FMCG Firms Urged to Consolidate, Diversify Supply Chains Amid Global Risks

The report from EY India also urged sharper resource allocation, localisation, and backward integration across value chains.

Sectors most exposed to oil, petrochemicals and global shipping-edible oils, textiles, paints, packaged foods and personal care-are already facing cost shocks and pricing dilemmas, it said.

Rising crude and derivatives prices and supply‑chain constraints are likely to have ripple effects across sectors, potentially dampening the strong profitability trajectory of the industry.

Costs associated with packaging and transportation have surged and a weakening currency is further adding pressure by increasing import costs. Meanwhile, supply chain constraints are driving higher commodity prices, freight costs, and price volatility.

Edible oil inflation remains a key concern as India imports around 57 per cent of edible oil needs and retail edible oil inflation crossed 7 per cent in early 2026, the report said.

FMCG companies using palm oil (snacks, bakery, packaged foods) continue to face margin pressure.

These pressures are expected to translate into higher retail prices or grammage reductions leading to smaller pack sizes, it said.

Personal care makers face shortages and price spikes in inputs, especially petrochemical‑derivatives.

Shortages and sharp price increases in inputs like silicone oil and ammonia have already impacted niche segments such as condoms and medical personal care products, where quality standards and substitutes are limited.

"Brands are likely to delay new product launches and prioritise core SKUs, focusing on volume stability and margin protection rather than portfolio expansion," the report predicted.

Paint companies are evaluating price hikes of 2-5 per cent if crude prices remain elevated into FY27 but competitive intensity within the sector may delay aggressive price passes through to consumers, it said.

- IANS