Consumer Goods Firms See Sales Momentum Improving Amid Rising Volumes and Inflation
Hindustan Unilever (HUL), Dabur, Godrej Consumer Products, and Dixon Technologies are among the consumer goods makers that have been relying on volume growth this fiscal. However, they now anticipate that inflation caused by the West Asia conflict will prompt price increases. This price hike will drive both volume and price-led value growth in the near future.
As a result, they anticipate stronger sales growth than what was previously anticipated. It was budgeted for raw material inflation to be relatively flat this year, and most fast-moving consumer goods (FMCG) companies had originally expected demand to recover mostly due to volumes. Consumers have started to feel the effects of conflict-related inflation in the last 30–45 days.
Dabur’s Market Prediction
Mohit Malhotra, Dabur's worldwide chief executive, stated that the company anticipates a portion of the value growth through price increases. This hike will accompany the volume growth that the brand has outlined due to the fact that inflation is rising in the Indian business. Both volume and price will play a role in maintaining the growth trend and sequential recovery.
According to Malhotra, Dabur anticipated no change in raw material prices while making plans for the current fiscal year, despite the fact that the company faced inflation of about 6% in the previous year. He elaborated by saying that inflation has accelerated due to the brand's perception of a domino effect from the ongoing war in the Middle East, which is affecting all countries and regions. With the exception of the beverage and healthcare industries, Dabur now anticipates that inflation of about 10% will affect several of our portfolios.
In response to inflationary pressures, Dabur has implemented price hikes of about 4%, while HUL, the biggest fast-moving consumer goods (FMCG) company in the country, has increased prices across the board by 2-5% for fabric wash and home care products. Soaps, detergents, and pesticides for the home have all seen price increases of 5-7% from Godrej Consumer Products. Aside from Marico, Emami has also raised costs.
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Some Interesting facts of the story |
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1.FMCG growth in India traditionally comes
from a mix of volume growth and pricing power. 2.Electronics products such as smartphones,
laptops, and televisions have witnessed price increases of up to 30% over the
past five months. 3.Compared with electronics, FMCG price
hikes have remained relatively moderate. |
Price Hike will Not Hamper the Demand: FMCG Firms
Sales growth in the Indian FMCG industry usually comes from both increased volume and increases in price-led value. But businesses are sure that customers will still buy despite the recent price hikes. Accordingly, the argument goes, customers have more wiggle room to deal with price increases thanks to the GST rate decreases executed last September.
Also, that time frame could see prices returning to previous levels. In contrast to FMCG, where price increases have been relatively mild, electronics like smartphones, laptops, and televisions have seen hikes of up to 30% during the previous five months. The cost of essential memory chips has increased two- to threefold, and raw material inflation caused by the conflict and the depreciation of the rupee has also contributed to this. Demand has been affected by the precipitous increase in prices.
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Quick Shots |
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•Major FMCG companies expect stronger sales
growth as inflation drives both volume and price-led expansion. •Leading firms including Hindustan
Unilever, Dabur, Godrej Consumer Products, and Dixon Technologies are
revising growth expectations upward. •Rising commodity and input costs linked to
the West Asia conflict are prompting selective price hikes. •FMCG companies now expect growth to come
from a combination of higher volumes and increased product prices. |
