FMCG companies may not pass the benefits of softening commodity prices to consumers immediately

5 Dec 2022 , 07:59 AM

Consumers will have to wait even longer for price reductions in other items, despite huge price drops in main commodities.

Top FMCG businesses claim that although prices of some commodities, including palm oil, have declined, the decrease has not been “secular and broad-based,” and they are closely monitoring it before making any decisions about lowering the price, according to PTI.

By lowering the MRP (maximum retail price) of their products, FMCG companies will be able to pass on the benefits to customers while simultaneously increasing their profit margins.

Along with palm oil, the cost of edible oil has decreased in recent months. Recently, numerous FMCG manufacturers reduced prices or upped the weight of various large packs of packaged food, benefiting customers.

According to NielsenIQ’s most recent research on the FMCG sector, rural areas had a bigger fall in consumption during the September quarter than they did during the three months that concluded in June.

Additionally, despite companies raising prices in response to broader inflationary pressures, consumers continued to favour buying smaller packages.

Comparing the September quarter to the three months before, the FMCG industry saw a 0.9% total volume loss.

The report did note, however, that FMCG producers continued to introduce new products because, in the third quarter of 2022, new releases contributed more to key FMCG categories than they had in the prior quarter.

The majority of these new product offerings involve adjustments to pack sizes, which may be the result of manufacturers using lighter weights due to the high cost of raw materials.

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