Hotter Indian summer to boost cool drinks, sugar sale

[Naveed Yaseen]

MUMBAI: Rising temperatures across the sub continent promises a hotter Indian summer than the last, boosting sales of beverages and ice-cream and making sugar costly.

Most parts of the country recorded temperature 2-4 degrees Celsius above normal in the last 1-ž months, and in certain places it exceeded 40 degrees C in February, weather data showed. And February is considered a winter month.

“We don’t give forecast for a long period. At present it (temperature) is going slightly above normal,” said A B Mazumdar, deputy director general meteorology, India Meteorological Department.

“Since mid-February we have been feeling the heat. This will increase demand from ice-cream and beverage makers,” said Ashwini Bansod, a senior analyst at MF Global Commodities India Ltd. “Besides, demand will rise from unorganised sector like lassi makers as well.” Lassi is sweetened yogurt served at street corners in Northern India in the summers.

Cold drink and ice-cream makers are big buyers of the sweetener and usually step up purchase in summer months.

“Soft drinks still have a strong seasonality curve in India, a warm climate should help our business further,” said a spokesman of Coca-Cola India. The Indian arm of the world’s largest soft drink maker, Coca-Cola Co, saw sales climb 28 per cent on year in the December quarter.

Both Coca-Cola and rival PepsiCo India, the Indian arm of PepsiCo Inc, have been aggressively expanding their base in rural areas along with urban pockets to drive sales.

A thriving 750 billion rupees beverage market boosted sugar consumption in India from about 16 million tonnes in 2000/01 to an estimated 23 million tonnes in 2008/09.

India’s farm minister said sugar output this year may be about 16.5 million tonnes, lower than earlier expectations of 18 million tonnes and much below last year’s estimated output of about 26.5 million tonnes. “Spot prices have to rise. They have to deal with situation of limited supplies. They may rise by 2-3 rupees per kg,” Bansod said.

“Demand from beverage makers has risen since last week. This year we are expecting higher offtake from cold drink companies,” Ashok kumar U Jain, a trader and president of the Bombay Sugar Merchants’ Association said.

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