Sugar Price Surge Puts Renewed Pressure on FMCG Firms
The rise in commodity prices is broadening, and sugar has emerged as a key cost pressure for Fast-Moving Consumer Goods (FMCG) firms, according to Equirus Securities.
Rising costs of sugar, coffee, cocoa, and other inputs are set to put renewed pressure on FMCG companies, with the earlier relief from lower raw material costs now becoming less widespread. The brokerage noted that the raw-material environment had 'rotated rather than eased' in the second quarter of FY27.
Sugar prices have risen 19% year-on-year and 20% quarter-on-quarter, making it a key outlier among agricultural commodities. This increase could directly affect biscuits, confectionery, malted beverages, and carbonated soft drink bottlers.
Cereal-linked inputs remain relatively better placed, with wheat prices up 2% year-on-year and rice 5%. However, maize prices were down 11% year-on-year, although they rose 4% quarter-on-quarter. The period of falling prices for beverage inputs has ended, with Arabica coffee prices rising 19% quarter-on-quarter and nearly flat year-on-year.