RISING RAW MATERIAL costs across the commodity spectrum may compel fast-moving consumer goods (FMCG) companies to hike prices, a standard response during inflationary cycles. However, the situation is more complex this time.
Commodity inflation has emerged at an inopportune moment for FMCG firms. Urban demand remains weak, while rural markets are only beginning to recover.
This dual challenge has companies adopting a cautious approach to price increases, fearing a potential impact on sales volume. CEOs admit that any price hike will be "calibrated" to align with the fragile demand environment.
"The slowdown in FMCG demand poses a greater challenge than rising input costs. Sharp price increases could hurt sales, something companies can ill afford right now," explains Harsha V Agarwal, vice-chairman and MD of Emami and president of the Federation of Indian Chambers of Commerce and Industry (Ficci).
While companies are wary, some see price hikes as unavoidable. Tarun Arora, CEO and whole-time director at Zydus Wellness, emphasises the inevitability of adjustments. "Input costs are climbing across the board, from food to non-food categories. FMCG firms have no choice but to raise prices, albeit gradually. Low to mid-single-digit hikes are expected by January, given the weak demand sentiment," Arora notes.
Varun Berry, vice-chairman and managing director of Britannia, echoes the sentiment, pointing out the rising inflation in critical commodities like wheat, palm oil and cocoa. "Value growth in the FMCG market is declining, while input costs are surging. Price hikes are necessary to protect margins," he says.
Some companies have already implemented price adjustments in select categories. Tata Consumer, Hindustan Unilever (HUL), and Britannia have raised prices for products like tea and biscuits. Sunil D'Souza, managing director and CEO of Tata Consumer, hints at more increases in the pipeline.
This story is from the December 24, 2024 edition of Financial Express Kochi.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the December 24, 2024 edition of Financial Express Kochi.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
MRF: Crude prices, Re slide driving surge in tyre prices
RISING CRUDE OIL prices and a depreciating rupee are driving up tyre costs, according to Arun Mammen, vice chairman and managing director of MRF.
PLFS reflects positive employment trends
As India strides towards the vision of Viksit Bharat, empowering youth with the right skills and work experience continues to be a priority
Davos Turns Into Fortress
GIVEN THE HIGH-profile nature of the event, beginning Monday, the security is both discreet and visible and comprises snipers, drone jammers, regular frisking and checking and round-the-clock patrol.
Petroleum products exports rise 2% in April-December
INDIA'S EXPORTS OF petroleum products grew marginally by 1.5% to 47.5 million tonne during April-December, compared to 46.8 million tonne in the same period last fiscal, according to data from the Petroleum Planning and Analysis Cell.
TN loses investment body chief ahead of meet
VISHNU VENUGOPALAN, MD & CEO of Guidance Tamil Nadu and a key bureaucrat instrumental in attracting major investments, including Cisco, Jabil, and Ford Motor's re-entry into the state, has exited the agency, multiple sources told FE.
Fighting halts in Gaza as ceasefire begins, Hamas frees 3 hostages
PALESTINIANS POURED INTO the streets to celebrate and return to the rubble of their bombed-out homes on Sunday, and Hamas released the first three hostages under a ceasefire deal that halted fighting in Gaza.
Trade Partner Or Adversary?
India must think beyond China-Plus-One strategy as the world trade order is rapidly changing
Comfortable design for 24/7 wear
It tracks fitness, sleep, stress & other key health vitals
Tech firms face setback as Wi-Fi spectrum allocation plan nixed
DoT DECISION MAY DELAY ADOPTION OF NEXT-GENERATION DEVICES
Mkt volatility may force life insurers to rethink ULIP plans
A prolonged volatility in the stock markets could dampen the investor appetite for unit linked insurance plans (ULIPs), prompting life insurers to shift the focus towards guaranteed income and pure protection plans like term insurance, industry experts said.
