Britannia kicks off another round of price hikes | Company Business News

Biscuit maker Britannia Industries Ltd has started increasing prices to counter a surge in the cost of key ingredients, palm oil and cocoa.

The industry has been experiencing inflation-deflation, said Varun Berry, vice chairman and managing director of Britannia, during the December quarter earnings call on Friday. 

“Towards the beginning of the year, it seemed that the environment would not be inflationary, and we had taken pretty steep price increases towards the last year. So, we started to correct that, and as we were doing that, there was a huge inflation that came at us, and we have now started to take price increases,” Berry added. 

On Thursday, the Good Day and Tiger biscuits maker reported a 4.8% sequential jump in its December-quarter consolidated net profit to ₹582 crore on a 6.5% rise in consolidated sales to ₹4,463 crore. 

The company increased prices by 2% in the quarter and expects a cumulative price hike of 6-6.5% until the June quarter of 2025-26 as costs of key input materials, such as wheat, palm oil, cocoa, etc., remain high. 

“So, our total price increase is about approximately ₹100 crore in the third quarter of 2024-25. In percentage terms, it would be about 2%, but by the end of the fiscal year, we will be at about 4-4.5% price increase,” he added. 

“In Q3, we’ve already taken a 2% hike; in Q4, it is going to be another 2.5%. Then, in Q1 of the next fiscal, it’s going to be another 1.5%. So, cumulatively, it’s going to be a 6-6.5% price increase,” he added.

To be sure, various key raw materials used by the company are costlier than a year ago. For instance, palm oil prices are up 43%, flour prices are up 4%, and cocoa prices are up a massive 103% year-on-year.

In September, India hiked import duties on crude and refined palm oil by 20 percentage points. Effective duties, including additional cesses, now stand at 27.5% for crude palm oil and 35.75% for refined oil. 

India is the largest importer of palm oil.

This has impacted makers of packaged foods and soaps. “First, there was a feeling that the palm oil import duty increase would be temporary; now we know it’s not going away,” he added.

The move follows other packaged consumer goods makers warning of another round of price hikes across products such as soaps, body wash and tea, following volatility in commodity prices, especially crude palm oil. 

Hindustan Unilever Ltd raised prices in the December quarter, with the management warning of more price increases. 

Similarly, Nestlé India too warned of pricing actions within its coffee portfolio following high inflation on the commodity.

Meanwhile, Britannia Industries is closely monitoring commodity prices. “Our strategy will remain focused on driving market share while sustaining profits. We remain vigilant of the competitive pricing actions,” the company said in its earnings presentation filed with the exchanges on Thursday.