FMCG Firms to Hike Prices to Offset Rise in Raw Material Costs

Author: Mohd Arham


Consumers may have to spend out more money for their daily use products as FMCG firms are facing inflationary pressure on their key raw material inputs. There has been a rise in the price of edible oil, palm oil, and coconut oil in the last 3 to 4 months and big firms are trying to absorb the price but will not be able to hold the price for much longer due to the covid-19 scenario as it is significantly affecting their margins.




One of the biggest firms, Marico which owns Saffola and Parachute, has faced inflationary pressure and had to go for an effective price hike. "The quarter (October-December) was also characterized 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” (Source: Business Today).

Other players such as Parle, Dabur, and Patanjali are monitoring the situation currently and are yet to announce any significant change.


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. 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 percent." (Source: PTI).


As per Dabur India CFO, they have seen inflation in some key raw materials such as Amla and gold. Their effort will be to absorb the rise in price and to increase the price of only selected items which will also depend on the competitive scenario. Haridwar-based Patanjali Ayurved is quiet currently and is looking at the situation and yet to take the final call in this matter.


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


Reference


https://www.businesstoday.in/current/corporate/fmcg-firms-mull-price-hike-to-manage-pressure-on-raw-material-inputs/story/427538.html


https://www.business-standard.com/article/companies/fmcg-firms-may-hike-prices-to-offset-inflationary-pressure-on-raw-material-121011000525_1.html

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