The Hindu Business Line : FMCG cos plan to increase prices

Chennai, June 6 That toothpaste or toilet soap that you use in the morning or the detergent for your clothes could soon be more expensive. Faced with the prospect of spiralling input costs, fast moving consumer goods companies that make these items of daily consumption are all set for a round of price increases.

Higher crude oil prices are expected to have a cascading effect on vital inputs such as linear alkyl benzene and sodium tripolyphosphate, which go into detergents while petro-derivatives such as high-density polyethylene, used for packaging material, will be more expensive. This, say FMCG marketers, will impact all goods.

Most FMCG companies had already hiked prices of their brands by 3-4 per cent a few months ago but say they will be forced to do so again. Henkel India’s Vice-President, Sales and Marketing, Mr Ranju Mohan, says that it will not be able to compensate consumers for the cost-push inflation and will have to revise prices. It expects to hike prices for all its brands by 5-10 per cent as early as possible.

Dabur India too had increased prices in the recent past essentially to neutralise higher input costs. More hikes are in the offing. Says Dabur India CEO, Mr Sunil Duggal, “Dabur is planning to hike prices of some products, and the price increase would average around 4-5 per cent in the current year. We would, however, not be able to divulge much information now on the exact quantum of hike. The price hikes are being put in place to neutralise the rise in input costs.”

Mr Anil Chugh, Senior Vice-President, Wipro Consumer Care, says that the company will not increase prices as of now but will wait for some time. However, he admits that there will be cost pressures. He says the huge increase in petrol prices in Malaysia (about 40 per cent), a primary supplier of palm oil which goes into toilet soaps, is worrisome. Even though, he says, palm oil prices were declining, there could be a spin-off effect of higher petrol prices on the freight and transport of palm oil imports from that country.

Mr C.K. Ranganathan, Chairman & Managing Director, CavinKare Pvt Ltd, says he is shell-shocked by the rising crude prices and skyrocketing prices of inputs and price hikes were inevitable. Most of CavinKare FMCGs use either petro-derivatives or oils, for which prices are shooting up, he said.

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