P & G did not give a specific price increase, but said that the price of fabric care products will increase from February 28 this year, while the price of other personal health products will increase from April. P & G said that the price increase will also affect international consumers, not just American consumers.The reason for the price increase across the board is attributed to the rise in transportation, materials, labor and other costs during the epidemic and the rise in the price of raw materials caused by global inflation.Andre Schulten, P & G's chief financial officer, said: "the recent surge in new crown cases and the resulting blockade have increased the risk of additional downtime in our or our suppliers' operations."
The price has been raised for several consecutive quarters
It is worth noting that this price increase is not the first time P & G has raised prices. In fact, this is the second consecutive quarter that P & G raised its inflation forecast.
In the last fiscal quarter, P & G has raised its cost expectation. Previously, it was expected to spend $2.1 billion on the cost of transportation, resin and other raw materials in the whole 2022 fiscal year as of June this year, an increase of 10.5%.
High inflation has indeed become a headache for FMCG giants. At the financial report meeting, P & G said that the pricing increased by an average of 3% in the last quarter, and the revenue brought by the price increase accounted for half of the total revenue, while the other half came from the increase of sales. The increased revenue helped offset the surge in the prices of raw materials, labor and transportation of goods, as supply chain difficulties continued to drag down almost all industries.
But P & G seems to be betting that consumers will be willing to continue to buy higher priced goods. At the end of October last year, P & G announced the price increase of some products of beauty, oral care and shaving care. At that time, Andre Schulten, the company's chief financial officer, said: "we have not seen any substantive response from consumers. In view of this, we are satisfied with our relative strength." And said that its brand consumers are very resilient, and even focus on the more high-end products of the brand, such as first aid beauty or native deodorant.
High inflationPrice increase has become the consensus of major brands
In the face of high costs, passing it on to consumers may be the simplest solution. However, due to the promotion of home policies brought by the epidemic, the demand remains high, and major consumer goods companies around the world have raised prices one after another.
The price increase of P & G has started since April 2021. At that time, P & G said that it would increase the prices of baby products, adult diapers and women's care products from September of that year, with an increase of 5% ~ 9%, which was the largest increase of P & G products in 33 years.
In addition to P & G, Kimberly Clark, a paper product manufacturer, also announced a price increase in 2021, saying that it would increase the price of its baby and child care, adult care and Scott bathroom tissue products from the end of June, with an increase of 5% ~ 9%.
(US CPI index tracking chart source: Wall Street News)