FMCG firms are anticipated to hike prices by about 10% to counteract inflationary pressures.
FMCG businesses are exploring another round of price increases to offset the impact of historic levels of inflation in commodity costs including wheat, palm oil, and packaging materials, which might compel consumers to pay more for their daily necessities. Furthermore, the ongoing crisis between Russia and Ukraine has thrown another blow to FMCG producers, who expect higher wheat, edible oil, and crude prices. Companies such as Dabur and Parle are keeping a close watch on the situation and will gradually raise prices to relieve inflationary pressures.
FMCG companies are considering another round of price hikes to mitigate the impact of historic levels of inflation in commodity costs such as wheat, palm oil, and packaging materials, which may force consumers to pay more for their daily essentials.
According to reports in the media, food manufacturers such as HUL and Nestle raised their prices last week. Mayank Shah, Senior Category Head at Parle Products, told PTI, “We are expecting a 10-15% jump by the industry.” Shah went on to say that because prices fluctuate so much, it’s difficult to predict the exact amount of increase owing to price volatility. Palm oil prices had risen to Rs. 180 per liter but have since dropped to Rs. 150 per liter. Similarly, crude oil prices had surged to over USD 140 per barrel before falling to USD 100, he said.
Tea, coffee, milk, and noodles will all be more expensive, according to Hindustan Unilever Limited (HUL) and Nestle. HUL has increased the price of Bru coffee powder by 3 to 7% today, March 14, according to CNBC TV-18. The price of Bru gold coffee jars has increased by 34%, and the price of Bru instant coffee pouches has increased by 3 to 6.66%. At the same time, the price of Taj Mahal tea has been raised by 5.8%. The costs of several Brooke Bond varieties have been increased by 1.5 to 14%. HUL stated it is making its products more expensive due to rising inflation when it announced the price increases.
Nestle India has also stated that the pricing of its products will be raised. The price of Maggi noodles has increased by 9 to 16 percent, according to Nestle India. A price rise for milk and coffee powder has also been announced. Following the price hike, the cost of 70 grams of Maggi Masala noodles has risen from Rs. 12 to Rs. 14. Simultaneously, the price of Maggi Masala Noodles 140 grams has risen by Rs. 3 (12.5%). Aside from that, the cost of a 560-gram pack has increased by 9.4%. That is, instead of paying Rs. 96, you must now pay Rs. 105.
Nestle recently increased the price of A+milk 1 liter cartons by 4% to Rs. 78 from Rs. 75. Nescafe classic coffee powder prices have increased by three to seven percent, while Nescafe classic 25 gm pack prices have increased by 2.5 percent to Rs. 80 from Rs. 78.
The rise in edible oil costs, as well as the rise in raw material prices, as a result of the uncertain geopolitical environment, will wreak havoc on Indian households’ budgets, which are already being impacted by rising inflation. The CPI inflation figures for February in India will be released later today. In January 2022, India’s headline inflation rate based on the Consumer Price Index (CPI) surged to a seven-month high of 6.01 percent, barely breaching the Reserve Bank of India’s four-to-six percent comfort zone.
Abneesh Roy, Executive Vice President of Edelweiss Financial Services, commented on the current situation, saying that FMCG manufacturers are passing on significant inflation to consumers. “For example, HUL and Nestle, have a lot of price power. Inflation in coffee and packaging materials is being passed on to them. In Q1FY23, we expect all FMCG companies to increase their prices by 3 to 5%.” he added. According to reports, FMCG giants HUL and Nestle have already raised the pricing of food goods including tea, coffee, and noodles, shifting some of the burdens to customers in order to maintain profit margins. According to rumors, HUL had raised prices for Bru coffee, Brooke Bond tea, and other products due to inflationary pressures.
The makers did not accept the price boost to totally alleviate the impact last time and instead absorbed a portion of it. “Everyone is currently talking about a price rise of 10-15%,” he continued, “even though the input cost has gone significantly higher.”
When asked if Parle would go on a hike, Shah said that the company currently has enough packaging materials and other goods and will make a decision in a month or two. Dabur India Chief Financial Officer Ankush Jain expressed similar sentiments, saying that inflation continues to rise and is a source of concern for the second year in a row.”
The inflationary pressures and resultant price increases have led to consumers tightening their purse strings and are relooking at discretionary purchases, while also downgrading to smaller packs. We are closely watching the situation and will undertake calibrated price increases to mitigate the inflationary pressures,” he said.
According to rumors, HUL had raised prices for Bru coffee, Brooke Bond tea, and other products due to inflationary pressures. Nestle India has raised the price of its popular Maggi noodles by 9 to 16 percent, as well as raised the price of milk and coffee powder, according to sources. “We are seeing consumer volume reduction because of the impact of high inflation,” an HUL representative said.
Our aim in this environment is to deliver value to consumers, invest in our brands, and safeguard our financial business model.” We start by pushing our cost-cutting mission harder, scrutinizing all cost lines with a laser-like concentration, and eliminating all non-value-adding costs. “We have been able to give the proper price value equation to a consumer and therefore helping to protect our business model in a very inflationary climate,” he added, citing the underlying strength of his brands and execution prowess.