It’s no small potatoes as prices climb 20% on low harvest
Prices of Lay’s popular packs at Rs 5, 10 and 20 have not been changed and contribute close to the majority 90% of its business.
Price of potato chips, bhujias, flakes and even fries have seen a rise of 15-20% since the past fortnight. However, the industry is still adopting a wait and watch policy and is expecting the potato harvest in August from Karnataka to stabilise prices.
A packet of Lay’s chips is now for Rs 18 per 29.5 grams compared to Rs 15 a fortnight ago, though the quantity of chips in the pack has gone up too in relative proportion.
Similarly, Bikano bhujia now cost 15 for 65 grams from its earlier price of Rs 10. Early this year, Canadian giant McCain Foods, that sells one out of every three french fries in the world, increased prices by 7%. Firm prices of processing potato, which has seen a jump of 130-180% this year owing to poor crop and hoarding by traders, is slated to be one of the reason for the price rise according to the manufacturers.
“Everyone is under pressure to increase rates. Prices of processed potato varieties like Chipson and Lady Rosetta in Azadpur mandi have moved from Rs 7 a kg in February to Rs 20 a kg as on date,” said PrakashLohia, managing director, Vegit agro division of Merino Industries.
The company is one of the leading potato flakes and snacks manufacturer processing 50,000 tonne potato annually and catering to all large players from PepsiCo, Nestle to Haldiram. The company has increased prices of potato flakes by 20% over the last two months said Lohia.
Prices of Lay’s popular packs at Rs 5, 10 and 20 have not been changed and contribute close to the majority 90% of its business. Its pack of Rs15, which sells mainly through institutions, has gone up but so has its weight. A PepsiCo spokesman said there has been no increase in prices of Lay’s.
ITC divisional chief executive (foods) Chitranjan Dar said the firm hasn’t taken up prices yet. “It’s a dynamic situation which we are monitoring closely. But as of now, we are protecting prices,” Dar said.
Currently, potato flakes in retail were being quoted at Rs 30 a kg. McCain officials in Gujarat said that the rise was a general increase owing to rising input cost of farmers from labour, electricity to seed and fertilisers.
Manesh Agarwal, MD, Bankey Bihari Ji Food Products in Agra, who has recently tied up with leading retailer Reliance to supply french fries, said that he had increased the prices of his own brand ‘BB Fries’ by 5%.
“I was expecting prices to correct, but we are seeing that traders are not unloading stock in market and creating an artificial crunch. Margins have narrowed down as we can’t increase price for companies with whom we have contract,” he said.
A good source of calcium, vitamin C and iron, potato is the king of vegetables loved by all age groups. With in-home snacking growing by more than 20% amongst high income household, stable prices is what the industry is looking at.
“Lays is the biggest player in potato chips and Indian snacks. Once it has increased prices, all other local manufacturers will soon follow,” said a Madhya Pradesh-based chips manufacturer. This year the potato crop is estimated to be lower by 13% than previous year at 40 million tonne owing to adverse weather conditions.