HUL: Will further cut FMCG product prices

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Hindustan Unilever Limited (HUL), CEO and MD, Rohit Jawa, has said that he expects FMCG companies to further reduce product prices if commodity prices remain flat in coming days. This is because according to him, commodity prices have begin to cool down. FMCG companies have fully priced in commodity price increase impact in product prices. And now there is no scope of any fresh price hike in the short term if commodity prices remain flat in time to come. Jawa expects flattish commodity price growth in Q3 FY24 vis-à-vis year ago period.

Which products of HUL recently became cheaper?

Already, in Q2 FY24, HUL, has cut prices of products from various segments like laundry, fabric wash, household care and skin cleansing.

In the July-Sep quarter of financial year 2023-24, HUL cut prices of fabric wash products which it sells under brands Comfort and Surf Excel. The FMCG juggernaut also reduced tea prices which it sells under Taza brand.

How much price hike FMCG companies took in past?

In the last few months, India’s two FMCG majors, HUL and Dabur, cut FMCG product prices in India. But even then, according to the former, FMCG product prices are currently 25% higher than what is was three years ago. In the last three years, due to substantial rise in raw material prices, FMCG companies have been hiking product prices. These companies took several round of price hikes in as many days.

But since Q4 FY23, commodity prices began to cool down. The rate of increase in product prices taken by FMCG companies started to taper down. According to HUL, CFO, Ritesh Tiwari, the rate at which FMCG companies increased product prices has fallen from 14 per cent in Q4 FY24 to 3 per cent in Q2 FY24 on year-on-year basis. And if commodity prices remain where they are, HUL will further cut prices in the ongoing December quarter.