India's festival season appears to have lost some of its flavour this year as high sugar prices hit sales of Indian sweets which are traditional favourites.
The season extends well into November, but consumer demand for sweets usually peaks at around the time of the Hindu holiday of Diwali, or festival of lights, which was celebrated on Saturday.
"Sales are down 30 percent from last year," said Feroz Sadri, director of Speciality Restaurants, which owns the popular "Sweet Bengal" brand with 11 shops across Mumbai, India's financial capital.
The country, the world's biggest consumer of the commodity, has seen retail sugar prices nearly double to 33 rupees a kilogram during this year's festive season from 18 rupees last year amid a huge demand-supply gap.
India's driest monsoon in nearly four decades initially hit sugar output before flooding in key growing areas did further damage.
The twin disasters are expected to force the country into importing sugar for a second successive year.
Global sugar prices recently surged to near 30-year highs amid a warning from the International Sugar Organisation (ISO) that worldwide sugar supplies are expected to fall nine million tonnes short of demand in 2008-09.
As well as the poor Indian crop, uncertainty about Brazilian production due to excess rain contributed to the rise in prices, analysts said. "As sugar prices rise uncontrollably, manufacturers have had no option but to hike prices," Sadri told AFP.
Sweets have long been essential delicacies for Indians to enjoy and have traditionally served as gifts during the holiday season.
But with the soaring sugar prices, consumers have been eyeing alternatives such as wines and assorted dry fruits as presents during the festivities.
"It's been a tough few months. We're trying to change tastes and consume less sugar," said 39-year-old Aarti Kapadia, a Mumbai housewife.
Also, when consumers have bought sweets, they have opted for smaller amounts, the merchants say.
"Consumers have become choosy, buying smaller amounts of sweets. They look for alternatives like wines, biscuits and sugar-free products," Sadri said.
India may be forced to import a record six million tonnes of sugar in 2009-10 to bridge the gap in supply, said Mehul Agrawal, commodities analyst at local brokerage Sharekhan.
Expected output of 15.80 million tonnes in the new crop season which started October 1 is seen falling well short of demand projected at 23 million tonnes.
The shortfall will be met with a combination of imports and buffer stock.
In a bid to stabilise prices in the local market, the government has allowed mills to import sugar duty-free.
Indian Farm Minister Sharad Pawar said last month that purchases at zero duty would be allowed until May or June, extending a deadline that had already been stretched to November 30 for white sugar and March 31 for the raw variety.