FMCG Giants Brace For Another Price Hike: What Gets Costlier This Quarter

 Leading fast-moving consumer goods companies are preparing for calibrated price hikes and shrinkflation strategies in the September quarter to manage rising commodity costs. The sector implemented average price increases of 2 to 5 per cent during the June quarter.

Firms are currently monitoring macroeconomic headwinds, including volatile crude oil prices, general inflation and weather-related risks such as the monsoon and El Nino, to determine further pricing actions.

Despite these margin pressures, market participants remain optimistic about steady demand, supported by robust consumer purchasing patterns, a shift toward premium products and better top-line expansion.

Tactics of Market Leaders

Britannia plans a 1.5 to 2 per cent pricing action in the second quarter. The bakery firm will primarily execute this through shrinkflation across its Rs 5 and Rs 10 biscuit packs, driven by elevated sugar and palm oil costs.

The company stated its initial pricing-led growth relied heavily on shrinkflation and indicated that further pricing action could follow in the current quarter.

"Going ahead in the quarter, you will see something more coming in. If the overall impact was 1 per cent, you would probably see maybe another 1.5-2 per cent coming in," Britannia Managing Director Rakshit Hargave said in an earnings call, according to PTI.

Hargave said the demand environment is strong and the trend is good. The company expects to preserve its FY27 EBITDA margins at least at FY26 levels if input costs remain elevated.

Hindustan Unilever (HUL) projects sequential inflation to rise by 2 to 5 per cent in the September quarter compared with the April-June period. The company implemented price hikes of 2 to 5 per cent in the first quarter and plans calibrated pricing to defend its margins and volume-led growth.

"Between the September quarter versus June quarter, we see sequential inflation, which could range between 2 to 5 per cent," HUL Chief Executive Officer Priya Nair said at a post-earnings call, according to PTI. Nair said the company will continue to take calibrated pricing into the quarter, depending on how inflation pans out.

Crude and Commodity Pressures

Godrej Consumer Products (GCPL) instituted an average price hike of 5 per cent in the June quarter. The company might deploy a comparable increase in the current quarter, contingent on commodity cost trajectories. GCPL is holding back on larger increases due to crude oil volatility, as input costs trail crude price changes by three to four weeks.

"No...We may get a similar kind of price increase in Q2 as well..." GCPL Chief Executive Officer Sudhir Sitapati said during an earnings call, according to PTI. He noted that with Brent crude hovering around $80-85 per barrel, existing pricing remains adequate. "With revenue growth tracking ahead of our original expectations and input costs beginning to ease, we enter the remainder of FY 2027 with increased confidence. We remain firmly on track to deliver our guidance for the full year with the confidence to exceed the same in select areas," Sitapati said, according to PTI.

Dabur India stated that high input costs will likely persist, necessitating calibrated price hikes alongside productivity focus. This strategy aims to safeguard margins while delivering targeted double-digit revenue growth in FY27, supported by its brands, innovation pipeline and execution.

"The growth will be more driven by revenue and price. Because of inflation, we had to pass it on to the consumer. Price growth and value growth are becoming higher than volume growth. Volumes will be under pressure as the inflation is too much," Dabur India Global Chief Executive Officer Mohit Malhotra said in an earnings call, according to PTI. Malhotra said the firm wants profit growth to be accretive to its top line growth and is monitoring geopolitical uncertainties.

Geopolitical and Weather Risks

Tata Consumer Products is assessing dynamic input costs and the geopolitical situation in West Asia before executing further pricing strategies. The firm is cautious about implementing hikes without corresponding cost pressures, targeting mid- to high-single-digit growth.

"If need be, we will also make further pricing interventions because the cost has been fairly dynamic and we are also coming to terms with the exact inflationary impact on the margins," Tata Consumer Products Managing Director Sunil D’Souza said in an earnings call, according to PTI. D’Souza said the West Asia situation remains dynamic and the company does not want to move ahead with price increases that are not underpinned by costs.

Nestle India stated that macroeconomic and geopolitical headwinds persist, according to PTI. In an investor presentation, the company stated that the ongoing conflict in West Asia and the potential influence of El Nino on the monsoon are significant factors to track. The firm warned that these external pressures could moderate short-term consumption across the broader food and beverage sector.