Debasis Mohapatra
Bengaluru, 7 January 2025
Several FMCG companies in India are likely to hike prices of many items in January-March period of 2025 on the back of rise in raw material prices.
According to brokerage firm- Nuvama Institutional Equities, these firms have already raised the prices of some of their items in October-December period owing to inflationary pressure and will do so again as inflationary pressure continues unabated.
“FMCG companies have taken price hikes in Q3FY25 in response to rising raw material prices due to inflationary pressures. An inflationary trend exists in raw materials such as palm oil, copra, tea and coffee….We expect some FMCG companies to take another round of price hikes in Q4FY25,” the brokerage firm wrote in the report.
“Commodity inflation has posed a problem as urban demand remains weak with rural gradually recovering,” it further wrote.
Palm oil, which is a key ingredient in many FMCG items, have seen 35 per cent increase in its prices in the last one year.
“Companies like HUL, GCPL have taken about 10% price hikes in soaps category due to rising palm oil prices. Snacks companies like Bikaji has taken around 2% price hikes in previous quarters and further 2% price hike is expected in Q4FY25 due to rising palm oil prices. Also, adverse impact of volume grammage cut in Rs 5 & Rs 10 price packs to pass on raw material inflation,” the report noted.
Similarly, Marico has taken price hikes of around 10% in Parachute coconut oil in H1FY25 because of rising copra prices.
Tea prices have moved up about 32% over the past year, which may prompt companies like Tata Consumer to take a gradual price hike of 25-30%. Edible oil prices have seen an increase in double digits, leading to companies like Marico raising prices of its edible oil brand, Saffola by around 20%.
“Robusta coffee prices have surged by 82% year-on-year due to global shortages. So, companies like Tata Consumer, Nestle, and HUL are to take gradual price hikes to offset high input costs,” the report noted.
