Sweets up 10-20% as modak sellers battle shrinking margins

Sweet prices in Pune have risen 10-20% during Ganeshotsav as higher sugar, milk, dry-fruit and other input costs squeeze sellers.

With Ganeshotsav driving demand for sweets and modaks, sweet shops and home-based sellers in Pune are grappling with rising raw material costs. Sellers said prices for several sweets increased by 10-20 per cent.

Higher prices for key ingredients such as sugar, milk, and dry fruits have driven this increase. While established sweet shops are passing on part of the additional cost to consumers, smaller home-based businesses say they have less room to absorb the increase and are seeing their profit margins shrink.

Sachin Gadve, director of Kaka Halwai Foods Pvt Ltd, said sweet prices have increased by around 10-20 per cent across categories due to the rise in raw material costs. “There is a price hike of around 10-20 per cent across sweets due to the increase in raw material prices, including sugar, milk, dry fruits and other ingredients,” he said.

Gadve also pointed to the possibility of further price pressure if agricultural production is affected by rainfall conditions. “Considering the scarcity of rainfall across most parts of the state this year, it may impact sugarcane and other crop cultivation. Consequently, prices may remain elevated, and we need to see what interventions are planned ahead,” he said.

For sweet shop owners, however, the immediate challenge is balancing higher input costs with customer price sensitivity.

Vijay Chaudhary, a sweet shop owner from Nigdi, said even a small price increase can affect sales. “Customers are price-sensitive, and even a slight increase in prices affects sales. Due to the rise in raw material costs, prices of sweets across the milk and dry-fruit categories have increased,” he said.

He cited the example of Kaju Katli, whose price at his shop has risen from around Rs 1,000 to Rs 1,400 per kg over the past four to five months. According to Chaudhary, the increase has contributed to a slight decline in sales this festive season. “Beyond a certain cushion, even we cannot afford to absorb the increase in input costs. We are left with no option but to pass it on to consumers,” he said.

The rise in cooking gas prices has added to the pressure on sweet businesses, while sugar is currently costing around Rs 70-75 per kg, Chaudhary said. Higher milk and dry-fruit prices have further increased the cost of production.

He also said that action by the Food and Drug Administration (FDA) against adulterated milk and milk products can sometimes lead to intermittent supply disruptions, adding to price pressure.

The impact is particularly pronounced among small, home-based modak sellers, who generally lack the bulk procurement arrangements available to larger sweet shops.

Anushka Tapshalkar, who runs a homemade modak business in Nigdi, said larger sweet shops can negotiate contracts and purchase ingredients in bulk, while home-based businesses often have to buy ingredients from retail outlets as orders come in.

“Large sweet shop businesses have contracts for milk, sugar, coconut, jaggery and other items and purchase them in bulk, so they may not feel the impact as much. However, for home-based businesses, we have to purchase products from retail shops as we receive new orders, which translates into higher costs,” she said.

Tapshalkar said the price of her modaks has increased from around Rs 30-35 to Rs 40-45 per piece, depending on their size. However, she said she has not been able to pass on the entire increase in costs to customers as she needs to remain competitive.

“Even our profits have shrunk because we cannot completely pass on the increase to consumers. Some customers compare our prices with large shops where modaks are available for around Rs 25 per piece, but they do not understand the economics behind it,” she said.

With a coconut costing around Rs 60, she said the increase in raw material prices has become a major challenge for small-scale sellers. “I have received only three orders for this Ganeshotsav so far,” Tapshalkar said.