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Price hikes inevitable in packed consumer goods: HUL’s Paranjpe

NEW DELHI : Hindustan Unilever Ltd’s chairman Nitin Paranjpe on Thursday flagged the unprecedented levels of inflation, saying while the company will continue to drive its saving agenda, price hikes will be inevitable.

“These are not easy times,” Paranjape said at the company’s 89th Annual General Meeting held virtually on Thursday. “At a macroeconomic level, we are going through probably the most difficult economic situation; inflation is high,” he said.

Paranjpe added that geopolitical tensions, along with the world emerging from the pandemic, has caused disruptions in supply chains. “Therefore, in India, we are probably getting to a situation where we’ve now seen 14 consecutive months of double-digit wholesale price inflation,” he said.

This, he said, has had an effect on the fast-moving consumer goods markets. “The FMCG markets which have generally been strong for a long period of time have started seeing the effect of this. And more recently, we’ve seen market growth rates moderate and volume growth rates have actually become negative in the short term,” he added. Companies have also been countering unusually high commodity inflation across raw materials. High input inflation has prompted companies to take direct price hikes across their portfolio as well as cut grammages of products they sell.

HUL, that sells popular brand such as Sunsilk shampoo and Kissan sauces, said it will continue to drive savings. Paranjpe, however, did not rule out price hikes.

“As a company, we are determined to try and see how we can mitigate the impact of some of this to our consumers. And therefore, our first action in all of this is to drive savings hard; your company does a great job at this. We drive continuous improvement and drive efficiencies. We get about 7% savings every single year, and we will continue to drive that hard,” he said.

Ingredients like palm oil, take crude, plastics, and costs of logistics, have seen inflation which is in excess of 50%, he said. The level of inflation is such that despite cost-saving efforts, it is inevitable that the firm will have to hike prices and therefore, they are going up, he said. “When that’s required, we do it in as calibrated a fashion as possible, in as thoughtful manner that is possible. And that’s what we will continue to do. There are price point packs that we have to be watchful, and we will follow the appropriate strategies—sometimes reducing volumes of fill levels, sometimes taking up prices…” Paranjpe said.

HUL is the country’s top pure-play fast moving consumer goods company with a turnover of 50,336 crore for the year ended 31 March 2022. The company, with its wide reach across 9 million outlets, is a barometer for household consumption of daily goods.

Paranjpe’s comments come as the fast-moving consumer goods sector is seeing a steep slowdown in volume growth; this, along with decadal high inflation is posing a challenge to both companies and households.

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