West Asia tensions cloud outlook for personal care brands, margins under pressure

At the heart of geopolitical tensions in West Asia is the rising costs of crude oil and its derivatives, which underpin a wide range of personal care inputs. From surfactants and emollients to silicone oils, fragrances, and polymers, much of the sector’s supply chain is directly or indirectly linked to petrochemicals sourced from or routed through the Middle East. As disruptions persist, companies are facing a mix of cost inflation and supply uncertainty that could reshape the category’s near-term growth trajectory.

Industry executives say the stress is already visible. “There is wider cost pressures on everything from plastics to glass. Global shipping disruptions have increased freight costs. Our inventory buffers might shield us for a few more weeks at best, beyond which the cost impact will be real,” Shankar Prasad, founder and CEO of Plum Goodness told Fortune India. He added that while lead times have increased, there has been no outright supply disruption till now.

Angshuman Bhattacharya, partner and National Leader, Consumer Products and Retail at EY India, said the impact could extend beyond immediate cost pressures. The sector is likely to see both direct and indirect implications over the next eight quarters, as crude-linked volatility filters through supply chains and begins to weigh on profitability. He noted that while the industry has enjoyed a strong profitability trajectory so far, these disruptions could dampen that momentum.

Cost pressures spread across the value chain

The impact is not limited to ingredients alone but packaging, a critical component in personal care, is also under strain. Around 70% of consumer packaging in India relies on flexible plastics, exposing brands to feedstock shocks. Polypropylene prices alone saw multiple hikes in March, contributing to an overall 20–30% increase in raw material costs for manufacturers.

These pressures are now feeding into consumer pricing. “Some pass-through is now unavoidable. But how much reaches the consumer depends on how quickly enterprises act,” according to Soham Chokshi, co-founder and CEO of Shipsy, a logistics firm active in the Gulf region.

He added that the Indian consumer will feel this in grocery bills, medicine costs, and daily essentials in the coming months.

For personal care companies, the squeeze is particularly acute because of the category’s reliance on specialised inputs. Shortages and price spikes in materials like silicone oil and ammonia have already hit niche segments such as condoms and medical-grade products, where substitutes are limited and quality standards are stringent. Few days back, Malaysia-based Karex, the world’s largest condom manufacturer supplying brands such as Durex and Trojan, had indicated that it may raise prices by as much as 30% or more if supply disruptions persist, with its leadership flagging a sharp rise in production costs since the conflict began. The company produces more than five billion condoms a year.

Companies are increasingly expected to delay new product launches and focus on core stock-keeping units to protect margins and maintain volume stability.

Pricing actions and supply chain recalibration

Large FMCG players have begun responding. Hindustan Unilever recently announced price increases of 2–5% across its portfolio, as it anticipates input cost inflation of 8–10%.

Priya Nair , CEO and Managing Director, Hindustan Unilever Limited, said, “More recently, heightened geopolitical tensions have led to commodity and currency volatility. We are navigating these headwinds through disciplined savings, the resilience of our global and local supply chain and calibrated pricing actions. Looking ahead, we are well positioned to navigate this volatile operating environment, supported by our strong brands, robust financial position and operational agility.”

HUL’s acquired brand Minimalist, for instance, depends on raw materials and intermediates sourced from or routed through the Gulf. Around 12–18% of its formulations, including UV filters such as Ethylhexyl Triazone and BEMT, are partly sourced through West Asia. This makes it particularly vulnerable to rerouting via the Red Sea, which increases freight and insurance costs.

To cope, companies are leaning on a mix of strategies including inventory buffers, supplier diversification, and localisation. “Inventory backup, multiple sources, indigenisation and continuous value improvement initiatives are what we use to deal with these pressures,” Prasad said.

According to EY's Bhattacharya, brands are likely to delay new product launches and prioritise core SKUs, focusing on volume stability and margin protection rather than portfolio expansion.

While demand for personal care products continues to hold up, the pressure on costs is intensifying. If disruptions persist, measured price hikes across the category appear increasingly likely, even as companies try to absorb as much of the shock as possible internally.