FMCG Performs Beyond Expectations Robust Future Ahead

How GST 2.0, easing inflation and renewed consumption are lifting India's FMCG story

- By R S Roy

India’s FMCG story has entered a new chapter. Despite margin pressures, one-off tax realignment and transient distribution disruptions, collections and consumption have surprised on the upside. Underneath the numbers — falling inflation, GST reform, rural traction and digital reach — a durable recovery is taking shape. This report traces that turnaround from multiple angles: macro, corporate, consumer behaviour, channel evolution and strategic priorities for businesses and investors.

The starting point — what the Pulse baseline taught us

Worldpanel’s October 2025 FMCG Pulse (data through July 2025) is the most recent, detailed household-panel view preceding the GST reform and the CPI drop. It documented:

■ Volume growth ~3.9% (year ending July 2025), down from 5.4% a year prior. Value growth diverged sharply (~10-12%), yielding a value-volume gap of ~5.5 percentage points — the largest recent divergence and a clear symptom of input-cost inflation and price pass-through.

■ Category patterns: convenience foods surged in volume (+55%), while staples (cooking media) held high spend per household (~Rs.5,944/year) but flat volumes; health & pain relief categories held premium pricing power and stable volumes.

■ Consumer sentiment: households overwhelmingly prioritized essentials, reduced discretionary purchases, and tried low-cost alternatives. The “main basket” concept emerged as decisive — savings matter most when aggregated across many items.

Implication: The sector's immediate constraint was affordability and pack/format shifts — not absence of preference or long-term structural demand. That meant policy or price relief could trigger a sustained response if executed visibly.

The policy pivot that changed the game: GST 2.0