As milk brands increase prices again, 4 in 10 households feel the pinch; Many cut consumption or downgrade to lower price brands/local supply sources

June 7, 2024, New Delhi: Milk is becoming an expensive commodity as two of the major brands - Amul of the Gujarat Cooperative Milk Marketing Federation (GCMMF) and Mother Dairy have increased the prices by INR 2 per liter for all grades of the product. The announcement of the price hike came after the parliamentary elections were over and before the results were to be announced on the occasion of World Milk Day. Jayen Mehta, MD of GCMMF, which markets a range of products under the 'Amul' brand, said that the hike is to compensate farmers for the increased cost of production and due to rise in overall cost of operation and production of milk.

"The surge in farm prices is only being partially passed on to the consumers, with an effective revision of 3-4 percent, thereby securing the interests of both the milk producers and the consumers," Mother Dairy said. The last time both Amul and Mother Dairy increased the price of milk was in February 2023. However, Mother Dairy increased milk prices by INR 10 per liter between March and December 2022 while Amul hiked its prices thrice in 2022. Amul Taaza the toned milk from Amul which was priced at INR 48 in June 2022 now sells for INR 56 per liter, marking an over 16% increase in the last two years.

India is not only the largest milk producing country but also a major consumer with dairy products being intrinsic to daily life. Milk is not only consumed by children and adults but used in various forms including making tea, coffee, milk shakes and cold desserts in summer. As the prices of cereals, pulses, edible oils, vegetables, fruits, etc., have been rising sharply for the last few years, most household budgets have been impacted. In the backdrop of high food inflation, LocalCircles has conducted a survey to find out how further rise in milk prices is going to affect consumption patterns. The survey received over 13,000 responses from household consumers located in over 309 districts of the country. 62% respondents were men while 38% respondents were women. 42% respondents were from tier 1, 25% from tier 2 and 33% respondents were from tier 3, 4 and rural districts.

4 in 10 Indian households feeling the pinch of multiple milk price increases; Have either reduced quantities they purchase, downgraded to lower priced alternatives or even stopped buying milk

The survey asked consumers, “Milk prices have increased 6-8 times in most parts of India in the last 24 months with the latest increase announced recently. How is your household coping with the high milk prices?” The question received 13,866 responses with 60% stating that they are “paying higher prices and buying same quantity and brand”. However, 14% stated that they “have switched to a low-cost brand or local supply source”; 20% stated that they “have reduced the quantity that we purchase”; 3% stated that they “have stopped buying milk” and 3% of respondents did not give a clear reply. To sum up, 4 in 10 Indian households are feeling the pinch of multiple milk price increases; have either reduced quantities they purchase, downgraded to lower priced alternatives or even stopped buying milk.

As milk prices continue surging, twice as many households switch to a lower cost brand or local supply source in the last 12 months

A comparison with trends in the last two years shows that as against 6% switching over to a lower cost brand or local supply source in 2022, which reduced to 3% in 2023, this year 14% have made the move. Another important impact to be noted is that 3% of respondents have stopped buying milk, same as seen last year. Also, while 60% of respondents are continuing to buy the same brand of milk at a higher price, which is one percentage more than last year, it is much below 68% in 2022 survey, which shows that higher prices are pinching.

In summary, multiple increase in prices of milk over last few years is impacting 4 in 10 Indian households surveyed. The result is, 14% of households surveyed have switched to a low-cost brand or local supply source; 20% have reduced the quantity that we purchase; and 3% have stopped buying milk. In a country where malnutrition, particularly among children, is rampant having to do without milk is a sad reflection of the situation. Hopefully, the government and the health departments will step in on behalf of school going children while most households will have to bear the price pinch. Milk adulteration being a major problem, explains why majority of households are opting to buy products of brands they trust.