Grocery Prices Raised In April To Offset Rising Commodity Costs

Owing to the rise in copra prices, Marico Ltd. has taken a 6% price hike on select packs of its Parachute hair oil range, according to its Managing Director and Chief Executive Officer Saugata Gupta. He expects domestic revenue growth to outpace volume growth in the first quarter of FY25 itself.

Godrej Consumer Products Ltd. has taken a "mild" price hike in soaps as palm oil prices have hardened in the last few months, its Chief Financial Officer Aasif Malbari told NDTV Profit. "We expect sales growth to be ahead of volume growth in the second half of FY25, as price increases make a comeback."

Hindustan Unilever Ltd. expects its near-term price growth to decline in low single digits, said Ritesh Tiwari, the company's chief financial officer.

"If commodity prices remain where they are, we envisage price growth plateauing in the mid-term," he said. However, the country's largest consumer goods maker expects to take a "low single-digit" price hike in the second half. It is currently monitoring the raw material price situation.

Britannia Industries Ltd.'s Managing Director Varun Berry foresees inflation of about 3-4% this fiscal, particularly post-election. "The outlook for this year is not deflationary but of healthy inflation,” he said, adding that wheat and sugar, in particular, are expected to remain inflationary in the coming quarters.

While the wheat output has been good, the government currently holds a low reserve, Berry said. An increase in government purchases could lead to a potential rise in wheat prices throughout the year. Furthermore, the lackluster sugar production indicates a possible inflation in sugar prices.

The overall commodity inflation would be at "manageable levels", he said. However, at present, Britannia is assessing the impact of input cost inflation.

Dabur India Ltd. expects a 3-4% price increase in the healthcare business, 1% in beverages and 2-3% in the home and personal care category in FY25.

Accordingly, the Honitus-to-Red Paste maker aspires to deliver "low double-digit" revenue growth and expects margin to stand at 20% in the ongoing fiscal, according to its Chief Executive Officer Mohit Malhotra.

Emami Ltd., too, had earlier indicated modest price hikes to the tune of 1-3% in the current fiscal, after factoring in the input price and consumption trends in different categories.

Pricing growth for the fast-moving consumer goods industry fell to 2.7% in 2023 as against 10% in 2022, according to market researcher NielsenIQ. This decline can be attributed to the decrease in prices for most products in the previous year. In 2022, there was unprecedented inflation in input costs, ranging from palm oil to crude oil to packaging materials, largely due to geopolitical factors. As a result, most companies have seen higher volume growth as compared with value growth in recent quarters, as prices have decreased despite overall demand remaining sluggish.

The companies are now flexing their pricing muscles as volume finally shows some signs of recovery. All eyes are on a likely good monsoon and anticipated rural spending post elections to further spur volume. Roughly 70% of the growth in FMCG is driven by volume increases, with the remainder coming from price adjustments.

"The worst is behind for entire FMCG sector and gradual recovery will continue due to strong likely monsoon this year," said Abneesh Roy, executive director, Nuvama Institutional Equities. "Most companies will focus on volume growth this fiscal and without any big sacrifice on margins, while pricing growth will come back for the sector after a negative pricing in FY24."