New Delhi: The common man is expected to be hit as the prices of essential products like tea, biscuits, oil, soap and shampoo may increase. The FMCG companies reported weak earnings in the Q2 of 2024-25 due to higher input costs and food inflation, which also slowed down the pace of urban consumption. The increasing rates of commodity inputs such as palm oil, coffee and cocoa were also accentuated.
To overcome the decline in urban consumption in the second quarter of the current financial year and overcome the costs, FMCG companies have hinted at a price hike.
Major FMCGs, including Hindustan Unilever Limited to Godrej Consumer Products Limited, Marico, ITC and Tata Consumer Products Limited are concerned over the decline in urban consumption, which according to industry experts forms 65-68 per cent of FMCG total sales.
“We think this is a short-term hit and we will recover the margins through judicious price increase and stabilising of costs,” said GCPL Managing Director and CEO Sudhir Sitapati in a Q2 earning statement. GCPL company manufactures of Cinthol, Godrej No 1, HIT.
Why FMCG majors are concerned
Meanwhile, the demand for FMCG products in rural markets continue to grow ahead of urban. Besides. FMCG major Dabur India stated that the environment was challenging in second quarter of 2024-25 due to high food inflation and a squeeze in urban demand. In its Q2 Results 2024-25, Dabur reported a slump of 17.65 per cent in its consolidated net profit to Rs 417.52 crore and revenue from operations declined 5.46 per cent to Rs 3,028.59 crore.
Nestle India Chairman & Managing Director Suresh Narayanan expressed concerns over decline in the urban sales and said “middle segment” is under pressure as high food inflation continues to affect household budgets.
“It is extremely clear that the market is facing muted demand. The growth in F&B sector, which used to be in double digits a couple of quarters ago, is now down to 1.5-2 per cent,” he said.
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