This festive season will pose several challenges for wholesalers and retailers in the nuts & dry fruits category…
It is interesting to note that while almost 50 per cent of nuts consumption in India is concentrated during the Diwali or festival period (which starts from 15 August and ends by 26 January), most of the nuts are harvested just before or around Diwali in the originating countries.
While cashews are harvested in India during April – May, raisins come in from Maharashtra during February–March; almonds and pistachios are harvested in August–September, mostly in the California region, hence, fresh crop is unable to reach the Indian market before Diwali.
Walnuts in the Kashmir region are harvested in September–October, hence very limited quantities of the fresh crop reach the markets in time for Diwali. Iranian almonds and pistachios are harvested during September–October, hence only cashews and raisins are available in plenty for Diwali, while all other nuts – almonds, pistachios, walnuts, hazelnuts – are available in short supplies for Diwali.
This typically leads to lower availability of nuts during Diwali, and their prices go higher, depending on the carry-over stocks from the previous season.
This year, the festive season is being perceived to be a more adverse year because of lower carry-over stocks from the previous season. Since Diwali this year is a few days earlier than usual, there are an even lower chance of fresh crop stocks reaching the market on time.
Poor grape crop in Maharashtra this year, caused by extreme weather conditions, has upped raisin prices by almost 100 per cent – from Rs 150-200 per kg to above Rs 400 per kg in the wholesale markets. Almond prices in the Delhi wholesale market are up from Rs 500-550 per kg to Rs 700+ per kg.
Due to restrictions on cashew imports from Vietnam, broken cashew prices have gone up from Rs 350 to above Rs 400 per kg.
Pistachios have become dearer by almost 50 per cent – Rs 600-650 to Rs 900+. Prices of Afghan Pishori Pistachio – a key ingredient for the sweet and confectionery industry – have gone up from Rs 1,200 per kg to the Rs 1,700 price range. Walnut kernel prices have almost doubled to Rs 1,500 per kg.
There are other supply chain related issues for this industry as the new FSSAI (Food Safety & Standards Authority of India) norms are more stringent, leading to slower import clearances and hence higher costs. Currency volatility continues – any depreciation in the Indian Rupee leads to further hikes in the costs of imported Nuts. The wedding season has fewer auspicious dates in 2014-15 and hence demand from this sector is likely to be softer this year.
Focus on Corporate Gifting will help the dealers of nuts and dry fruits this year as this sector remains unorganized and is less sensitive to prices. Retailers may be looking toward other categories of gift items for Diwali, which are less expensive for the consumers. Hence, dry fruits dealers need to be conservative this year in projecting their demand.
Nuts have also not spared the ingredient industry from Sweetmeats to Biscuits/Confectionery, and all have taken a hit on their bottomline.
“The demand for nuts is going down for snacking due to high costs, and our company has to absorb the incremental rise to keep their buyers’ base intact for these premium products,” says owner of Haldiram in Nagpur, Shiv Kishan Agrawal.
The owner of Priyagold Biscuits, Shekhar Agrawal, shares the view with respect to the ingredients, and though they are seeing a shift in demand from nuts to biscuits on gifting, they have had to absorb the ingredient cost on value added biscuits.
On one hand we need nuts as part of our daily diet plans, but on the other hand, their increasing costs are becoming a deterrent for increasing consumption.
Stringent FSSAI related requirements, though good and very much required in the long term, are stretching the dealers in the short term. Overall, though the future looks bright for Nuts with the increasing appetite for healthy food as the Indian economy rises
from recession, the immediate short term seems pricey, and Retailers and Wholesalers need to be cautious.
This year, the festive season is being perceived to be a more adverse year because of lower carry-over stocks from the previous season.
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