FMCG Companies Plan Additional Price Increases for Select Consumer Goods

FMCG Companies Prepare for Calibrated Price Hikes Amid Rising Inflation

Daily essential products such as soaps, detergents, biscuits, packaged foods, and beverages are expected to get costlier as leading Fast-Moving Consumer Goods (FMCG) companies prepare for calibrated price hikes due to rising crude-linked inflation, higher packaging costs, and fuel expenses from geopolitical disruptions that are squeezing margins.

The executives of FMCG makers, which have already gone for recent price hikes of around 3 to 5 per cent, have indicated either ongoing price increases or readiness to raise prices further, citing inflationary pressure arising from volatile crude oil prices, higher logistics costs, currency depreciation, and disruptions in global supply chains amid geopolitical tensions.

This pressure is being felt across sectors, including food, personal care, beverages, and household products, as FMCG companies are attempting to balance their margins and are resorting to either price hikes or shrinking pack sizes, retaining the popular smaller SKUs of Rs 5, 10, or 15 in the market, to maintain sales volumes.

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FMCG companies are focusing on price elasticity and internal cost efficiencies, such as trimming discounts and promotions, tightening inventory management, and streamlining supply chains, to cushion the impact. However, consumers are still expected to bear part of the burden through calibrated price hikes and reduced grammage.

Home-grown FMCG maker Dabur India Global CEO Mohit Malhotra said the company is already facing 10 per cent inflation this fiscal and has initiated price increases to cushion the impact. The company has already implemented a 4 per cent price increase across different parts of the business to partly mitigate this impact.

Leading bakery products and biscuits maker Britannia has also indicated imminent price hikes to offset nearly a 20 per cent rise in fuel and packaging costs due to geopolitical developments. The company is looking at both alternatives - a direct price increase and grammage reduction, said its Managing Director and CEO, Rakshit Hargave.

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HUL, which has popular brands such as Surf Excel, Brooke Bond, Lifebuoy, Dove, Clinic Plus, Sunsilk, Lakme, also signaled more price hikes if commodity pressures persist. The company has seen a cost inflation of around 8 to 10 per cent so far on its material cost base.

Pidilite Industries, which owns popular brands such as Fevicol, Dr Fixit, FeviKwik, and M-Seal, is bracing for another round of price hikes, said its Managing Director Sudhanshu Vats. The company has already raised prices twice this year, in April and May, and is now evaluating further increases to offset a weighted average surge of 40-50 per cent in input costs.

In the beverages segment, Varun Beverages Chairperson Ravi Jaipuria said companies selling packaged water and beverages have already started cutting discounts amid rising costs, while further action could follow if fuel prices climb.

Marico MD & CEO Saugata Gupta said while the company is benefiting from softer copra prices, cost pressures are being mitigated through "calibrated pricing actions" and cost management initiatives. The company, which owns brands such as Parachute, Saffola, and Livon, has already taken price hikes of about 6-7 per cent in its Value Added Hair Oils portfolio.

Tata Consumer Products Ltd Managing Director and CEO Sunil D'Souza also pointed to rising packaging and LPG-linked costs, although he said margin pressures remain manageable for now because of the company's diversified portfolio.

Nestle India Chairman and Managing Director Manish Tiwary said times are volatile and difficult for anyone to predict what's going to happen even two months down the line.