With increasing pressure on their margins, fast-moving consumer goods (FMCG) companies such as Godrej Consumer Products (GCPL) are considering taking a price hike on products like soaps. The cost of palm oil, a key raw material for making toilet soap, has risen by 30-35 % in one quarter.
A GCPL official said that a decision on hiking soap prices has been taken by the company and it be implemented in the next couple of months. Although market leader Hindustan Unilever (HUL) has not yet passed on the cost escalation to consumers, industry analysts said it was only a matter of time before the company takes a price increase in toilet soaps. On the other hand, Wipro Consumer Care & Lighting has already raised the consumer price of Santoor by 3-5 %, while other players are waiting for the market leader to blink first.
"We are waiting for the market leader to signal a price increase. We would then follow suit," said an industry official from a homegrown company . "Given the upward cycle in commodity prices, the industry has no choice but to sacrifice on volume growth and go in for price rise," the official added. After a good run with volumes, FMCG companies can now rely on value growth to return to the sector.
According to an industry analyst, FMCG companies managed to maintain their margins in the previous quarter by adopting various costcutting measures. However, with shooting commodity costs, it would be difficult for companies to maintain margins now. But, will volume growth really get impacted? Given the growth in income levels among other positive factors, the industry hopes that volumes would continue to grow.
A GCPL official said that a decision on hiking soap prices has been taken by the company and it be implemented in the next couple of months. Although market leader Hindustan Unilever (HUL) has not yet passed on the cost escalation to consumers, industry analysts said it was only a matter of time before the company takes a price increase in toilet soaps. On the other hand, Wipro Consumer Care & Lighting has already raised the consumer price of Santoor by 3-5 %, while other players are waiting for the market leader to blink first.
"We are waiting for the market leader to signal a price increase. We would then follow suit," said an industry official from a homegrown company . "Given the upward cycle in commodity prices, the industry has no choice but to sacrifice on volume growth and go in for price rise," the official added. After a good run with volumes, FMCG companies can now rely on value growth to return to the sector.
According to an industry analyst, FMCG companies managed to maintain their margins in the previous quarter by adopting various costcutting measures. However, with shooting commodity costs, it would be difficult for companies to maintain margins now. But, will volume growth really get impacted? Given the growth in income levels among other positive factors, the industry hopes that volumes would continue to grow.
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