Ice creams, chocolates may cost you more as prices of raw materials rise

MUMBAI: A cup of ice cream or an artisanal chocolate bar, sweet treats this summer, will pinch your pockets because the West Asia war has thrown supply chains in disarray.

For one, the US-Iran conflict is creating problems for companies. Prices of key ingredients, such as dry fruits and nuts, used to add flavour and make a range of ice creams and chocolates have gone up, squeezing margins of firms. Some of them are still refraining from taking price increases, amid peak business season. The cost of nuts and dry fruits has increased by about 15-22% over pre-war levels, said an industry executive. Rising logistics and packaging rates are adding to their cost pressures.

"Certain inputs like dry fruits and cocoa are seeing tightness (of supply) and longer lead times. Many such categories are dependent on imports and sea-route supply chains, including regions impacted by geopolitical situation," said Siddhant Kamath, director at Naturals Ice Cream, which has already taken a 10% price hike on an average across its portfolio to cope with high overall input costs.

Mother Dairy has taken selective price hikes in ice creams, driven by global commodity movements and higher logistics costs, said MD Jayatheertha Chary. Given the war started closer to the onset of the summer season, companies did not get enough room to make any adjustments to product recipes. Also, skimping on dry fruits and nuts would hit quality, said Zervin Rana, director of Dinshaw's Dairy Foods. "The primary impact is being felt on margins. As a result, there may be no alternative but to increase the MRPs of products," Rana said.

For Pascati Chocolates, cost of procuring hazelnuts has gone up by 75% year-on-year. Although hazelnuts are largely imported from Turkey, the war has led to broader regional instability and shipments now come by air, pushing up costs, said founder Devansh Ashar. "Thermocol box and packaging costs have also increased. Eventually, in the next month or so, we will have to increase the price of our hazelnut based chocolates and pass that on to the customer," said Ashar.

If fuel charges rise further, it will be another blow, said a spokesperson at Walko Food Company.

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