FMCG set to turn the corner as GST 2.0 may boost spend, says report

The fast-moving consumer goods (FMCG) sector is on the cusp of a turnaround, according to a report released on Thursday by Worldpanel by Numerator (formerly Kantar), even though growth in the segment’s volumes and value continued to remain sluggish in the year ended July 2025. 

 

Speaking about the recent cuts in rates of goods and services tax, the report said: “There are indications that cooling prices might bring back growth into the market, and the GST 2.0 implementation therefore is likely to provide some impetus to the overall spends. While we are positive there will be a turnaround in the market as we finish the year.”

 

According to the report, volumes grew 3.9 per cent in the year ended July 2025.

 

“(Growth in the same period last year) stood at a handsome 5.4 per cent. It has now been five quarters since the sector saw a volume growth of at least 5 per cent, and while we expect better performance in the final quarter of the calendar year, it is unlikely that growth shoots up beyond the 5 per cent mark this year.”

 

According to the market researcher, rising commodity prices have led to a growing valley between volume and value growth.

 

“In the year-ended July 2024, value growth was at 6.3 per cent. The gap between the two was less than a percentage point. However, this year, this gap has increased to 5.5 percentage points,” the report added, pointing to a value growth rate of 12.8 per cent.

 

Prices of commodities, including cocoa, coffee, and palm oil, were high in the early part of the year due to disruptions in global supplies and weather-related factors.

 

Ingredients like cocoa and palm oil have a significant impact on large categories such as biscuits, soaps, and chocolates, leading to manufacturers increasing prices.

 

According to the report, while shoppers have increased spending, consumption has dipped marginally. Categories like snacking fabric care are high-spending categories.

 

“An average shopper spends ₹2,408 on the snacking category annually, a result of a 6 per cent growth since last year. However, consumption growth here is less than 2 per cent, indicating that shoppers haven’t raised the consumption to keep their spend in check,” the report pointed out.

 

Similarly, fabric care, which sees an average annual expenditure of ₹2,050 per household, saw a growth rate of 4 per cent. However, consumption growth was flat.

 

However, despite prices easing and tax concessions, India’s FMCG sector continues to tread water.

 

Over the past three years, average quarterly household expenditure has surged 1.3 times, the report said, as consumers now spend approximately ₹56,000 every quarter.

 

“Compared to last year, a significantly higher number of consumers now report difficulty in managing their day-to-day expenses, pointing to a growing financial squeeze. This challenge is especially acute among less affluent households.”

 

“Looking ahead, consumer caution is likely to persist, with households remaining constrained by stretched budgets and they don’t see it improving in future. The near future belongs to restraint and not significant revival,” it added.