Prices for confectionery and baking goods have seen significant increases recently, influenced primarily by steep inflation and soaring costs of key commodities. According to Jayen Mehta, managing director of Amul, chocolates have surged by 20% year-on-year, driven by inflation affecting commodity supplies.
The impact of these price changes is stark, particularly against the backdrop of cocoa prices reaching record highs. This key ingredient has surged to $12,900 per tonne—a staggering 180% increase compared to the previous year. Such dramatic shifts are attributed largely to lower production volumes from major cocoa-producing nations like Ghana and Ivory Coast, compounded by high logistics costs making transportation more expensive.
Another contributing factor to rising prices across the confectionery sector stems from increased costs of edible oils, which saw import duties rise by 22% earlier this year. Anurag Katriar, founder of Indigo Hospitality, noted, “Prices are 10% higher for us on average compared to last year because of steep inflationary trends.” Annual contracts with suppliers serve as a temporary buffer, but with renewals approaching next March, even greater price pressures may loom.
Chains and restaurants are grappling with the rising costs, attempting to keep prices manageable for consumers. Chef Dhruv Oberoi from Olive Bar & Kitchen shared his thoughts, stating, “Prices are up 10-15% over last year. We try to balance out the mix across our menu and absorb some of the food costs.”
Meanwhile, the broader dining experience has been affected by consumer spending habits due to inflation, with the April-June and July-September quarters both reflecting decreased foot traffic at restaurants. Rajat Agrawal, CEO of Barista Coffee, remarked on their strategy of price adjustments, saying, “Our price hike activity is an annual planned exercise; our increase on average has been less than 5% last year, which is substantially lower than price inflation on commodities such as cocoa, coffee and wheat.”
Despite efforts to manage costs and maintain customer volume, analysts remain cautiously optimistic. Restaurants are actively promoting new menu items and food festivals to draw customers back through the doors, aware of the impact increased prices could have during the holiday season.
The situation is exacerbated by general increases across staple goods, including wheat flour prices hitting their peak at Rs 40 per kg, the highest they have been in 15 years. This overall inflationary trend paints a challenging picture for both consumers and businesses.
Market experts suggest these rising prices may lead consumers to re-evaluate their spending patterns, especially around festive periods typically marked by indulgence and celebration. The coming months will be telling as companies and consumers alike navigate these changes.
While some businesses, including Tata Starbucks and Bakingo, chose not to comment directly on their price strategies, the overarching trends are clear. Increased prices and careful management of consumer expectations will dominate the conversation surrounding confectionery and baking goods as we head toward the new year.
