kg in September, compared with approximately Rs 47 per kg in June.

Sugar prices rose sharply through August as well. The average retail price increased from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20.

Although prices have shown some signs of easing in recent weeks, the decline has not yet fully reduced the costs faced by food manufacturers and other major sugar users.

The rise in sugar prices has largely been driven by concerns over tighter domestic supplies. Sugar production for the 2025-26 season is now estimated at around 30.6 million tonnes, lower than the earlier projection of 34.3 million tonnes.

Excessive rainfall, crop diseases and other disruptions have affected sugarcane production in important growing regions. At the same time, demand is increasing as households, sweet shops and food companies prepare for the festive season.

The combination of lower-than-expected production and rising seasonal demand has created pressure on domestic sugar availability. Concerns over lower stocks towards the end of the sugar season have added further uncertainty for manufacturers and traders.

Food companies are now facing the challenge of absorbing higher sugar costs without significantly affecting consumer demand.

Companies have several options to deal with rising input costs. They can absorb part of the increase, reduce other expenses, improve operational efficiency, raise product prices or reduce the quantity offered in each pack.

Some companies have already started increasing prices. Bikaji Foods has begun implementing an approximately 2% increase across its sweets portfolio as higher sugar procurement costs continue to affect margins.

Products that require larger quantities of sugar could face greater cost pressure if prices remain elevated. Biscuits, cookies, confectionery, chocolates, beverages and traditional sweets could all be affected.

For sweet shops and bakeries, the impact could be particularly significant because sugar is a key ingredient in many of their products and their profit margins can be relatively limited.

Consumers could ultimately see the higher cost in two ways.

The most direct option would be an increase in retail prices, with companies charging more for products such as biscuit packets, chocolates and boxes of sweets.

The other option is shrinkflation, where companies maintain the same retail price but reduce the quantity of the product inside the package.

Smaller pack sizes could allow manufacturers to manage rising costs without making price increases immediately visible to consumers. However, if sugar prices remain elevated for a prolonged period, companies may face increasing pressure to pass at least part of the additional cost on to buyers.

Not every sugar-based product is expected to become more expensive immediately. Companies will also have to consider competition and consumer sensitivity to higher prices before making major changes.

The government has introduced several measures aimed at improving sugar availability and preventing further price increases ahead of the festive season.

Duty-free imports of raw sugar have been allowed to supplement domestic supplies. Applications have also been opened for the remaining 202,550 tonnes under a one-million-tonne duty-free raw sugar import quota.

The government has additionally tightened stockholding rules in an effort to discourage hoarding and speculative stocking.

From September 1, large sugar users were restricted to holding stocks equivalent to 15 days of consumption. The stock limit for dealers is also set to be reduced from 4,000 quintals to 2,000 quintals between September 15 and November 30.

While these measures have contributed to some easing in sugar prices, the benefit has not yet been fully reflected across the food manufacturing supply chain.

With the festive season approaching, the outlook for consumers will depend heavily on whether sugar prices continue to decline and how much of the higher input cost food companies ultimately decide to pass on.

For now, rising sugar costs remain a major concern for sweet makers and packaged food companies, raising the possibility that festive favourites could become more expensive in the coming weeks.