FMCG in India
Input Costs, Pricing and Shrinkflation
FMCG makers face rising palm oil, wheat and packaging costs and respond with price increases, smaller packs or cost cutting.
Costs push and pull prices.
Raw materials
Palm oil, crude derivatives, wheat, sugar and packaging films are major inputs.
Pricing power
Strong brands can pass on cost increases more easily.
Shrinkflation
Firms may reduce pack weight while keeping the price to hit a price point.
Volume versus value
Price rises lift revenue but can reduce volumes.
A lighter pack
A 100-gram biscuit pack becomes 90 grams at the same price.
Judging inflation only by shelf price
Pack sizes also change.
Key takeaways
- Input costs move prices.
- Strong brands pass on costs.
- Shrinkflation reduces pack size.
- Price rises can cut volumes.
No recording for this one yet - EconReader can read it aloud for you.