FMCG Firms Prioritize Volume Growth Over Price Hikes Amid Rising Commodity Costs

Fast-moving consumer goods (FMCG) companies are likely to maintain prices despite rising commodity costs, including sugar and edible oils, during the festive season. This decision is driven by a desire to protect consumer demand and maintain volume growth amid improving consumption.

Industry executives have stated that FMCG firms have already implemented judicious price increases of around 2-5% in the June quarter to partly offset higher input costs. They are unlikely to raise prices further before the end of the festive season, even as margins remain under pressure.

Sugar prices have reached a new high, while costs of edible oils, coffee, cocoa, and crude oil derivatives used in packaging have increased sharply due to geopolitical disruptions and supply concerns in global markets. However, companies are focusing on operational efficiencies and cost optimisation measures to protect profitability while prioritising volume-led growth.

'We are attempting to hold prices,' said Hemant Malik, ITC Chief Executive Officer, Foods Division, and Executive Director. 'Most FMCG firms have so far implemented only modest price hikes of around 3-5% despite facing much higher cost increases.'