Palm oil prices have FMCG companies with their backs to the wall

India’s packaged goods makers must either raise prices or switch to an alternative—both options with their fair share of pitfalls.

Godrej Consumer Products’s CEO Sudhir Stiapati last week told Reuters that the company would keep increasing the price of its soaps to protect margins as palm oil prices rise. The company does not expect price hikes to impact sales because soap is not a discretionary product that consumers can just stop using. But what about the many packaged consumer goods that are? 

India is the largest importer and second-largest consumer of palm oil in the world. Not only is it used in pretty much all processed foods like bread, biscuits, noodles, chips and ice cream, it is also used to …