FMCG cos hike prices to offset rupee shocks

Sep 16 2013, 17:38 IST
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SummaryWith an increase in input costs, the R1,85,000-crore industry effects price hikes across all categories of retail commodities like personal care, dairy business, paints and detergents

Rising input costs are putting the squeeze on Indian FMCG companies that are already feeling the heat from a sliding rupee. Due to higher costs of imported raw materials in packaging, crude oil and palm oil, FMCG companies are now opting for price hikes to tide over the situation.

While Wipro Consumer Care & Lighting (WCCL) has undertaken a price hike for its flagship soap brand Santoor, Parag Milk Foods raised prices for its select milk brands recently. FMCG major Godrej Consumer Products Ltd (GCPL), makers of Cinthol soaps, is biting the bullet soon, while Dabur India is considering a similar move for some of its brands in the next few days.

Meanwhile, other FMCG companies like Asian Paints and ITC Foods are also mulling price hikes to offset the rising input costs.

In essence, the R1,85,000-crore Indian FMCG industry will soon witness major price hikes in personal care, dairy business, paints and detergents sectors. For the common man, the falling rupee is going to hit where it hurts the most—the pocket.

On the impact of the weakening rupee on FMCG companies, Vineet Agrawal, president of WCCL, said: “There’s a clear impact on raw materials like palm oil and packaging materials. We have increased prices of our Santoor brand by 5% from R21 to R22. We are mulling price hikes in other brands too.” The rupee deprecation is leading to an increase in fuel prices and transportation costs, he added.

Sharing similar sentiments, Adi Godrej, chairman of GCPL, said the rupee depreciation has impacted all companies across the country. “As costs have gone up, we will accordingly take price hikes soon. It has impacted all our GCPL brands in different degrees,” he said.

Like personal care companies, dairy majors are also feeling the impact of the weakening rupee in the past two months.

Devendra Shah, chairman of Parag Milk Foods, said with the increasing dollar exchange rates, the company is raising prices of skimmed milk powder to the tune of R215 to R225 per kg as against R170 to R180 per kg a few days back. “We have just increased raw milk procurement prices paid to farmers by R2.50 to R3 per litre in Maharashtra,” he said.

What will be the impact of fresh price hikes on consumers and FMCG companies? Nitin Mathur, consumer research analyst at Espirito Santo Securities, said the consumer sentiment has declined further following high inflation and lack of employment opportunities in India.” What

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