With fast-moving consumer goods (FMCG) majors seeing no respite in input cost pressures, especially in crude and palm oil prices, Hindustan Unilever Ltd (HUL) hiked prices of its detergents and soaps again by anywhere between 3.5-14 percent, while reducing the grammage for some smaller packs.
So buying a packet of Wheel or Rin detergent, or even a Lux or Lifebuoy soap will be costlier by anywhere between Rs 1-2 to up to Rs 14. According to distributors, CNBC-TV18 spoke to, the steepest hike has been in the higher-end detergents like Surf Excel, where the easy wash variant’s price has now been hiked by around Rs 14. But the price hikes at HUL are not new, they’re possibly the 3-4th round of price hikes that the company has undertaken amid unprecedented inflation in raw materials.
HUL hiked soap prices of its skin cleansing products by 5-7 percent in the second half of FY21 and most recently, the company's management said during the Q1 results that HUL's took calibrated price increases in tea, skin cleansing & laundry products.
But the issue of input cost pressures is definitely not limited to just HUL. Palm oil and its derivatives go into nearly every consumer product we use, be it soaps and creams, or snacks and biscuits. From HUL and ITC to Britannia, Parle and Godrej Consumer Products, FMCG companies across the have been alluding to input cost pressures as a result of which they have been putting in place stringent cost control measures, while in some cases are passing on the inflation to consumers in the form of price hikes, or reduced grammage.
Most recently, Emami too, in its annual report for FY21 said the company is looking to maintain decent margins in FY22 and that the increase in raw material costs could be absorbed through higher operational efficiency and judicious price increases.
Elaborating further on its outlook for FY22, Emami said the major focus for the company will be ramping up distribution, especially in the modern trade segment, which comprises supermarkets, while reducing its focus on the wholesale channel. This is part of the company’s plans to increase direct reach and strengthen rural coverage in a bid to boost growth.
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In specific business segments, Emami aims to achieve higher double-digit growth in the healthcare and male grooming categories going forward, while for Boroplus, it expects to clock 8-10 percent organic growth a year and consolidate the brand’s position in the market.
Relief for Future Retail Ltd?
In the retail space, Future Retail saw some relief in the ongoing legal battle with Amazon with the Supreme Court on Thursday staying all proceedings pending before the Delhi High Court for attachment of assets of Future Coupons Private Ltd (FCPL) and FRL.
This is with regards to a March 2021 order by the Delhi High Court which directed for attachment of assets of FCPL and FRL, and in staying this order, SC said it was trying to balance interests of all stakeholders and also directed markets regulator Sebi and CCI to not pass final orders on approval on the FRL and Reliance Retail deal for four weeks.
However, this doesn’t change much in terms of the deal, or the legal battle FRL is engaged in with Amazon. The future of the deal still largely depends on the final orders pronounced by the Singapore International Arbitration Centre, which is still awaited.
Recovery in sight for the retail sector?
There could be some recovery in sight for the retail sector, which has been hit massively in the past 12-18 months due to lockdowns and COVID-19 related curbs. Addressing Aditya Birla Fashion Retail's (ABFRL) annual general meeting, chairman Kumar Mangalam Birla said apparel markets are expected to return towards normalcy towards the latter half of FY22. The company, on its part, is targeting revenues of Rs 25,000 crore after five years.
One clear area of focus for ABFRL is the ethnic wear category, where the company made several investments in the past two years as it looks to build a formidable play in this space. What works for apparel retailers with the ethnic wear category is that this is seen as the largest segment in the fashion and apparel sector with a significant profit pool. In fact, with the festive season around the corner, apparel retailers such as Lifestyle, Westside and Raymond are seeing an increased demand for ethnic wear, and the category is expected to lead growth for the industry this festive season.
Overall, retailers are expecting a healthy festive season as they see consumers wanting to come to stores and shop. The likes of Raymond and Lifestyle are eyeing double-digit growth over pre-COVID levels. Last month, Onam served as a prelude where the industry saw good demand despite restrictions in Kerala, and some industry players say that if cases continue to recede, and there are no fresh restrictions, this could be the best festive season the industry has seen in years. However, the threat of a third wave and fresh restrictions continues to loom over the sector.
Cinema chains continue to suffer
But even as the retail sector is betting on a recovery, there seems to be no respite in sight for movie theatres in Maharashtra with the state government still not allowing them to open. On Tuesday, the Multiplex Association of India (MAI), along with cinema chains such as INOX and PVR wrote to the Maharashtra government, urging it to reopen theatres in the state and claimed that the exhibition industry has suffered losses to the tune of Rs 4,800 crore since March 2020 due to restrictions, which also puts in jeopardy the lives of lakhs of employees associated with around1,000 cinema screens in Maharashtra.