Procter & Gamble Health | Of late, several FMCG companies such as Hindustan Unilever, Godrej Consumer Products (GCPL), Marico, Dabur have increased the prices of their products to offset the impact on their margins due to the inflation in input costs.
Fast-moving consumer goods (FMCG) major Procter & Gamble Hygiene and Health has hiked the prices of most of its products by 4-11 percent as it battles inflation in key raw materials.
According to a retail intelligence platform, the company has raised prices of larger pack sizes of detergent powder brands Ariel and Tide by 4-5 percent since July, while its personal care brands Pantene and Head & Shoulders have seen a price uptick of as much as 10-11 percent in the period. The development was also confirmed by distributors of the company.
Moneycontrol reached out to the company for a confirmation on the development but it declined to comment citing a silent period ahead of its second-quarter results.
P&G has undertaken similar price hikes globally. Last week, the company announced it is increasing the price of its grooming, oral and skincare products on account of higher freight and raw material costs. This is the second price hike by the company in the country after the mid-to-high digit price increase earlier.
Of late, several FMCG companies such as Hindustan Unilever Ltd (HUL), Godrej Consumer Products (GCPL), Marico and Dabur India have increased the prices of their products to offset the impact on their margins due to higher input costs.
Dabur had increased the price of its products by 3 percent across categories in the last quarter of FY21 and was mulling a further price hike if costs did not ease in the quarters ahead. GCPL raised the prices by 4-5 percent in the first quarter of FY22.
Paint companies such as Asian Paints and Berger Paints have undertaken the highest ever price hikes, up by 9-11 percent, brokerages said on October 27.
Also read: Asian Paints, Berger Paints hike prices in highest-ever increase)
Large SKUS bear the brunt
P&G has strategically introduced price hikes in the larger pack sizes of 1 kg and above, leaving smaller packs aimed at the masses and lower-income households untouched.
“When it comes to detergent powders like Ariel and Tide, the company has not taken any price hikes in the smaller pack sizes. However, mid to large sizes, which are meant for urban consumption, have seen a 4-5 percent increase since July,” an industry expert said.
According to a distributor, a 2 kg pack of Ariel Matic Front Load Detergent Powder, priced at Rs 480 in September, will come for Rs 499 from November 1. The price of a 1 kg pack of Tide Ultra 3 in 1 Clean, Rs 130 in September, was increased to Rs 140 in October.
For its personal care brands such as Pantene and Head & Shoulders, the company has taken a 4-5 percent price increase in the mid-size packs while here, too, smaller pack sizes of 180 ml and sachets have not witnessed any hikes. Larger pack sizes—650 ml and above—however, are now 10-11 percent more expensive.
P&G has not raised the prices of Whisper Sanitary pads in India.
Margin pressure mounts
Operating in a high inflationary environment has dented the margins of most FMCG companies globally and in India. The prices of key commodities, including palm oil, and even agri-commodities are skyrocketing.
While reporting its second-quarter results last week, HUL CMD Sanjeev Mehta had underlined this. “Inflation in certain commodities like palm oil, crude-based derivatives and ocean freight has been unprecedented. We haven’t seen this kind of inflation for many years,” said Mehta.
According to analysts, the biggest impact of inflation is on the vegetable oil basket.
“Edible oils like palm oil, sunflower oil, rice bran oil, safflower oil, the prices of these commodities are up by 35-50 percent year-on-year (y-o-y) and the companies which sell edible oil such as Dabur, Marico are most impacted,” said Himanshu Nayyar, lead analyst, institutional equities, Yes Securities.
The second-most affected segment, said Nayyar, is crude derivatives where the companies are witnessing 30 percent inflation YoY. Light liquid paraffin, a crude derivative, is a key commodity used in personal care products such as shampoos. Apart from this, companies are also battling high freight and packaging costs.
Analysts indicate that if input costs do not subside, more companies in the consumer products segment may raise product prices in the months ahead.Internet Explorer Channel Network