Consumers buying daily essentials from Hindustan Unilever Ltd (HUL) might start noticing changes on store shelves — smaller low-priced sachets and costlier larger packs — as the FMCG company adjusts pricing to deal with rising input costs.
Speaking after the company’s March 2026 quarter results on April 30, HUL CFO Niranjan Gupta said the FMCG major has begun reducing grammage in low-priced sachets while increasing prices of bigger packs. The move is aimed at cushioning the impact of sharp inflation in crude-linked raw materials.
The company has already implemented price hikes of 2-5 per cent across categories, following an 8-10 per cent surge in costs, largely attributed to disruptions stemming from the ongoing tensions in West Asia. For consumers, this translates into either paying slightly more or getting a little less for the same price — a common strategy in the FMCG sector known as “shrinkflation".
At the ground level, the impact will vary by category. Home care products such as detergents have seen the sharpest price adjustments due to their high dependence on crude derivatives. Personal care items like soaps and shampoos have followed, while foods — particularly tea — have remained relatively insulated, even witnessing some deflation.
CEO and MD Priya Nair signalled that the company will prioritise volumes despite pricing pressures. “We are confident of navigating the current situation in the Middle East, and hence we are reiterating our guidance for fiscal year 2027 to be better than fiscal year 2026. As far as margins are concerned, we expect to be around the guided range while driving competitive volume-led growth, which will continue to remain our number 1 priority," she said.
The strategy reflects a careful balancing act: protect margins without hurting demand. In essential categories like detergents, soaps, and tea, demand tends to be relatively stable even when prices rise, though some moderation in volumes is expected. “We are talking about detergents, soaps, shampoos, tea, etc., these are basic categories. There will always be some (demand), there could be some elasticity of price to volume, where it tends to be relatively lower than other categories. So, we expect some recalibration between volume and price," Nair added.
Beyond pricing, the company is tightening costs internally. It is ramping up savings programmes, optimising overheads, and even deploying AI-led tools to make advertising spends more efficient. “We are looking at efficiencies in our media spends because we have started deploying AI-based models as far as media is concerned," Gupta said.
Financially, the pressure from rising costs is already visible. HUL’s expenses rose 8 percent in the March quarter, while EBITDA margins slipped despite a strong 21 percent jump in net profit — aided partly by a one-time gain from a divestment.
Going ahead, the company expects margins to stay within the 22.5-23.5 percent range, indicating that further price hikes or cost adjustments cannot be ruled out if inflation persists.
For consumers, the takeaway is straightforward: everyday products may not always look more expensive at first glance, but value could be changing quietly — either through smaller pack sizes or gradual price increases across categories.
