Your grocery bills in India are about to go up
What's the story
Leading fast-moving consumer goods (FMCG) companies in India are planning to raise prices in the September quarter. The decision is largely driven by rising input costs due to commodity inflation and geopolitical uncertainties. Despite these challenges, the firms remain optimistic about demand, citing resilient consumption trends, premiumization, as well as improved revenue growth.
Sector strategy
Shrinkflation and selective pricing actions
The FMCG sector, which saw an average price hike of 2-5% in the June quarter, is now looking at shrinkflation.
This involves reducing grammage weight or selective pricing actions to protect margins.
The move comes as companies keep a close watch on inflationary pressures, crude oil volatility, and weather-related risks such as monsoon and El Nino.
Company responses
Britannia and GCPL's pricing strategies
Leading bakery food company Britannia plans to raise prices by another 1.5-2% in Q2 through "shrinkflation."
The move is due to high commodity prices for sugar and palm oil.
Godrej Consumer Products Ltd (GCPL), which raised prices by an average of 5% in the June quarter, may do so again this quarter but is waiting for commodity cost trends to become clearer.
Future outlook
Dabur and HUL's approach to price hikes
Dabur India expects elevated input costs to persist in the near term, prompting calibrated price hikes.
The company is confident of delivering double-digit revenue growth in FY27, backed by strong brands and a robust innovation pipeline.
Hindustan Unilever Ltd (HUL) also plans to hike prices across multiple product categories in Q2, expecting sequential inflation of 2-5% compared to April-June.