For ice cream lovers, summer 2012 will be hotter. For, they have to shell out more than what they paid for the same scoop or cone last year.
The summer is yet to set in, but the ice cream makers increased the prices last month. One more round of hike is expected after the union budget next week.
Compared to their rates in the previous year, ice creams are already expensive by 5% to 10% and if union finance minister Pranab Mukherjee raises excise duty in the budget, the ice creams prices are set to rise further. All the three major ice cream brands of Gujarat - Amul, Vadilal and Havmor - have
increased rates.
The previous year, ice creams had been made expensive by up to 10%. And now, the entry level candy or chocó bar, which was costing around Rs5 to Rs5.50 last year, is already up by 10% or 50 paise. In case of other ice creams, the prices are up in the range of 5% to 10% or Rs1 to Rs2.
Thanks to hike in milk prices, labour charges, and other factors, the well-known brands of Ahmedabad, in the first round, increased the prices in January and February. "We have already increased ice cream prices by 7%," said Devanshu Gandhi, managing director, Vadilal Industries Ltd.
According to Gandhi, overall increase in raw material prices, coupled with logistics costs and rise in inflation, has fuelled the ice cream prices. "We increased the prices in February," he said.
Gujarat Co-operative Milk Marketing Federation (GCMMF), which markets Amul brand of products, has already increased the prices by 10%. Its managing director RS Sodhi said that the dairy giant revises ice cream prices every year.
"And in this year, we have already hiked the prices up to 10% due to rise in input costs. Now, if excise duty is up in budget, not only ice cream but other items will be expensive," said Sodhi.
The industry is afraid of the hike in excise duty, which is 1% at present. "At present, the excise duty on ice cream is 1% and we are afraid that the duty is likely to rise. If that happens, we will have to increase the ice cream prices further by the end of this month after the union budget," said director of Havmor Ice Cream Ltd, Pradeep Chona.
According to Chona, last year the cost of milk powder was around Rs140 per kg. "This year, the milk powder price has shot up to Rs175 to Rs180 per kg. With several rounds of hike in milk and milk powder prices, the margins of ice cream makers have gone down to merely 3% to 5%," he said.
Talking about unorganised sector, Chona said that the non-branded ice cream makers have to pay zero tax on ice cream, which helps them in selling the ice cream by up to 15% cheaper than the organised players.
"The VAT on ice cream is 15% and excise is 1%, which is not paid by unorganised players. In case of organised players, 50% cost of the ice cream goes in taxes and commission paid to cold chains,"
said Chona.
