Due to increased raw material prices and supply constraints, Indian FMCG firms are resorting to desperate measures to keep the cost in check. The players are experimenting with different stategies, like hiking product prices, reducing the weight of the product pack and substituting expensive raw materials with cheaper ones. “There isn’t enough cushion to deal with commodity costs. We have to pass on the burden to consumers in some ways,” says Chitranjan Dar, Divisional Chief Executive, ITC Foods. The strategies that ITC is adopting, include raw material substitution like edible oil instead of butter, grammage reduction and price hikes of high-margin biscuit packs. Similarly, Hindustan Unilever (HUL), recently increased the price of Lifebuoy and Rin by 4-6 percent. HUL also stopping a promotional offer for Lux. Godrej Dabur India is also contemplating a 2-3 percent price hike across its Vatika shampoo range. Jude Magima, Executive Director (Supply Management), Dabur India, says, “Despite a good kharif crop, we don’t expect inflation to come down. We have insulated consumers from price increases for a long time, but commodity inflation has been in double digits for more than 12 months now, and it’s getting impossible to manage.”
Posted on: 22-9-2010
Source: www.economictimes.com
