Stories
FMCG Firms Hold Prices Despite Rising Costs, Prioritize Volume Growth
- •FMCG companies plan to maintain current prices through the festive season to protect consumer demand and volume growth, despite increased commodity costs and geopolitical disruptions.
- •Companies implemented modest price increases of 2-5% in the June quarter to partially offset higher input costs but are unlikely to raise prices further before the festive season ends.
- •Key input costs, including sugar, edible oils, coffee, cocoa, and crude oil derivatives for packaging, have risen, putting pressure on margins.
- •ITC and Dabur India confirm efforts to hold prices, with ITC's Hemant Malik stating they are absorbing costs through management initiatives and portfolio actions.
- •Industry executives indicate that while price adjustments might be revisited in Q3 or Q4 if cost pressures persist, the current focus is on operational efficiencies and volume-led growth.
Key Questions Answered
FMCG firms intend to hold prices through the festive season to protect consumer demand, sustain improving consumption momentum, and prioritize volume-led growth despite facing elevated cost pressures and margin constraints from rising commodity prices and geopolitical disruptions.
Leading industry executives noted that companies already introduced judicious and modest price increases of around 2 to 5 percent during the June quarter to partly offset higher input costs before pausing further hikes ahead of the festive period.
Government interventions and measures have led to a recent easing of sugar prices, providing some much-needed relief to manufacturers and supporting their decision to hold off on major price hikes through October and November.
