FMCG player Marico has decided to hold on to its prices in the first quarter of this financial year despite facing margin pressure due to input cost inflation. Last year the company took a 19 per cent weighted average price increase during the April and June quarters due to spurt in copra prices.
“While there will be significant margin pressure in the next two quarters, we have to get volume and market share growth so there will not be significant change in prices in the first quarter,’’ said Saugata Gupta, MD & CEO, Marico, during an analyst meet.
With copra prices peaking, the company is hoping some price correction in input costs will help it in holding on to prices. As Gupta adds, “Copra prices are cyclical and have already peaked. Demand and supply pressures will adjust prices and bring it down.”
Marico is now seeking volume growth across its brands while keeping its gross margins at a threshold level. “It is important that we get volume growth. Even for brands like Saffola there has been no significant increase in margins,” he added.
The company has also been facing flat growth in its products targeted at the youth comprising gels, deos and serum under brands like Livon, Zatak and Set Wet.
Competition
Having re-launched Zatak last year, the competitive intensity in the deos category has led to growth slowing down for its youth portfolio. Besides, its entry into new categories like hair colour with Livon has yet to register significant volumes.
“The competitive landscape has changed and we are still waiting to get a verdict on the performance of Livon hair colour. We are confident that there will be growth between 15-20 per cent in the in the next two quarters in the youth category,” said Gupta.
Marico experienced faster growth in rural sales at 33 per cent compared to urban growth at 25 per cent.
“We expect urban consumption to pick up and get bridged with rural consumption by the second half of the year,” added Gupta.