Hindustan Unilever is India’s biggest and most consumer goods company. The firm is very fast-moving. The firm has now decided to do another round of price hiking across all it’s product categories. This action is being undertaken in order to deal with the significant impact of the raw material prices rising.
Management had hinted about price hikes
This price hike is perfectly aligned with the management’s statements after December’s quarter earnings. It was indicated in the statements that the company is going to consider hiking prices as the company also expected that the input price inflation would be higher than what it was in the December quarter.
Edelweiss Securities – a brokerage firm has stated that the company made a three to ten percent hike in the prices of the various products like soaps, detergents, dishwash, etc.
Prices were raised in January as well
In January as well, the company raised the prices of products like Wheel, Surf Excel, Rin, and Lifebuoy by three to twenty percent as shown by a report in the Business Standard.
How did the price hike help the company?
The firm had made price hikes in the December and September quarters because of rising commodity prices of ‘soft’ products like tea, crude palm oil, etc. The hiked prices did manage to help the company to become one of the very few FMCG (Fast-moving consumer goods) companies to have a reported year-on-year expansion in operating margins in the December quarter.
The company raised concerns over the demand environment and especially in the rural market. Edelweiss Securities (the brokerage firm) is of the belief that the price hikes are the function of Hindustan Unilever’s dominance in terms of market shares.
The firm has seen the biggest growth in its market share over the past decade. The December quarter had ended with market share across all of the company’s product portfolios being higher than the levels in 2019 for the company.
Other companies might follow suit
The price hikes which were made by Hindustan Unilever doesn’t just concern the company alone. It raises concerns about the impact this action will have over the retail inflation in the entire country as many other companies may choose to walk down the same path taken by Hindustan Unilever.
This week, India has reported a seven-month high retail inflation rate of 6.01% for the month of January because of an unfavourable base.
[“source=trak”]
