India’s sugar consumption is on a downward trend this season, estimated to drop to 280 lakh tonnes by September compared to the record high of 290 lakh tonnes last season. The Indian Sugar and Bio Energy Manufacturers Association (ISMA) attributes this decline to subdued demand, particularly during the peak summer months of April and May. The Director-General of ISMA, Deepak Ballani, mentioned that the government’s monthly sugar sales quota for May 2025 is 23.50 lakh tonnes, a 13 per cent decrease from the previous year. Overall, the cumulative sales quota for the first seven months of the 2024-25 sugar year is 184.50 lakh tonnes, down 6 per cent year-on-year.
Monthly Quota Woes:
The government’s efforts to regulate domestic sugar availability and prices through monthly sales quotas have faced challenges this season. With a lower quota set for May 2025 and a decrease in cumulative sales compared to the previous year, the sugar industry is experiencing a shift in consumption patterns. In 2023-24, mills in India managed to sell 290 lakh tonnes of sugar against a government quota of 291.5 lakh tonnes, driven by factors like general elections and exports to countries like Bangladesh. However, this year’s consumption seems to be more subdued, with no significant events boosting demand during the hot summer months.
Institutional Buyers’ Impact:
Institutional buyers, who make up around 70 per cent of sugar consumption in India, are showing signs of reduced demand from the FMCG sector. This shift in purchasing behavior is contributing to the overall decline in sugar consumption this season. ISMA has enlisted the help of consulting firm PwC to conduct a comprehensive study on sugar consumption trends, aiming to understand sector-wise patterns and anticipate future developments. The study comes at a time when alternative sweeteners are gaining popularity, posing a potential challenge to traditional sugar consumption habits.
Production and Projections:
Despite the decrease in sugar consumption, the net sugar production for the 2024-25 season is estimated to be between 261 and 262 lakh tonnes. This figure accounts for the diversion of 33-34 lakh tonnes towards ethanol production, a growing trend in the industry. As of mid-May, sugar production had reached 257.44 lakh tonnes, with approximately 533 mills shutting down operations for the season. Additional production of 4-5 lakh tonnes is expected during a special season from June to August in parts of South India. The completion of the PwC study on sugar consumption trends is anticipated within the next two months, providing valuable insights for the industry’s future strategies and decisions.