Leading FMCG firms hike soap prices by 7-8% as palm oil rates go up

Leading FMCG makers such as HUL and Wipro have hiked soap prices by around 7 tp 8% to offset the impact of a surge in palm oil prices, a key raw material for the product.

Companies such as HUL and Tata Consumer have also increased prices of tea recently due to a decline in production caused by erratic weather conditions.

During the earning calls for the September quarter, several listed players hinted at a price increase in soaps in the current quarter to safeguard their margins, as they were facing a rise the prices of commodity inputs such as palm oil, coffee and cocoa.

"The prices of palm oil derivatives, a key raw material in soap manufacturing, have risen significantly -- 30% plus increase since the start of this year," Wipro Consumer Care Chief Executive Neeraj Khatri told PTI.

"In response, all major players in the industry have implemented price hikes of approximately 7–8% to partially offset the increase. Our pricing adjustments are aligned with these market trends," he said.

Wipro Consumer Care, part of Azim Premji-led Wipro Enterprises, owns brands like Santoor and Chandrika in the soap category.

Market leader HUL has also increased prices of tea and skin cleansing products, which comprise its soap business under brands such as Dove, Lux, Lifebuoy, Liril, Pears, Rexona etc.

“The overall commodity atmosphere is benign, except for tea and crude palm oil which are witnessing inflation. Consequently, we have taken selective price increases in tea and skin cleansing. While making any price changes, we always ensure that we maintain a competitive price-value equation,” said a company spokesperson.

Palm oil prices have gone up by around 35-40% since mid-September because of the increase in import duty as well as a rise in global prices.

Palm oil is mainly imported from Indonesia and Malaysia. Currently, palm oil is priced at nearly ₹1,370 per 10 kg.

Prices of Lux soap (pack of 5 soaps) have gone up to ₹155 from ₹145, and of Lifebuoy (pack of 5 soaps) to ₹165 from ₹155. Similarly, prices of Pears (pack of 4 soaps) have gone up to ₹162 from the previous ₹149.

Besides, prices of other personal care products from HUL have also gone up, according to a distributor.

According to Nuvama Institutional Equities Executive Director (Research) Abneesh Roy, after HUL, now most other players would also take a price hike.

"In FMCG generally everyone follows market leader, so gradually all players will take a price hike," he said.

Last week, Tata Consumer Products Ltd (TCPL) Managing Director & CEO Sunil D’Souza in an interview with PTI said that the company has increased prices by about 25-30% in segments such as tea in phases and has not passed on the burden to consumers in one go.

It had gone for a gradual price hike as it wanted to continue the momentum on the volume side.

"We don't want a demand shock coming in. So we have to be comparative. We have to make sure the category continues to be chugging along. So we have translated bit by bit, and we will be taking gradual price increases," he said.

In the quarterly earnings statement, Godrej Consumer Products Ltd (GCPL) flagged a rising trend in prices of palm oil and its derivatives which have increased in high double-digits since the start of the year.

Hinting towards a judicious hike, the maker of Cinthol and Godrej No. 1 soaps had said the GCPL management has decided not to pass on the entire cost increase to consumers and hence pricing growth will lag the increase in input prices.