The FMCG industry continues to see unprecedented inflation in key raw material prices, and these inflationary pressures are expected to persist, the management of FMCG major Hindustan Unilever (HUL) said on Tuesday.

Reporting earnings for the July-September quarter, HUL’s Chief Financial Officer Ritesh Tiwari said the company took sequential price increases in skin cleansing, laundry & household care products, while tea prices saw some cooling off in the quarter.

CNBC-TV18 reported in September that HUL hiked prices of detergents such as Rin, Surf Excel and soap bars such as Lux by anywhere between 3.5 to 14 percent while reducing grammage for smaller packs.

Tiwari added during the earnings call that the company is confident of being able to navigate inflation levels being currently seen, and that while a clear focus will be to ensure the company takes calibrated & judicious price increases, its savings agenda is also extremely important to manage P&L.

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The company reported a domestic consumer growth of 11 percent, with an underlying volume growth of 4 percent, and the remaining 7 percent being price-led growth. HUL’s Profit After Tax (PAT) grew 9 percent in the quarter.

The management also said that after a pickup post the second wave, the FMCG industry is seeing some moderation, especially in rural areas. The company continues to remain cautiously optimistic about demand recovery.

“September quarter witnessed a sequential improvement in trading conditions, albeit remained challenging with unprecedented levels of input cost inflation and subdued consumer sentiments,” Sanjiv Mehta, Chairman and Managing Director said.

While rural growth has been resilient through the pandemic, and urban muted, rural growth is now moderating in the last two months, also on the back of a higher base. “Once base normalises, will start to see what happens to underlying demand,” Mehta added.

The management also alluded to a rebound in its discretionary and Out-of-home categories. Ice creams, cosmetics and premium hair oils, which stood impacted due to restricted mobility in the second wave saw a strong recovery, the company said.

While out-of-home has recovered and is ahead of pre-COVID levels, Mehta said that discretionary demand is 3 percent more than September 2019 levels and is expected to recover further through the festive season.

On the digital front, HUL said that more than 15 percent of the company’s turnover is now captured digitally. It has also stepped up its digital presence through its dedicated direct-to-consumer platforms for four of its premium beauty brands including Lakme, which is seeing 30 percent of sales coming from digital.

Innovation too, which took a back seat in discretionary portfolios during the pandemic, has gone up significantly, the company added.

(Edited by : Priyanka Deshpande)

First Published:Oct 19, 2021 9:05 PM IST