FMCG input costs are moving in opposite directions—what it means for margins

Subscribe to enjoy similar stories. NEW DELHI: Prices of key inputs for the fast-moving consumer goods (FMCG) sector are moving in opposite directions, creating a mixed margin outlook for companies such as Hindustan Unilever, Marico and Parle Products. Several agricultural inputs and packaging materials, for instance, are getting cheaper, while other commodities such as sugar, coffee, and fishmeal are becoming more expensive, potentially producing an uneven impact on FMCG companies' profit margins.

Industry analysts say that the coming quarters may bring margin relief in some pockets for large food, beverage and home-and-personal-care companies, even as price volatility persists in other key commodities. “Considering current raw material inflation and GST 2.0 rollout, majority of the companies will witness volume-led growth in the second half of FY26, especially in food and beverages & beauty and personal care segments," said Ronak Shah of Equirus Securities. Edible oils remain among the more volatile inputs.

Price of copra—crucial for manufacturers of hair oils, soaps and coconut-based foods—declined 6% in the ongoing quarter (as of November-end), but remains sharply elevated on a yearly basis, up 60% due to production disruptions and festive demand, analysts at Equirus Securities said in a note released Thursday. The brokerage has used 1 December spot prices, rather than 31 December quarter-end data, for its sequential and annual comparisons. Companies say some margin respite is likely in the near term.