Dairy Sector Faces Margin Squeeze from Rising Costs and Weak Demand

India’s private dairy companies are grappling with a sharp margin contraction due to the ripple effects of the West Asia conflict. Soaring input costs — especially in packaging, where polymer prices have surged up to 47% — along with higher logistics, labour, and energy expenses, are squeezing profitability. With milk procurement alone accounting for 70% of costs, only a narrow 25–30% band remains for other expenses, now under severe pressure. Companies like Milky Mist, Nova Dairy, and Ananda Dairy report operating at full capacity but facing supply delays, doubled lead times, and vendor constraints. Institutional demand has collapsed — mooMark saw over 50% drop in HRC sales — as eateries struggle with LPG shortages and high fuel prices. Labour shortages post-festivals, driven by delayed migrant worker returns and lingering pandemic caution, are further disrupting operations. Firms are offering food and housing to retain staff. Despite absorbing cost shocks so far, players expect price hikes within weeks: paneer by 4–5%, and curd, buttermilk, and lassi by 7–9%. The crisis highlights the sector’s vulnerability to global supply chains and underscores the urgent need for cost pass-through and operational resilience.