Israel, Iran war: FMCG firms hike prices, shrink pack sizes as costs rise

Your next soft drink may cost more, and everyday items like biscuits or chips could offer less in quantity, as consumer goods companies recalibrate pricing strategies to cope with rising input costs.


A spike in crude oil prices triggered by the ongoing West Asia conflict—now in its fourth week—has significantly increased packaging and logistics expenses. Crude derivatives are also key inputs for several household products, further intensifying cost pressures.


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To offset this, companies are adopting a mix of selective price hikes and grammage reductions. Some are also expanding smaller pack offerings to maintain affordability for consumers.


“Some price corrections were already overdue over the past two years. Given the current environment, we have advanced this decision and will be implementing selective price increases effective April 1. In certain larger SKUs, the increase may be slightly higher as there was some flexibility available through trade margin adjustments,” said Nikhil Doda, co-founder and chief operating officer at Lahori Zeera.


Parle Products is also evaluating calibrated pricing actions and pack-size adjustments, according to chief marketing officer Mayank Shah. He flagged fuel availability as a more immediate concern, urging policymakers to prioritise supply for essential sectors such as food to avoid disruptions.


Dabur, too, indicated it would take price increases where required, although it did not provide specifics.

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For FMCG companies, which had been banking on GST cuts to revive consumption after a prolonged slowdown, the current situation could delay demand recovery just as signs of improvement had begun to emerge in recent quarterly earnings.


Meanwhile, AWL Agri Business is pushing a wider range of pack sizes, including smaller 200 ml options. Managing director and CEO Shrikant Kanhere said such formats could help consumers better manage household budgets if inflationary pressures persist.


Analysts at The Knowledge Company estimate that packaging costs have risen 15–20% due to higher crude prices. They noted that companies are balancing price hikes and pack-size reductions to protect margins without significantly denting demand, as categories ranging from soaps to packaged foods face mounting pressure.


(With inputs from TOI)