Destocking prior to GST 2.0 may impact FMCG sales in Q2

Fast-moving consumer goods (FMCG) companies are expected to see pressures on their performance, especially on the top line, in the July-September quarter, as buying from distributors took a hit while the trade slowed down their purchases in anticipation of new stock with updated maximum retail prices (MRP).

- SHARLEEN D'SOUZA

The government had announced changes to the goods and services tax (GST) on many categories, which led to a cut in MRP from September 22.

The government had reduced GST rates on items ranging from food products to shampoos and soaps.

Distributors from the Central, Western, and Eastern regions have seen muted growth. While distributors typically pick up stock ahead of the festival season, as secondary sales (sales from distributors to retailers) also see an uptick, this time they are witnessing some weakness.

A distributor from the Western region said that while primary sales (sales from companies to distributors) have picked up since September 22, the same recovery has not been seen from retailers.