HUL To Emami: FMCG Giants Set To Take Fresh 2-4% Price Hike To Protect Fragile Margins
Significant volatility has been observed in crude palm oil, and the rupee over the last couple of weeks, said HUL CEO Rohit Jawa.

Daily groceries to personal grooming products are set to get dearer as packaged consumer goods makers plan to take another 2-4% increase in product prices. This is to offset the impact of inflationary pressures on margins, which could further delay the elusive recovery of consumer spending.
Companies such as Hindustan Unilever Ltd., Emami Ltd., Marico Ltd., Godrej Consumer Products Ltd., and Adani Wilmar Ltd. said that prices of key commodities, such as tea, copra, palm oil and palm fatty acids — used in making soaps — have jumped over last year, negating the deflation in crude oil prices. Higher costs of commodities have been putting pressure on margins amid persistent slowdown in demand. Prices of cocoa and coffee have also surged, which could prompt the likes of Tata Consumer Products Ltd. and Nestle India Ltd. to take more rounds of price hikes in the coming quarters.
The latest round of price hikes comes after these companies have already taken 4-20% increase, depending on category, in the first half of this financial year.
"Crude oil prices continue to deflate during the quarter...however, significant volatility has been observed in crude palm oil, and the rupee over the last couple of weeks," HUL Chief Executive Officer and Managing Director, Rohit Jawa, said. If commodity prices remain where they are, the largest consumer goods maker plans to take "low single-digit" price hikes in order to maintain operating margin at the lower end of 23-24% range.
Peer Godrej Consumer Products echoed similar sentiments. "High palm oil prices have necessitated sharp price increases including grammage cuts and trade scheme reductions, and this has led to trade destocking," said MD and CEO Sudhir Sitapati. "Prices of PFAD, which is a derivative of palm oil, is still high and I think there is requirement for one or two more rounds of pricing in soaps in particular, to get back to our normative margins."
The owner of GoodKnight and Cinthol brands anticipates an operating margin of 22-26% for fiscal 2025. If raw material costs remain stable, the lower end of this Ebitda margin range is expected next fiscal, said Sitapati.
Emami also expects further 1–1.5% price increase in the coming quarters, on top of the 2% hike the company had taken in the December quarter.
Earlier in November, Britannia Industries Ltd. said that it would implement a price hike of 4-5% in the current quarter and is likely to take further pricing actions over the next nine months to maintain its margins.
Marico Ltd., too, has already taken a 10% price hike in coconut oil and about 20% in edible oil so far this fiscal. Higher-than-expected price of copra, a key raw material, as well as vegetable oil prices weighed on margins in the December quarter. While volumes for its brand Parachute moderated sequentially, that of Saffola remained "firm", it said.
Marico, like other companies, is expected to take more price hikes, as those taken till December weren't enough to cushion its profit margins.
Analysts expect margins to remain under pressure in the January-March quarter, with some relief expected from next fiscal, aided by a potential recovery in urban demand and the full realisation of price hikes.
"We expect some of the FMCG companies to take more rounds of price hikes in the first six months of this year," said Abneesh Roy, executive director, Nuvama Institutional Equities. Nestle, HUL and Tata Consumer may continue to take gradual price hikes on the back of coffee and cocoa surge, he said. Also, adverse impact of volume grammage reduction in smaller Rs 5 and Rs 10 packs is also likely, as companies pass on higher costs to consumers.
Roy expects urban demand to remain constrained due to inflation and weak wage growth till June. "We expect urban recovery to start in the second half of this year."