The economic crunch is affecting every part of the world and in Mumbai, India, price hikes on raw materials for mattresses aren’t exempt. According to this report, there have been two rounds of price increases for mattresses in the months of June and July of this year, with profits unexpectedly only gaining 15-20%. This development leaves mattress companies no choice but to increase prices of their products.

Prices of mattress seem to be going in only one direction, northwards. This is because of the surge in raw material costs. After nearly 6% hike in June, prices have gone up by another 7% in July. This two rounds of hike have increased the price of a regular size (78”X60”) of mattress to Rs 8,560-8,800 a piece. The premium range mattresses are now priced at Rs 17,500-Rs 26,045.

Global prices of latex, cotton and polyester - the main raw materials for mattresses - have gone up in the past few months. Latex prices went up by 60% while prices of cotton grew by 20% in the last two months. Prices of polyester also surged by 25% in the same period.

The combined price rise of raw materials has affected the profit margins of the industry by 15-20% in last three months, experts said.

The popular mattress brands such as Kurl-On, Sleepwell and Springwel have raised prices of their products to neutralise the spiralling cost of raw materials. Kurl-On chairman and managing director Sudhakar Pai said: “We kept our prices under control for a few months. But now we are forced to increase the prices as the rising raw material costs have been affecting our bottomlines.” Kurl-On is the market leader with a 40% share, marginally ahead of Sleepwell, of the Rs 1,000 crore organised market.

Industry experts said the profitability of the mattress companies are still under pressure, leaving room for further price hike. “Our profitability has gone down by 10% even after we raised prices in July,” said Kurl-On chief marketing officer G Sivaram.

The peculiarity of the industry is that price hike by any of the three major players is normally followed by the others, said Mansuk Shah, a long-time dealer.

Via Economic Times India