You are here: Home » Companies » News
Business Standard

FMCG firms may hike prices to offset inflationary pressure on raw material

FMCG firms, which are facing inflationary pressure on their key raw material inputs, are considering marginal hike on their products price to offset it

Topics
FMCG companies | FMCG sector | India inflation

Press Trust of India  |  New Delhi 

food, demand, sales, FMCG, consumer, customers, coronavirus
A person looks at FMCG products at a supermarket

Consumers may have to shell out more money for their daily use products as FMCG firms, which are facing inflationary pressure on their key raw material inputs, are considering marginal hike on their products price to offset it.

Some like Marico and others have already gone for price hike, while some which include Dabur, Parle and Patanjali are closely monitoring the situation.

FMCG players have been trying to absorb the price increase of raw material inputs such as coconut oil, edible oil and palm oil, but they are unlikely to hold the prices of their commodities for a long time as that will impact their gross margins.

"We have seen a significant rise in input cost and especially edible oil in the last three to four months and that is putting pressures on our margins and costs. As of now, we have not taken any price hike but we are closely monitoring it and if it goes like this then probably, we may go for a price hike," Parle Products Senior Category Head Mayank Shah told PTI.

According to him, these commodities are cyclic in nature.

When asked about the price hike, Shah said: "It will be across products as edible oil is being used in all products. It would be at least 4 to 5 per cent."

Dabur India CFO Lalit Malik said the recent months have seen inflation inching up for some key raw materials like amla and gold.

"Going forward too, we expect some inflationary pressure in key commodities. Our efforts will be to absorb the raw material price increase through our synergies and cost efficiencies, and undertake only selective and judicious price hikes, which will also depend on the competitive scenario in the market, said Malik.

While for Haridwar-based Patanjali Ayurveda, it's still a 'wait and watch' situation and yet to take a final call on this but hinted that it is also moving in that directions.

"We always try to absorb the market oscillation but if compelled by the market factors, we would take a final decision on that," said Patanjali spokesperson S K Tijarawala.

Marico, which own brands as Saffola and Parachute, has faced inflationary pressure and had to go for an effective price hike.

"The quarter (October-December) was also characterised by inflationary pressure in key raw materials necessitating cutting back on some promotions and taking effective price increases across both Parachute and Saffola edible oil portfolios, said Marico in its quarterly updates for Q3 last week.

Edelweiss Financial Services Executive Vice President Abneesh Roy said many key raw materials are up sharply such as palm oil, tea, copra, edible oils etc.

"Price growth will come back in 2021 for the consumer after raw material pressure starts impacting their gross margins," he said.

However, Roy also added that the consumer have other cost levers to cushion this impact at EBITDA margin level.

"have very high pricing power. They normally take a price hike in a gradual staggered manner but eventually pass on the entire price hike. We expect the same to continue, given the demand is robust and most of the FMCG products have the advantage of low unit packs of Rs one, two, five and ten price points, Roy said.

EY Partner and National Leader (Consumer Products and Retail) Pinakiranjan Mishra said: "While have seen a rise in cost especially of agri inputs, they will try and limit price increases through cost control measures to support consumer offtake in the current environment.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, January 10 2021. 17:18 IST
RECOMMENDED FOR YOU
.