FMCG companies levy consumers with cost burden

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New Delhi, Mar 19: Finding it difficult to cope with rising input costs, most FMCG companies are passing on the cost burden to the consumers by either raising prices or resorting to weight reduction of the packs.

Market leader, Hindustan Unilever Ltd, has resorted to both -- raising prices and reducing the net weight of packs for its home and personal care category to beat the rising input cost.

The company increased the price of its soap brand ‘Lux’ in the last three months from Rs 15 (100 grams ) to Rs 16. Further, in the last 20 days, the company hiked the price of its bathing soap brand ‘Lifebuoy’ (115 grams) from Rs 13 to Rs 14.

Besides, HUL also reduced the weight of  its detergent powder and detergent soap cake ‘Wheel’ from 1 kilogram to 850 gram and 250 gram to 190 gram.   

“The FMCG business continues to face cost pressures and we at HUL are offsetting this both through aggressive cost effectiveness programmes and  also through selective and judicious price increase,” a company spokesperson said.

Dabur India, another FMCG major, is planning price increase across its various product categories very soon. The company, however, refused to give exact details citing that it was early to comment on it . Dabur said that since the demand was high, any price hike would not upset the volume growth.

Even small FMCG players are resorting to weight reduction of packs. “Since it is getting difficult to hike prices we have decided to reduce the weight of biscuits by 10%,” Surya Foods and Agro Ltd (makers of ‘PriyaGold’) chairman B P Agarwal said.

Goramal Hariram Ltd has reduced the weight of its detergent soap cake ‘555’ from 200 grams to 185 grams in the past few months.

Biscuit companies attribute the reduction in the content to spiraling prices of key raw materials along with other associated costs. While  the edible oil prices have increased by 30% in the last three months over last year, wheat flour too have witnessed the same price increase since April 2007 over last year.

“We can’t  tamper with the biscuits prices as it is  a price sensitive high volume-low margin product, consequently, we have reduced the content  of some of our biscuit brands from 75 grams to 65 grams,” Anmol  Bakers Pvt Ltd  managing director Gobind Ram Choudhary said.