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Informist, Monday, Sept. 15, 2025

NEW DELHI – India's sugar consumption, estimated at 28-32 million tonnes in the sugar year 2024-25 (Oct-Sept), is expected to grow at a compounded annual growth rate of 1.5-2.0% till 2029-30, driven primarily by institutional demand, according to a recent study by the Indian Sugar & Bio-Energy Manufacturers Association.

As per the study released Monday, institutional demand now accounts for 60–65% of the country's sugar consumption and retail for the rest. Within institutional demand, the non-alcoholic beverages segment accounts for 35–40% and confectionery for 15–18%, followed by bakery, biscuits, dairy/ice cream, the hotels, restaurants, and catering industry, pharmaceuticals, and processed foods, according to the report.

Retail consumption, as per the report, has remained resilient but is little changed, with urban growth slowing on health concerns even as rural, tier-II, and tier-III demand for affordable and packaged sugary goods continues to rise.

CHANGING TASTES

According to the report, consumption patterns are regional and shaped by cultural preferences. In northern India, sugar finds its way into everything from the daily tea to wedding feasts and winter sweets, while urban centres increasingly try jaggery and stevia for beverages. Western India, especially Gujarat and Maharashtra, weaves sugar into festivals and savoury dishes, with jaggery retaining a stronghold in snacks like chikki. The southern states favour jaggery-based delicacies and temple prasadam; Eastern India's signature is the "mishti" culture, exemplified by Bengali sweets and the seasonal date palm jaggery.

According to the association, per capita spending on sugar in India is highest in Lakshadweep, Punjab, and Haryana, especially in urban regions. The southern and eastern states lag, revealing a preference for local sweeteners and restrained branded sugar penetration. Island territories show higher costs, driven by logistics and reliance on packaged sugar.

However, across all regions, India's sweeter palate persists and continues as a norm, but health-conscious users in metros are curbing their intake slightly in favour of more natural alternatives, it said.

SUGAR ALTERNATIVES

The report shows that while white sugar continues to be the preferred source for sweetening, the market for alternatives such as jaggery is gaining traction. So far, white sugar maintains market dominance, accounting for over 85% of the retail sweetener basket and 95–97% of institutional use. Its appeal lies in its cost, versatility, long-established habit, and a reliable supply chain. Major manufacturers see 90–95% of sales from white sugar products, the report said. 

However, jiggery and khandsari now claim 12–13% of the retail market, seeing growing use in urban grocery chains but facing price-related hurdles. While traditionally rural and unorganised, jaggery is increasingly found in modern, branded formats. Khandsari has a loyal rural following, but other organic/specialty sweeteners remain niche, deterred by price premiums, limited availability, and taste/aftertaste differences, as per the report. 

According to a former lead ingredient adviser at Nestle quoted by the report, even in reformulations, the focus is more on reducing sugar content than switching to substitutes, due to persistent consumer attachment to sweetness profiles.

SUGAR SUPPLY
The supply side of India's sugar story is marked by lower output and yield pressures, as per the study. India is expected to produce about 26 million tonnes of sugar in 2024-25 (Oct-Sept), down more than 20% from 2018–19, reflecting the impact of erratic climate, fluctuating rainfall, and widespread crop diseases like red rot in major sugarcane-growing belts such as Uttar Pradesh. According to the association, national sugarcane yield is at an average 66 tonnes/hectare, trailing recent highs and putting stress on the industry's bottom line.

Mills, as per the report, remain heavily clustered in Uttar Pradesh, Maharashtra, and Karnataka, which account for around 80% of total cane supply and 67% of operational sugar mills. This geographic focus creates a systemic risk: a major weather event or policy misstep in one region can have national repercussions.

Private sugar mills now make up 58% of the total industry, with sugar cooperatives at 37%. Modernisation--precision agriculture, irrigation, and automation--drives efficiency in Maharashtra and Karnataka, while Uttar Pradesh leverages strong government support to shore up the sector. Simultaneously, other states face persistent productivity or cost hurdles, with some farmers shifting away from sugarcane cultivation towards easier-to-grow and more lucrative crops, the study found.

FMCG PUSH
India's fast-moving consumer goods sector has seen consistent growth over the years. Its rural sales have been growing faster, rising about 8% in the March quarter of the financial year 2024-25 (Apr-Mar), even as urban sales grew 3% in the same period, statistics in the report showed. "As disposable incomes rise and distribution networks reach deeper into rural India, packaged foods, confectionery, beverages, and on-the-go snacks are flooding new markets--bringing sugar-rich products to first-time consumers," the association noted in the report.

It pointed out that as women's participation in the workforce rises, the demand for convenience foods is boosting the uptake of sweetened beverages and snacks, especially among women in urban and semi-urban job markets. Modern retail, e-commerce, and quick commerce are also growing rapidly in metros for small-pack, branded sugar. In contrast, traditional kirana stores still dominate sales in tier-II and tier-III cities and in rural areas. "This means unbranded, bulk sugar remains the mainstay for millions, though branded share has doubled in a decade to roughly 8–10%," as per the report.

HEALTH TRENDS
The study has identified three sugar-use psychographic cohorts, with "light users" accounting for 15% of total consumption. These are users who are health-conscious, urban, affluent, and substitute sugar with honey, jaggery, or stevia. "Moderate users", who account for 40% of total consumption, are pragmatic users, use sugar for home cooking and during festivals, are responsive to reduced-sugar messages, but avoid "sugar-free" labels. Then there are the "heavy users", who account for 45% of total consumption in the country. These are users who consume sugar daily and are strongly attached to taste.

While "reduced sugar" innovations are growing, the study found that actual offtake remains small. Natural sweeteners such as stevia and coconut sugar face cost and taste adoption hurdles. Artificial sweeteners like sucralose also draw consumer distrust, particularly in semi-urban and rural markets.

The sector has to adapt to the revised goods and services tax, food safety standards, and mounting global health campaigns, with potential for new sugar taxes and stricter advertising and labelling requirements in the pipeline, as per the report. ISMA said the report was prepared on the basis of interactions with more than 30 industry experts, including chief executive officers, procurement heads, ingredient advisers, research and development directors, group product managers, and category sales leads across segments.  End

Reported by Pallavi Singhal

Edited by Nishant Maher

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