‘Panic Buying’ a Reason for Sanitizer Shortage in India?

Introduction

The severity of the crisis in the country is indicated by the extreme uncertainty as to when the ongoing pandemic will end. From the starting of March this year there has been a sudden rise in the demand for hand sanitizer in the country. Such an increase in demand arises from a situation when too much money is involved in chasing a few products i.e. supply failed to meet demand. The sudden increase in prices of sanitizers is a result of both demands pull inflation and cost-push inflation. As a matter of fact, consumer demand outpaces the available supply of sanitizers in the country forcing an overall increase in prices. Also, an increase in production costs owing to the surge in prices of raw materials and wages is passed on to consumers in the form of inflated prices of the finished product. Such factors determine the scale of inflation in the sanitizer market in the country. 

What happened!

Usually, market players kept an exceeded capacity of 15-20% of the actual demand but due to an uncertain rise in the demand, they failed to meet the supply, thus leading to a rise in price and entry of players in the market. The price of alcohol used in the production of hand sanitizers shows a significant rise which nearly left no option available with sanitizer manufactures to inflate the price of the final product. While this procedure lasts for more than 2 weeks and ends on 19th of March 2020 when Government of India states that the prices of Alcohols used in manufacturing hand sanitizers to be capped under the Essential Commodities Act, 1955 and states were also been advised to increase the existing capacity of existing manufacturing units of alcohol-based sanitizer. While black marketing and hoarding were becoming a question of concern for many as health care personals who are unable to get sanitizers and face masks that vanished from chemist shops in many areas of the country adjoining towns as people resorted to panic bulk buying amid Covid19 outbreak. Now the government has fixed the prices of face masks and hand sanitizers and declaring them as essential commodities. The union minister recently declared that the retail price of a 200ml hand sanitizer bottle will not exceed Rs 100 and the same price is applicable throughout the country till June 30, 2020.

Sanitizer Market in India

The Indian sanitizer market which stood at nearly US$16 million in the 2019 market is expected to witness the growth of 58.89% in the next two years. Major market players like Dettol, Godrej, and Lifebuoy which are holding more than fifty percent share by value in the local market have increased their production capacity to meet the growing demand. Also, according to the estimates by Knowledge Sourcing Intelligence LLP, approximately 38.126 million bottles of hand sanitizer to be sold in the country in 2020.