2024-04-18 05:04:38
New Delhi : The prices of most of the raw materials used in the FMCG industry are either stable or have decreased. Despite this, you are not getting any relief in the prices of consumer goods. The reason for this has been explained by our associate newspaper Economic Times. One of its reports says that companies manufacturing such goods have not reduced retail prices to maintain their profit margins. It is possible that these companies may also increase prices in the near future.
reduction in input costs
Most of the consumer goods companies have reduced the prices of products related to home, personal and food categories in the last few quarters. Despite this, prices of consumer goods remain higher than two years ago. Consumer goods companies say that prices have been increased in the last two years to maintain the rising costs of raw materials and supply chain. Actually, cost inflation started with the Corona epidemic and has increased further after Russia’s invasion of Ukraine. According to the report of Economic Times, the prices of crude oil, palm oil and coffee have increased compared to a year ago. Whereas the prices of cocoa, coffee and sugar have increased rapidly.
Product prices normal
Krishnarao Buddha, Senior Category Head (Marketing), Parle Products, says that we have to accept the fact that the prices of existing products are now normal. Although some raw material prices are down, we are still seeing pressure on input costs, particularly in the food segment. In such a situation, the prices of the products will either remain stable or may increase in some cases, but there is no possibility of further price cut.
Prices may increase further in the near future
According to Boston Consulting Group, prices of household care products, food and beverages have more than doubled in the last 10 years, but the increase was sharper after Covid. Analysts say that the prices of raw materials have fallen in the last one year, hence companies have maintained profits through margin expansion. BNP Paribas had said in a recently released report that companies would be reluctant to increase prices in the near future.
Highest increase in oral care
According to the report, some categories of beauty and personal care have seen minor price cuts in the last two months, but oral care has seen the biggest price increase. Detergent and dish wash prices have dropped 15% in the past six months, but are still up 4-30% compared to two years ago. Among food and beverage products, except edible oils, prices remained largely unchanged in the last six months. For example, the prices of soap have not changed in the last six months. But this is 15-20% more than two years ago. The price increase in the oral care category has been the highest in two years, due to which the EBITDA margin of Colgate Company has touched a record high of 33.6% in the December quarter.
The prices of some goods have decreased
After a 15% increase in detergent prices in the last two years, the category has seen price cuts in the last quarter. Raw material prices have started rising, but increasing prices may be difficult. Growth in fast-moving consumer goods (FMCG) sales in rural areas has overtaken the urban market for the first time in almost three years. This is being said to be an early sign of improvement in demand.