To meet the sudden surge in consumer demand for kitchen essentials such as milk-based products, butter, staples and olive oil, food companies are rushing to increase the production. The demand for such products elevated when the festive season kicked off and is continuing with peak wedding period a month after Diwali.
According to Mother Dairy they have exceeded their own estimates. This festive season witnessed an outgrowing consumption of milk and milk products. Butter too saw a surge in demand from both consumers and the institutional segments, leading to temporary shortage. Production has been ramped up.
Actually the demand-supply incompatibility is a consequence of a combination of factors including festive demand, return of big weddings after two years of the pandemic and supply hitches earlier in the year with the outbreak of the Ukraine war that is still being felt for select categories like oil.
Amul, which makes a wide range of dairy products, has been dealing with supply deficit for about one month now. In a double blow for the company, the lumpy skin disease that killed thousands of cattle in many states also dragged down production of milk in states like Gujarat and Maharashtra.
Dr. R.S. Sodhi, MD, Amu, said, “The huge surge in demand started with the festive season and we saw panic buying of products like butter. Production and supplies are increasing to more than average now; gradually the supply channels are being filled.”
Regardless of inflation, the rush in demand has been across staples starting from October, with the commencement of the peak festive period.
The October sales of pulses, maida, edible oils, sugar, basmati rice and gram flour have been excellent. The demand is expected to remain robust till March,” said Angshu Mallick, managing director, Adani Wilmar. The demand spike has led to supply gaps across grocery stores as well as ecommerce platforms. Restaurants, which have seen a surge in dine-ins, too are being impacted by the supply shortfall and are either switching to alternatives or trying to procure raw material in bulk.
“Festive surge, followed by weddings is leading to record increase in dine-ins and catering, and we have been facing supply crunch of dairy and certain edible oils. We are hopeful the crunch will ease out soon,” said Anjan Chatterjee, chairman of Speciality Restaurants that operates multiple casual and fine-dine brands such as Mainland China and Asia Kitchen.
Consumers preferring to gift dry fruits, pulses and other healthy foods over sweets during the festive season also contributed to the demand surge.
“October being the festive month, we saw a huge demand for our products across all categories. Every year our sales in the festive season increases by 5 to 10%, but this time we witnessed a growth of 25%,” said Ashish Khandelwal, managing director of BL Agro, which makes pulses, edible oils, ghee, flour, dry fruits and ready-to-eat foods and sells its products under the brand name Nourish.
Khandelwal added that the company has started a new manufacturing unit in Bareilly, with increased production capacity for its Nourish products franchise which includes cereals, rice, flours and breakfast foods.
Akshay Modi, managing director at Modi Naturals, which makes Oleev olive oils, said, “We saw a surge in consumer demand during the festive season. We expect the increase in demand to continue in the coming month and have taken required measures to meet the demand.”
A report by Bizom depicted that in spite of the overall market falling by 3%, the commodities segment expanded 11% in November over a year ago period, the segment, however, fell 24% last month compared to October due to heavy stocking in the preceding months in the run up to the festive season. Executives said consumers preferring to gift dry fruits, pulses and other healthy foods over sweets during the festive season also contributed to the demand surge.