As milk prices keep surging, 4 in 10 Indian households have either cut down on quantity, shifted to lower priced alternatives or stopped buying milk

February 7, 2023, New Delhi: In most Indian households, apart from vegans and those who don’t like it, milk and milk products including curd, butter, ghee, buttermilk, paneer, cheese, etc., are among the most consumed food items. India is not only the largest milk producer but also the largest consumer of milk and milk products according to the United States Department of Agriculture (USDA) “Dairy and Products Annual – 2021” report. India’s per capita milk consumption at 406 grams (g)/day (2019-2020), already exceeds the world average of 305 g/day (2020), the USDA report states.

For Indian consumers struggling to keep expenditure within household budgets despite higher prices of most things as compared to 2019, pre-COVID times, frequent increase in prices of different grades of milk of different brands several times over the last one year has been bad news. Most well-known dairy brands, whether cooperatives or start-ups, have raised the price of their products at least 2-5 times in one year by INR 1-3 each time. The latest increase of INR 3 in the prices of all grades of milk by Amul, Govardhan and other brands has once again got some household consumers to take a call on optimizing or reducing their milk consumption. The cumulative increase in prices by some brands has been more than INR 12 per litre over the last one year. The major reason cited by dairy sector biggies is the steep increase in costs of energy both for operation and logistics, packaging and cattle feed and other overheads including labour costs.

With a large number of consumers raising this issue over the last 6 months, LocalCircles decided to conduct another survey to understand how households are coping with such a steep price increase. The survey received over 10,000 responses from citizens located in 303 districts of India. 64% respondents were men while 36% respondents were women. 45% respondents were from tier 1, 33% from tier 2 and 22% respondents were from tier 3, 4 and rural districts.

4 in 10 Indian households are feeling the pinch of multiple increase in milk price in the last 12 months

The survey attempted to understand how households are “coping with the high milk prices” which have increased 4-6 times in most parts of India in the last 12 months. Of the 10,604 respondents to the query, 59% or 6 in 10 households surveyed indicated that they are “paying higher prices and buying the same quantity of milk from their preferred brand. Among the remaining respondents, 19% indicated that they have “reduced the quantity that we purchase"; 16% have “switched to a cheaper alternative or grade of the same brand”; 3% have “switched to a lower cost brand or local supply source”; and 3% have stopped buying milk. In sum, 4 in 10 Indian households are feeling the pinch of multiple increases in milk price in the last 12 months.

As milk prices continue surging, percentage of households who have switched to cheaper alternatives of the same brand in last 12 months has jumped from 4% in August 2022 to 16% in February 2023

A comparative study of data collected through surveys in August 2022 and February 2023 shows that as against 6% who had switched to a lower cost brand or local supply source in August, this time only 3% have made the switch. However, the percentage of those who have opted for a cheaper alternative of the same brand has jumped from 4% in August 2022 to 16% in February 2023; while the percentage shift in the category of those buying the same quantity while maintaining brand loyalty has changed from 68% to 59%, indicating that price factor remains a sensitive issue for consumers when it pinches.

In summary, the new LocalCircles survey shows that household consumers remain price sensitive, particularly as there has been more than several rounds of increase in prices of most milk brands in the country. The comparative chart also brings to fore the impact of frequent though gradual rise in prices – from 4% in August 2022 to 16% in February 2023, saying they have shifted to cheaper priced alternatives from the same brand. With 19% reducing the quantity of milk they purchase in the last 12 months and 3% households just putting a full stop to their milk consumption, the need of the hour is for Government to intervene to ensure prices for consumers don’t rise any further in 2023.