Rising sugar prices are pushing biscuit manufacturers to plan a rise in their prices. The industry says commodity prices have reached a level beyond which it would be impossible to sustain the pressure and there is no other choice but to pass some of it on to consumers.
ITC says while it is making every effort to further improve supply chain efficiencies to mitigate the impact on consumers, a price rise is inevitable, given the significant increase in input costs. Britannia also says it would have to increase prices.
To some extent, future contracts (where a wholesale seller and buyer sign a supply contract for a certain period, agreeing on a price, which is insulated from fluctuations during the period) have helped companies sustain prices. But, as and when the contracts expire and come for renewal, it would be necessary for the companies to mull a price rise.
Parle Products Ltd says that until now, future contracts have shielded it. But, if the prices continue to rise at this rate, at the time of renewal the company will have to pay higher price and, consequently, it will be forced to consider a price hike.