FMCG companies are taking various measures to tackle inflationary pressures triggered by the West Asia conflict. This includes calibrated price hikes, grammage reduction as well as sharper focus on cost efficiencies.
The volatility in crude prices has particularly hit packaging costs severely among other raw material costs.
Dabur India, Global CEO, Mohit Malhotra in an earnings call on Thursday said that the company has already hiked prices by 4 per cent across different parts of the business to mitigate the inflationary impact due to the West Asia conflict.
The company has also reduced grammage in small packs to maintain popular price points.
“We may also need to take a second round of price increase, depending on the geopolitical situation,” he added.
Cost inflation
Godrej Consumer Products has also increased prices by 5 per cent in soaps, 6-7 per cent in detergents and about 7 per cent on household insecticides, the company’s senior management recently stated. This comes on the back of cost inflation seen in raw materials including palm oil and crude-oil derivatives.
Speaking at the fourth quarter earnings call, Rakshit Hargave, MD & CEO, Britannia Industries said, “selectively we will have to take price increases, and this includes both grammage adjustment.”
An analyst report by Nuvama Institutional Equities noted that inflation in crude-linked inputs has led Marico to hike prices by 6-7 per cent in value-added hair oils. It has also taken prices hikes in Saffola edible oils. Meanwhile, with correction in copra prices, the company has also passed on benefits to consumers through some selective price actions.
Several companies have also begun focusing on alternative sourcing of certain packaging inputs which are facing disruptions due to the West Asia crisis. Industry experts said depending on the geopolitical tensions, players may need to take more price hikes in the coming months if the inflationary pressures persist.
Players in packaged drinking water and paints have already had to take more than one round of price hikes to tackle inflationary costs.