FMCG products might become costlier in India soon
What's the story
Fast-moving consumer goods (FMCG) companies are preparing for another round of price increases in India. This comes after recent hikes of 3-5% across products like soaps, detergents, biscuits, packaged foods, and beverages. The price rises are being driven by crude-linked inflation, higher packaging and fuel costs due to geopolitical disruptions. These factors have been squeezing margins across sectors including food, personal care and household products.
Strategy response
Price elasticity and internal cost efficiencies
FMCG companies are now focusing on price elasticity and internal cost efficiencies to manage the impact of rising costs. This includes trimming discounts, tightening inventory management, and streamlining supply chains. However, consumers will still bear some burden through calibrated price hikes and reduced grammage. Dabur India Global CEO Mohit Malhotra said they have already implemented a 4% price increase across different parts of their business to partly mitigate inflation impacts.
Price adjustments
Britannia and HUL preparing for price hikes
Britannia, the maker of Good Day and Marie Gold biscuits, is also preparing for price hikes due to a nearly 20% rise in fuel and packaging costs. MD Rakshit Hargave said they are considering direct price increases and grammage reduction as options. Hindustan Unilever Limited, which owns brands like Surf Excel and Dove, has already raised prices by 2-5% depending on the portfolio. CFO Niranjan Gupta said they have seen cost inflation of around 8-10% on their material cost base.
Cost pressures
Pidilite, Varun Beverages warn of further action
Pidilite Industries, known for brands like Fevicol and M-Seal, is also bracing for another round of price hikes after raising prices twice this year. Managing Director Sudhanshu Vats said they will continue to pass on input cost surges in a calibrated fashion. In the beverages segment, Varun Beverages Chairperson Ravi Jaipuria noted companies selling packaged water have started cutting discounts amid rising costs. He warned that further action could follow if fuel prices continue to climb.