India’s dairy and FMCG sectors are facing rising cost pressures as the ongoing West Asia conflict disrupts packaging supply chains, with sharp increases in input prices and tightening availability of key materials. The surge is driven by higher crude-linked raw material costs, with prices of polyethylene (PE) and polypropylene (PP)—widely used in plastic packaging—rising over 50–60%, while glass packaging costs have increased by more than 20% amid fuel shortages and supply constraints.
Packaging, which typically accounts for 15–25% of product costs in FMCG and food categories, is now emerging as a critical pressure point, forcing companies to reassess sourcing, pricing, and inventory strategies.
For dairy companies operating on thin margins—where nearly 70% of revenues go toward milk procurement—such cost escalations are significantly impacting profitability and operational planning. (Magzter)
Supply disruptions have also led to shortages of bottles, wrappers, and other materials, with companies reporting tight availability, longer lead times, and premium pricing over standard rates.
Logistics challenges are compounding the issue, as freight rates and war-risk premiums have risen by 20–30%, increasing landed costs and delaying deliveries. (The Financial Express)
In response, companies are adopting mitigation strategies such as reducing packaging weight, rationalising SKUs, building safety stocks, and exploring alternative materials.
However, with consumer demand still price-sensitive—especially in low-unit packs—many firms are absorbing costs rather than passing them on immediately.
With no immediate resolution to geopolitical tensions, industry experts warn that packaging-related disruptions could persist, continuing to squeeze margins and reshape cost structures across the dairy value chain in the coming months.
Source: Dairynews7x7 20th April, 2026 Read full story here
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