FMCG Firms Prepare for Another Round of Price Hikes Amid Rising Commodity Costs

FMCG companies are bracing for another round of price hikes in September quarter due to rising commodity costs and geopolitical uncertainties. The sector implemented average price increases of around 2-5% in June quarter, but is now looking at shrinkflation or reducing the grammage of products along with selective pricing actions to protect margins.

Britannia, a leading bakery food company, expects to take another 1.5-2% pricing action mainly through shrinkflation in its Rs 5 and Rs 10 biscuit packs. Britannia's MD and CEO Rakshit Hargave said that demand environment is strong, but added that further pricing action could follow if overall impact was not enough.

Other companies like Godrej Consumer Products Ltd (GCPL) and Hindustan Unilever Ltd are also expected to raise prices across multiple product categories in the September quarter. GCPL has held back from taking larger price increases amid volatility in crude oil prices, but may implement another hike in the current quarter.

Tata Consumer Products Ltd Managing Director Sunil D'Souza said that further pricing action could be considered if required, while Nestle India warned of geopolitical and inflationary headwinds which could moderate overall consumption in the short term.