FMCG Firms Adjust Pricing Strategies to Mitigate Impact of Rising Input Costs

Companies Adjust Prices Amid Rising Costs in Middle East

The turmoil in the Middle East has led to a significant increase in the costs of ingredients and packaging for companies manufacturing soaps, soft drinks, face cream, and detergents. In response, these companies are taking measures to protect their profits, including scaling back on trade discounts, shrinking the size of value packs, and implementing direct price hikes in large units.

Varun Beverages, the second-largest PepsiCo bottler globally outside the U.S., has been cautious in increasing prices due to the stable demand environment, which has been helped by tax benefits announced last year. According to Ravi Jaipuria, chairperson of Varun Beverages, the company is cutting costs wherever possible and has already seen these efforts reflected in its first quarter results.

Companies such as Lahori Zeera, a regional beverage brand, have made selective revisions, including minor price increases on certain SKUs, to improve overall realizations. Lahori Zeera's co-founder and chief operating officer, Nikhil Doda, stated that these changes are limited and targeted, and the company's model continues to remain non-discount-driven.

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FMCG major Hindustan Unilever has rolled out a 2-5% price increase across product categories depending on their exposure to crude-linked raw materials. However, the company has shrunk the value pack sizes to avoid a price hike in these packs.

The war in the Middle East has also delayed the price cooling in the case of mustard and copra, which have held onto pre-war levels and have not fallen further as expected. This has impacted companies like Bajaj Consumer, which is a leader in the light hair oil category with its flagship brand, Bajaj Almond Drops. Bajaj Consumer's managing director, Naveen Pandey, stated that the company is monitoring the situation on a daily basis and is taking necessary calls.

Comparison of Price Adjustments

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CNN Foods, which sells beverage brands like Phirki and Papanata, has implemented a 3% reduction in trade margins, along with a rationalisation of brand-funded consumer discounts—particularly in modern trade and quick commerce channels. According to spokesperson Chirag Wadhwa, the company is focusing on a balanced approach between margin discipline and volume growth to protect profitability.