Rising costs: FMCG companies like P&G, Jyothy Laboratories hike prices

FMCG companies like P&G and Jyothy Lab have kick-started new year by increasing prices to offset commodity cost pressures.

By Namrata Singh, TNN | Updated: Jan 06, 2012, 09.53 AM IST

MUMBAI: Fast-moving consumer goods ( FMCG) companies like Procter & Gamble India (P&G ) and Jyothy Laboratories have kick-started the new year by increasing prices to offset commodity cost pressures.

P&G and Jyothy hiked prices across the board while Hindustan Unilever (HUL) had effected selective price increases in toilet soaps in November-December last year. Godrej Consumer Products , Dabur and ITC have, however, not changed product prices, although industry analysts believe that it is only a matter of time that they follow suit.

P&G has taken product prices up by 5-10 %. Ariel OxyBlu , which was earlier priced at Rs 80 for 500 gm, now costs Rs 84, while Whisper Choice, which was earlier priced at Rs 20 for a pack of eight, is now dearer by Rs 2 for the same pack. P&G spokesperson declined to comment.

M P Ramachandran, CMD, Jyothy Laboratories, said the company has taken prices up by 5-7 % across products , passing down the increase in commodity costs to consumers. The maker of Ujala fabric whitener recently took over majority control of Henkel India, bringing in its fold the latter's detergent business. In the last two months, HUL has raised the price of Lifebuoy (20 gm) by Re 1 to Rs 19 and that of Lux (90 gm) by the same margin to Rs 19.

Raw material prices were on an uptrend for most part of last calendar year. Palm oil, which is the key raw material consumed by FMCG companies , has come off its peak but continues to rule high. Prices of packaging materials were also high in November-December , which impact all consumer product companies . Despite the rupee depreciation , prices of other crudeoil derivatives remained unchanged .

Industry analysts said P&G's price increase possibly indicated the return of pricing power, especially in detergents and feminine hygiene products. An under-penetrated category like feminine hygiene has grown through price reductions over the years. This is one category which has also got the support of the government which brought the excise duty down on sanitary napkins to 5% in the previous budget, while other FMCG prod ucts like soaps, detergents and personal products remained in the 10% excise duty bracket.

Price increases, said analysts , would also ensure that value shares are protected from getting eroded in a highly competitive environment.

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