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Soapmakers to hike prices after key raw material gets costlier

Consumer goods companies will hike prices of soaps in the ongoing quarter as a key raw material, palm fatty acid distillate, has turned costlier.

Consumer goods makers will hike prices of soaps in the ongoing quarter as a palm oil derivative, a key raw material, has turned costlier.

Hindustan Unilever Ltd., the maker of Lux soap, will increase prices in the personal wash category by 5-6 percent, Srinivas Phatak, chief financial officer at India’s largest consumer goods firm, said in an investor call after the third-quarter earnings.

Godrej Consumer Products Ltd., maker of Cinthol, too, hiked prices by 5-6 percent in January, Sunil Kataria, chief executive officer (India and SAARC).

Palm fatty acid distillate, a key soap ingredient, has seen prices rise by 47 percent since November. The input costs for soapmakers have jumped when the fast-moving consumer goods consumption is growing at its slowest pace in five quarters, with Indians cutting back on spending in a slowing economy.

In the quarter ended December, HUL’s beauty and personal care sales declined 1 percent year-on-year. For Godrej Consumer, they contracted 4 percent for the second straight quarter.

The value growth—a combination of volumes and price-led expansion—of the category fell from 11.1 percent in 2018 to 1.7 percent in 2019, according to Nielsen data sourced from the industry. That’s because of softening demand and price cuts. While HUL cut soap prices by 6 percent, Godrej Consumer lowered offered discounts in July-December.

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