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Mumbai: Grocery expenses for Indian households may soon increase as biscuit major Britannia Industries plans selective price hikes and grammage reductions this quarter to offset rising input costs linked to the ongoing West Asia conflict.

The company’s Managing Director and Chief Executive Officer Rakshit Hargave said the company has already initiated calibrated price increases to protect profit margins amid inflation in palm oil, laminates, fuel and freight costs.

Price hikes and smaller packs expected

Speaking after the company’s quarterly earnings announcement, Hargave said Britannia would adopt a mix of price increases and grammage cuts across selected product categories.

“We obviously will need to take some mitigation measures, and we have initiated calibrated price increases starting from this quarter. The mitigation measures include grammage adjustments and some of the packs, which are above Rs 10, will see some kind of a price increase,” he said.

The move means consumers may either pay more for Britannia products or receive smaller quantities for the same price. Such grammage reductions are commonly used by fast-moving consumer goods (FMCG) companies during periods of inflationary pressure.

Industry experts believe the impact could be visible across popular biscuit and bakery products sold in neighbourhood kirana stores as well as supermarkets.

West Asia conflict impacts supply chain

Britannia attributed the rising costs partly to disruptions caused by tensions in West Asia. According to the company, shipping movement was affected in March after the Strait of Hormuz faced operational challenges, delaying vessel dispatches.

“The West Asia impact hit us in March after a relatively stable quarter in the first two months. We were unable to dispatch vessels because the Strait of Hormuz was locked,” Hargave said.

The Strait of Hormuz is a crucial global shipping route for oil and trade cargo. Any disruption in the region typically results in higher freight charges and fuel costs, affecting manufacturing and logistics expenses for companies worldwide.

Britannia clarified that its domestic operations were not directly impacted by fuel and gas shortages. However, the indirect impact through increased raw material and transportation costs has forced the company to adopt corrective measures.

Palm oil and packaging costs rise

The company highlighted that inflationary trends were particularly visible in palm oil, laminates and fuel prices during the quarter. Palm oil is a key ingredient used in the biscuit and bakery industry, while laminates are essential for product packaging.

At the same time, wheat prices showed a deflationary trend, offering some relief to the company. Despite this, the overall cost pressure remained high due to other commodities and freight expenses.

Hargave said Britannia has secured forward contracts for palm oil supplies for the next five months, which provides temporary protection from immediate price volatility. However, the broader inflationary environment continues to remain a concern.

He further stated that Britannia would also implement price hikes in international markets from the first quarter of FY27.

Strong quarterly profit despite margin pressure

Despite rising costs, Britannia reported strong financial performance for the fourth quarter. The company posted a 21 per cent rise in consolidated net profit compared to the corresponding quarter last year.

Revenue from operations increased 7.1 per cent to Rs 4,686 crore during the quarter.

The company’s EBITDA margin stood at 18.2 per cent, declining 20 basis points year-on-year and 186 basis points sequentially due to inflationary pressures.

Britannia also announced a final dividend of Rs 90.5 per share for shareholders, reflecting confidence in its long-term business performance.

Analysts noted that the company has managed to maintain growth momentum despite global uncertainties and rising commodity prices. However, continued geopolitical tensions and supply chain disruptions could keep pressure on the FMCG sector in the coming months.

Consumers likely to feel the impact

The planned price revisions are expected to affect everyday grocery spending, especially for middle-class households that regularly purchase packaged food products.

FMCG companies across India have been facing margin pressure over the past few quarters because of fluctuating commodity prices, elevated transportation costs and global trade uncertainties.

With Britannia now moving towards selective price hikes, other food and packaged goods manufacturers may also consider similar strategies if inflationary trends continue.

Consumers may therefore witness gradual increases in prices of biscuits and packaged foods over the next few months, even as companies attempt to balance affordability with profitability.