The news: The war in Iran is creating significant hurdles for consumer packaged goods companies as rising crude oil prices boost costs and eat into margins.

• Unilever, the parent of Dove and Vaseline, expects costs to rise by €350 million to €500 million ($409.5 million to $586 million), assuming crude remains around €100 ($115) per barrel (currently about $105).
• Kimberly-Clark, the parent of Huggies and Kleenex, expects input costs to increase by $50 million in Q2 and another $150 million to $170 million in the second half if oil prices stay elevated.
• Reckitt Benckiser, maker of Lysol and Durex, warned the war could add up to £150 million ($203 million) in input costs in 2026.
• Procter & Gamble recently said it faces a roughly $1 billion after-tax headwind under similar conditions.

The bigger challenge: Uncertainty is making planning and forecasting more difficult, as the path of the conflict remains unclear. As Kimberly-Clark CFO Nelson Urdaneta noted, the company has not yet fully incorporated elevated oil prices—or potential mitigations—into its outlook given the number of moving pieces.

Implications for brands: Rising costs are likely to be passed through to consumers, but doing so without pushing away increasingly price-sensitive shoppers won’t be easy. Some companies, like P&G, are signaling targeted price increases, particularly on premium products, giving consumers a choice between higher-priced, better-performing options and more familiar, lower-cost alternatives.

That balancing act is getting harder as consumer pressure builds. Core PCE, which excludes food and energy, rose 3.2% YoY in March, its highest level since November 2023, per the Commerce Department. As everyday expenses climb, consumers are being forced to make tougher trade-offs. Increasingly, those trade-offs are showing up in consumer behavior: 57% of shoppers are switching to lower-priced brands, 46% are opting for private labels, and 26% are buying smaller package sizes, per Omnisend.

To maintain share, brands will need to respond more deliberately, whether by leaning into promotions, offering a wider range of pack sizes, and more clearly communicating value.