ITC, HUL, Godrej & others take the bullet for you

Kolkata | Mumbai: Consumer goods companies are increasingly absorbing rising raw material costs rather than resorting to blanket price hikes, seeking to protect demand and sustain recovery in volume growth. These companies, such as ITC , Hindustan Unilever , Godrej Consumer Products , Emami , Havells , Reliance Retail and Aditya Birla Lifestyle Brands , are combining selective price increases with cost-cutting measures to limit the impact on consumers as well as their own margins. Also read | The great Indian biscuit battle begins: Can Reliance crack the code? This strategy comes amid an elevated input-cost outlook flagged by several companies during recent earnings calls, due to high raw material prices, supply disruptions and freight charges. They are cutting trade investments as well as rationalising vendor networks to negotiate better rates through higher volumes. Part of the impact is absorbed into their margins. Godrej Consumer Products chief executive Asif Malbari said inflation across crude oil-linked derivatives, palm oil and other commodities intensified last quarter, resulting in a high single-digit rise in input costs, one of the highest increases in raw material costs in several years. Live Events Despite a significant part of its portfolio comprising fixed-price packs, the company took stringent pricing actions alongside cost-saving measures and optimisation of trade investments, Malbari told analysts. Retailers and apparel makers are also balancing pricing actions with cost-saving initiatives. Reliance Retail, the country's largest retail chain, started absorbing part of the input cost increase to protect demand. Its chief financial officer Dinesh Taluja said inflation was at a two-year high, weighing on consumers' purchasing power. The company is identifying areas of high customer demand, working with fewer vendors in those markets and undertaking joint business planning to improve margins rather than raising prices, he said. Aditya Birla Lifestyle Brands managing director Ashish Dikshit said the company offset cost increases through a 6% price increase, with a larger portion of the additional costs not passed on to consumers. "We have worked very closely with our vendor partners to be able to minimise the increase from that," he said. Balancing Costs, Pricing Margins of several large consumer goods companies came under pressure in the July-September quarter, as they absorbed part of the cost increases to keep price hikes limited. Inflation remains the biggest concern for companies as they seek to sustain the demand recovery. "The patchy monsoon or drought in some states has not impacted demand. Inflation is the biggest concern right now and hence we have to balance pricing action with other cost-saving measures," said Emami managing director Harsha Vardhan Agarwal. Also read | Britannia plans further price hikes amid food inflation impacting margins Companies nevertheless implemented average price increases of 3-6% across branded apparel, daily essentials, personal care products such as soaps and shampoos, and packaged foods in the last two quarters. Some also reduced grammage in fixed-price packs of ₹5, ₹10 and ₹20. Companies like Britannia, HUL and Havells said more price increases were in the offering. Companies said demand had been on a firm recovery path over the past two quarters, with the recently concluded festive season also delivering double-digit year-on-year sales growth, led by a recovery in volumes. Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel ) Read More News on havells aditya birla lifestyle brands godrej consumer products emami hindustan unilever Consumer goods companies Indian fmcg fmcg input cost rise ITC Hindustan Unilever (Catch all the Business News , Breaking News and Latest News Updates on The Economic Times .) Subscribe to The Economic Times Prime and read the ET ePaper online. ... more less (You can now subscribe to our Economic Times WhatsApp channel ) Read More News on havells aditya birla lifestyle brands godrej consumer products emami hindustan unilever Consumer goods companies Indian fmcg fmcg input cost rise ITC Hindustan Unilever (Catch all the Business News , Breaking News and Latest News Updates on The Economic Times .) Subscribe to The Economic Times Prime and read the ET ePaper online. ... more less