Industry leaders reported that companies have already implemented a moderate price increase in the June quarter, amounting to about 2–5 percent, to partially offset increased raw material costs.
Despite the rise in commodity prices, including sugar, and the impact of geopolitical turmoil, FMCG companies are likely to hold prices steady throughout the holiday season. This is being done to protect consumer demand and support volume growth amidst improving consumption.
Industry executives noted that although companies are facing renewed pricing pressures—for instance, sugar reached a new high, and costs for key components such as vegetable oils, coffee, cocoa, and crude oil derivatives for packaging have sharply increased—they are trying to minimize further price hikes until the end of the holiday period, even despite margin pressure.
Most firms have managed to absorb a significant portion of inflation through cost control measures and portfolio management, but leaders emphasized that the focus remains on protecting volume growth, as margin pressure remains high.
Company Executives' Comments
Hemant Malik, Executive Director of ITC's Foods Division and CEO, stated that the company will maintain current prices during the holiday season, regardless of cost inflation. He clarified that firms are absorbing most of the rise in raw material prices through expense management initiatives and portfolio actions.
Malik also mentioned that the reduction in the GST rate last year stimulated volume growth across multiple categories and supported market demand. However, he warned that if price pressures persist, companies may be forced to revise pricing later in the fiscal year.
He added that adjustments to prices might be necessary in the third or fourth quarter, noting that most FMCG companies have so far implemented only a modest price increase of approximately 3–5 percent, despite a much more substantial rise in costs.
A major domestic FMCG producer, Dabur India, which has also applied calibrated pricing actions on select products to partially compensate for raw material costs, is closely monitoring the situation. Ankush Jain, CFO of Dabur India, reported that the company has raised prices on some products in recent months to mitigate the inflationary impact caused by the geopolitical situation, while considering competitive intensity. He added that the situation will continue to be closely monitored.
Mayank Shah, Marketing Director at Parle Products, stated that most FMCG companies are expected to maintain prices at least until Diwali, citing strong demand in both urban and rural areas, as well as the recent easing of sugar prices due to government measures. He noted that no one wants to disrupt demand, so companies are unlikely to raise prices due to the holidays.
According to Shah, demand remains encouraging in both market segments, and companies prefer to sustain this momentum rather than risk slowing consumption due to price increases. He also pointed out that the reduction in prices for certain goods, especially sugar, following government intervention, provided some relief to producers. Shah forecasts no major price increases in the FMCG category before October–November. Companies are focused on operational efficiency and cost optimization to protect profitability, prioritizing volume growth.
These statements came against a backdrop where many FMCG manufacturers are grappling with high costs for key raw materials, including vegetable oils and packaging materials, due to supply chain disruptions and geopolitical uncertainty.