Rising Costs Forcing a Price Increase? Here's How to Protect the Relationship, Not Just the Margin

If you're a local FMCG manufacturer, you already know the feeling: raw ingredient costs climbing, power bills spiking, freight costs eating into every load. You've absorbed as much as you can, but the numbers no longer work, and a price increase is now unavoidable.

The good news? How you raise prices matters just as much asthe increase itself. Retailers don't push back on price increases nearly asmuch as they push back on being surprised by them. Here's the approach we recommend to ensure that your price increase is received favourably.

1. Build the case with hard numbers

Don't just say "costs went up." Show your retail customers exactly where, by how much, and why e.g.

- Raw ingredients - Up 10.0%. Wholesale prices increased 10% in the 6 months to 30 Jun  '26

- Power - Up 11% as electricity prices increased 11% in the 6 months to 30 Jun  '26

- Freight - Up 40.1% Diesel price increased 41% in the 6 months to 17 Aug '26

Transparency builds trust and heads off the "just trying to boost margin" objection before it's even raised.

2. Put it in writing

Compile a formal letter to your retail customers outliningthe impending price increase, the cost breakdown above, and a clear effectivedate. This becomes the reference point for every conversation that follows.

3. Talk before you send

Before that letter lands in an inbox, pick up the phone. Apersonal heads-up, with the rationale explained, shows respect for therelationship and stops the letter from feeling like an ambush.

4. Send the letter and open the door

Send the formal notice and offer a follow-up meeting to walkthrough it together before the effective date. Give your customers room to askquestions in a low-pressure setting.

5. Get commitment on the date

Don’t leave the effective date open to negotiation bydefault. Seek explicit agreement that the increase will be implemented asscheduled.

6. Respond promptly and professionally

Questions will come, so answer them promptly, clearly, andwithout defensiveness. Every response is a chance to reinforce that thisincrease is fair and necessary, not opportunistic.

7. Be willing to give it back

If your costs fall over a similar period, be ready to pass those savings on too. It's the single fastest way to build long-term credibility with your retail partners, and it makes the next price increase conversation a whole lot easier.

Are your net COGS and indirect selling costs running away from you?

We can help. Talk to Retail Wise. Send me a message or visit retailwise.com.au

#NetCOGS #FMCG #PriceIncrease #RetailStrategy #RetailWise#GroceryRetail

‍