Soaps draw price hikes for FMCG companies on rising input cost
- As per reports palm oil prices are expected to be volatile this year and could reach a nine-year high. Palm oil is a key ingredient in used in the manufacturing of soaps
NEW DELHI: India’s top fast moving consumer goods (FMCG) companies have raised prices across soap brands over the last few quarters as palm oil prices have remained northbound.
Companies such as Hindustan Unilever Ltd, Wipro Consumer Care and Lighting, Godrej Consumer Products have taken select price hikes on soaps.
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Wipro Consumer Care and Lighting that makes Santoor brand of soaps said it has taken an 8% hike in its soaps portfolio over the last three to four months.
“Palm oil prices have gone up dramatically, which is a key ingredient, as far as soaps are concerned and you would have seen, everybody's announced price hikes in soaps. Even in Chandrika, which we make from coconut oil we've taken a price hike there. The price hikes have been to the tune of 8% in the last three to four months," Vineet Agrawal, CEO, Wipro Consumer Care & Lighting and Executive Director, Wipro Enterprises, said on Thursday.
Agrawal said the rise in international freight costs have also led pushed top the cost of importing palm oil from Malaysia and Indonesia. "So not only the fact that during covid harvesting was a little difficult, especially in Malaysia, but freight costs have also gone up," he said. Palm oil prices, he said, have shown no signs of flattening.
Agrawal said the company is hoping palm oil prices will stabilise as more price hikes could impact demand.
“As far as soaps are concerned, we hope that we don't have to take anything more. We are hoping that prices of palm oil will stabilize from now onwards. We expect it to decline, actually," he said.
In a January report, Reuters said palm oil prices are expected to be volatile this year and could reach a nine-year high. Palm oil is a key ingredient in used in the manufacturing of soaps.
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Demand for soaps remained strong in 2020 as consumers took to heightened instances of handwashing and cleaning amid fears of contracting covid-19.
Several companies including Reckitt Benckiser and Wipro Consumer Care and Lighting said their soap brands performed well during the peak pandemic months.
India’s top packaged consumer goods company, Hindustan Unilever Ltd (HUL) has raised prices by 6-14% in select soap packs in the last six months, analysts at Jeffries said in a report on the company dated 3 March.
“Inflation is particularly high in case of palm oil (soaps), tea and crude oil derivatives. This implies that the next few quarters would be tough for HUL on the input cost front. In the past six months, prices of soaps are up nearly 6-14%, with hikes in past two weeks as well; packaged tea has seen 17-23% increase since Sep-20," Jefferies said in its report.
For instance, price of Lifebuoy Total (125 grams) was up at Rs25 in February from Rs22 in September last year. The Dove pack of three was up from Rs150 to Rs160 in the same period. Some brands under HUL have managed to stay away from price hikes in soaps.
"We expect HUL to be calibrated in pricing, to ensure volume growth/ market share is not compromised and pricing does not become out-of-sync with competition," Jefferies said in its note.
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