FMCG Companies Hint At Price Hike The rising prices of commodity inputs such as Palm oil, Coffee and Cocoa, have pushed FMCG firms to pass increased costs to consumers
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As food inflation remains a pressing challenge, fast-moving consumer goods (FMCG) companies resort to price hikes to pass on commodity prices to consumers. These rising prices not only strain budgets, but impacts discretionary spending of middle class families. Hindustan Unilever (HUL), Marico, Godrej consumer products limited(GCPL) and Dabur are among firms which increased prices of their products.
The already high prices were further exacerbated by the import duty on oil, "We think this is a short-term hit and we will recover the margins through judicious price increase and stabilising of costs," said Sudhir Sitapati, MD, GCPL. In the second quarter of FY25, the company recorded a net profit of 13 per cent.
Similarly, in view of the higher-than anticipated degree of inflation in copra prices and sharp import duty hike in vegetable oils, Marico stated it will focus on its revenue growth aspiration while remaining watchful on the margin front during the second half of the year. "During the quarter, we witnessed stable demand trends in India with rural growth at 2x the pace of urban on a year- on-year basis. Pricing growth for the sector turned positive on a YoY basis as brands effected price increases in response to rising commodity prices," said CEO, Saugata Gupta. According to the Q2 results of FY25, Parachute Rigids registered 4 per cent volume growth. Volume offtakes grew in high single digits, resulting in ~120 bps gain in market share on MAT basis. The brand recorded 10 per cent revenue growth, aided by pricing interventions made at the start of the year.
Despite a challenging demand environment marked by high food inflation and a resultant squeeze in urban demand, Dabur continued to drive consumer engagement across its key brands to end the second quarter of 2024-25 with a consolidated revenue of INR 3,029 crore. "We expect recovery in consumer demand in the coming quarters, both in urban and rural markets. We are focusing on strengthening our competitive edge in the marketplace by investing in scaling up our rural footprint and rolling out consumer-centric innovations. To cater to this wider network, we have expanded our product basket with the launch of affordable and rural-specific pack bundles across categories, besides investing in consumer activations in the hinterland to establish a better connect with our consumers," said Dabur CEO Mohit Malhotra.
Hindustan Unilever (HUL) too pointed at a similar trend, mentioning that demand trends would remain stable and low-single digit price growth likely, if commodity prices remain where they are. The company would implement price hikes in its skin cleansing and tea products, "We have started taking calibrated price hikes in tea at multiple price points, and this will happen over the December quarter," Rohit Jawa, CEO, HUL, told media in a post-earnings call.
Food inflation in India is influenced by multiple factors such as erratic climate patterns, seasonal changes, rising input and production costs. Currently, the rising prices of commodity inputs such as Palm oil, Coffee and Cocoa have hinted at the price hike.
