By Anagh KeremuttWalk into a neighbourhood kirana store and the small Rs 10 biscuit pack is the same but different. The price may not have changed, but the quantity inside has. As costs rise, FMCG companies are relying more on smaller sizes, lower discounts and selective price hikes to protect their margins.
Automakers are passing higher costs on to buyers, and telecom operators are preparing for another tariff hike.
Companies are pushing through higher prices even as across sectors, demand remains uneven. While sometimes it reflects confidence that consumers can absorb the increases, more often, companies have limited options in the face of rising costs and pressure on margins.
Analysts at The Knowledge Company estimate packaging costs have risen by 15-20% as crude oil prices rose. "Household staples from soaps to packaged foods face margin pressures as petrochemical input costs rise," the firm said.
In this edition of Chart of the Week, we look at how companies are responding to rising costs and what their pricing decisions reveal about demand across the country.
FMCG companies turn to price hikes amid rising costs
For the past two years, FMCG companies were focused on reviving demand. Urban consumption remained under pressure as wage growth slowed and households exhausted much of the savings built up during the pandemic. Executives spoke about improving consumption, but backed off from raising prices as they prioritised volume growth over passing on higher costs.
Most companies preferred to absorb the hit on their margins or rely on grammage cuts rather than risk hurting volumes. With input-cost pressures returning and consumption showing signs of recovery, companies are now finding it harder to keep absorbing higher costs, and are turning to price hikes.
Dabur has already implemented price increases of around 4% across parts of its portfolio. The company expects higher prices and volume growth to support double-digit growth this year, despite inflation picking up in the India business.
Hindustan Unilever has raised prices across several product categories by 2-5%. The company said the cost of materials used in its products has risen by up to 10%, and further price hikes may follow if inflation remains higher. Dove and Pears soaps have seen price hikes of about 5%, while Rin and Wheel detergents have become 5-11% more expensive.
Despite concerns around a weaker monsoon, HUL remains optimistic about rural demand. Chief Financial Officer Niranjan Gupta said, “We do not expect any impact on rural demand in the second half of FY27,” citing higher reservoir levels, strong grain stocks and government support prices for crops.
Prices of Marico's cooking oil, Saffola, have jumped by up to 11%, while the company also raised prices in its Value Added Hair Oils portfolio by around 7%.
Godrej Consumer has raised its soap prices by around 5%, detergent prices by about 7% and household insecticide prices by roughly 5%.
The company believes these measures will help offset most of the recent rise in input costs. "This is not an alarming level of inflation. Between pricing, some cost actions, and the portfolio mix, we should be able to recover most of it," said Managing Director Sudhir Sitapati.
Colgate-Palmolive has also raised toothpaste prices by up to 9%, extending the latest round of FMCG price hikes beyond soaps, detergents and edible oils.
Pidilite raised prices in both April and May, with Fevicol becoming 12-15% more expensive. Managing Director Sudhanshu Vats said the company's raw material costs have jumped by 40-50% and that it will continue passing some of those costs on to customers.
Research company Worldpanel by Numerator estimates volume growth in FMCG could slow to 3-4% amid an uncertain macroeconomic environment. Analysts at the firm said, “FMCG volume growth could soften if higher energy costs coincide with food inflation from weather stress and higher input costs.”
The Rs 10 pack is still sacred
Companies may be willing to raise prices on larger packs and premium products, but products priced at Rs 5, Rs 10 and Rs 20 remain untouchable. These packs are often the first choice for value-conscious consumers, especially when household budgets are under pressure.
"We are reducing grammage because we can't breach those price points," said Mohit Malhotra, Global CEO of Dabur India.
Britannia also says it is more comfortable raising prices on packs above Rs 10, while smaller packs may see grammage reductions instead. The company is weighing a mix of price hikes and smaller pack sizes as fuel and packaging costs remain higher.
Smaller packs account for 40-60% of sales across categories ranging from biscuits and soaps to shampoos and staples. "Sales of packs under Rs 20 have been growing 5 percentage points faster than larger packs as consumers find it harder to manage household expenses," said Parle Products Vice President Mayank Shah.
AWL Agri Business is expanding its range of edible oil packs starting from 200 ml. The company says consumers are increasingly opting for smaller purchases that allow them to spread expenses across the month rather than spend Rs 180-200 on a one-litre pack in a single purchase.
Some sectors have more pricing power than others
The latest round of price increases shows that some industries can pass on higher costs more easily than others. Automakers have announced another round of price hikes despite a challenging demand environment, while telecom operators are preparing for fresh tariff increases as revenue growth begins to slow.
Hyundai raised prices by up to Rs 12,800 from June 1, depending on the model and variant, citing higher input and operating costs.
Maruti Suzuki followed with hikes of up to Rs 30,000 across select models from June. "We were left with no choice," said Partho Banerjee, Senior Executive Officer for Marketing and Sales, adding that higher prices are never good for customers, especially first-time buyers.
Mahindra & Mahindra raised prices by up to 2.5% from April 6, while Tata Motors plans to raise passenger vehicle prices by up to 1.5% from July.
Meanwhile, attention in telecom is already shifting to the next tariff hike.
Industry revenue growth slowed to 10% in FY26 from 13% a year earlier as the impact of the July 2024 tariff hikes faded. Wireless revenue growth slowed to 7% in the March quarter, bringing another round of tariff hikes back into focus.
Analysts expect telecom operators to raise tariffs by around 15% from Q2FY27. For consumers, that could translate into roughly a Rs 50 increase for a standard 28-day mobile plan. Motilal Oswal estimates such a move could lift industry revenue by around 11% to nearly Rs 3 lakh crore in FY27.
Pricing power is returning across India Inc, but not every company is using it the same way. Some are raising prices directly, while others are relying on smaller packs and grammage cuts.