NEW DELHI: Leading biscuit maker Britannia will continue to increase prices of its products to beat inflationary pressure.
The company has decided to go for an estimated 7.5% and 10% price hike in the third and fourth quarters, respectively.
Two-thirds of the hike will be through grammage reduction and one-third would be a direct increase in retail price, Britannia said in its investor presentation.
The company had taken a 4% hike in the second quarter. Despite this hike, Britannia, which makes brands like Good Day, Tiger and Marie Gold, witnessed a slump in its profit and margin during the recently concluded September quarter.
Britannia’s Managing Director Varun Berry during an analyst call on Tuesday, said there is no substitute for price increase during the current inflationary environment.
“We have actioned price hikes in a calibrated and gradual way to offset the cost pressure,” added Berry.
Britannia, in its quarterly financial statement released on November 8, had said that it has been witnessing unprecedented inflation in market prices of palm oil at 54%, industrial fuel at 35% and packaging material at 30%. This is leading to an overall inflation in the July to September quarter to 14%.
The Nusli Wadia-owned company’s consolidated gross margin contracted nearly 500 basis points year on year to 37.5% which was lowest in eight years.
Its profit after tax fell 21% during the quarter even as it posted domestic volume growth of 2%.
According to analysts at Motilal Oswal, Britannia reported better than their expected sales but disappointed margin. Other leading FMCG brands such as Marico, Nestle and HUL have initiated price hikes in recent quarters to offset inflationary pressure.