Blow to consumers as India's leading FMCG companies hike prices again

India’s leading fast-moving consumer goods (FMCG) companies like Hindustan Unilever (HUL), ITC and Parle Products have hiked the prices of their products in October and November in a bid to ease the pressure of rising raw material costs. 

HUL, the country’s largest FMCG company, has hiked prices in the range of 1-33 per cent across its portfolio. On an average, it has increased prices by around 7 per cent to offset higher input costs, said an industry source.

While the price of a 19ml pack of Comfort Conditioner has seen the sharpest rise — 33.33 per cent — HUL has hiked prices across the board — in tea, coffee, soaps, detergents, toilet cleaners, face creams, body lotions, shampoos and so on.

For example, the price of Bru instant coffee (50g) is up by 8.3 per cent and that of Lipton tea by around 3 per cent. Some stock keeping units (SKUs) of Dove soap have seen prices go up by 7 per cent to 12 per cent while that of Surf Excel have gone up by 2 per cent to 20 per cent. Prices of different SKUs of Lux soaps are up by 7 per cent to 18 per cent. Tresemme shampoo SKUs have risen by 9 per cent to 25 per cent. 

In an email statement to Business Standard, HUL said, “With unprecedented volatility in commodity prices, we have seen significant inflationary pressures…We mitigate cost inflation first by driving our savings agenda harder. Considering the inherent strength of our brands and our execution prowess, we continue to take judicious and calibrated pricing actions as needed using the principles of ‘Net Revenue Management’, our science of pricing.”

HUL’s spokesperson also said that the company has been able to provide the right price-value equation to the consumer, thereby protecting its business model in a highly inflationary scenario. 

Last month, in a conference call after the announcement of results, HUL chief financial officer Ritesh Tiwari, told investors, “HUL took calibrated price increases across fabric wash and household care portfolio to partly offset the high input cost inflation.”

Leading biscuit maker Parle Products has also increased prices by 5 per cent to 10 per cent across its product portfolio in this quarter. The maker of Parle G biscuits has reduced grammage in SKUs below Rs 20 and increased the prices of packs priced above Rs 20. 

“The prices of raw materials like edible oil have gone up by 55 per cent to 60 per cent in the last one year while wheat and sugar prices have also gone up by 8 per cent to 10 per cent. Hence, we had to increase prices,” Mayank Shah, category head at Parle Products, told Business Standard. He also said that the previous price hike of 5-10 per cent was done in February and March this year.

ITC, too, also raised the prices of some of its products owing to higher input costs. “Input costs have gone up significantly and the overall industry has increased prices. While the prices of select items have been revised, ITC’s focus is on effective cost management, premiumisation, favourable business mix and evaluating all avenues to mitigate costs and enhance efficiency, to ensure that we don’t have to pass on the entire burden to the consumer,” the company said in a statement. 

Britannia Industries is also planning to hike prices by 6 per cent across its portfolio between October and March 2022. However, the company has warned investors that the price hike comes at the cost of volume growth.

“We are going to see a period of low volume growth, not just for us, but for the industry as a whole,” Varun Berry, managing director, Britannia Industries, told investors in an earnings conference call earlier this month. “It’s not a great place to be. But considering the kind of inflation that we are seeing in the marketplace, there is no other alternative,” Berry added.

“In a situation like this (high commodity costs), there is no substitute for a price increase. So we’ve gone ahead, and we’ve implemented pricing… One third of our pricing is through MRP changes and two thirds is through grammage reduction, which takes time because you’ve got to experiment, you’ve got to get the settings of the machines right etc,” Berry said.