Poor monsoons coupled with skyrocketing sugar prices has dealt a severe blow to small companies engaged in the fast moving consumer goods (FMCG) segment. Propelled by poor margins and declining demand, smaller players in the sector are mulling hiking the prices of their products in the near term.

SMEs suffer as sugar prices soar

According to small players in the industry, soaring sugar prices has added to the woes of the embattled FMCG players who have been suffering due to the delayed monsoons. Market experts also opine that profit margins of FMCG companies, where sugar is the main input, will be adversely affected by the steep rise in its prices.

“Due to the weak monsoons this year, prices of all essential commodities including sugar has surged significantly. This has consequently raised input costs for FMCG companies,” comments Sunil Mangal, Proprietor of Frontier Biscuit Factory Pvt Ltd, a Delhi-based biscuit manufacturing company.

International sugar prices shoot up

Sugar prices have increased at over 40% since January 2009. Furthermore, sugar imports have also become costlier due to huge import demand from Mexico and India. Milind Jahagirdar, MD of Jahagirdar Bakers, a Nashik-based bakery says, “There has been a stupendous rise in international sugar prices largely due to low production in Brazil, the world’s largest sugar producer.”

Meanwhile, FMCG players are closely monitoring the developments in both domestic and international markets before announcing a hike in prices of their products. Considering that inflation is low at present, these companies may not be able to hike the prices immediately. Therefore, the industry observers expect the FMCG companies to resort to other cost-cutting measures such as deduction in Advertising expenditures.
Poor monsoons coupled with skyrocketing sugar prices has dealt a severe blow to small companies engaged in the fast moving consumer goods (FMCG) segment. Propelled by poor margins and declining demand, smaller players in the sector are mulling hiking the prices of their products in the near term.

SMEs suffer as sugar prices soar

According to small players in the industry, soaring sugar prices has added to the woes of the embattled FMCG players who have been suffering due to the delayed monsoons. Market experts also opine that profit margins of FMCG companies, where sugar is the main input, will be adversely affected by the steep rise in its prices.

“Due to the weak monsoons this year, prices of all essential commodities including sugar has surged significantly. This has consequently raised input costs for FMCG companies,” comments Sunil Mangal, Proprietor of Frontier Biscuit Factory Pvt Ltd, a Delhi-based biscuit manufacturing company.