The festive rush: How FMCG sector is driving Diwali purchases and demand

With Diwali just around the corner, the FMCG sector is seeing strong sales across categories, with edible oils, dairy, and snacks driving festive demand

As Diwali celebrations light up homes and streets across India, the festive spirit is visible in shoppers’ baskets too. From kitchen essentials to sweet treats, the ongoing festival season has brought a notable boost to the fast-moving consumer goods (FMCG) sector, with companies reporting strong sales across categories.

 

The ongoing festive season has triggered a surge in demand as consumers line up the stores in search of gifts and essentials. Lower price tags, following the recent Goods and Services Tax (GST) cuts, have further encouraged spending.

 

In FMCG, the response has been swift. The sales have lifted to double digits, with Parle Products reporting a 15-20 per cent jump in sales at the primary level, supplies to distributors and stockists, highlighting the immediate impact of festive demand.

Kitchen essentials, dairy items see growth

 

India’s kitchens and dining tables are buzzing this season, driving demand for FMCG items across categories such as cooking oils, dairy, beverages, and ready-to-eat snacks. Sparsh Sachar, director and business head of FMCG at Nutrica, BN Group, told News18 that edible oil demand has risen noticeably during this period, as households prepare elaborate meals.

 

Dairy products, integral to Indian festive cuisine, are seeing a sharp rise in sales. Milk, paneer, ghee and sweets are in higher demand as families prepare elaborate meals and festive gifts.

 

Ranjith Mukundan, CEO of Stellapps Technologies, told News18 that demand for milk, paneer, and ghee is noticeably increasing as families make sweets, festive meals, and gift items.

 

India’s consumer goods and retail companies posted steady to strong volume growth in the September 2025-26 quarter, reflecting improving consumption during the festive season. Companies are optimistic about sustained expansion, supported by GST rate cuts and a gradual recovery in rural spending.

 

In Q2 FY26, Adani Wilmar reported a 5 per cent year-on-year (Y-o-Y) rise in overall volumes, driven by double-digit growth in its industry essentials and FMCG segments. On edible oils, the company saw volumes rise nearly 4 per cent Y-o-Y, though it noted challenges in mustard oil due to price fluctuations.

GST overhaul adds momentum

 

The recent GST reforms, effective September 22, have played a key role in driving festive sales. Prime Minister Narendra Modi had called the reforms a “Diwali gift” to citizens, promising lower tax burdens across essential goods.

 

The GST revamp simplified tax slabs, removing the 12 per cent and 28 per cent categories. Many daily-use goods, including hair oil, shampoo, soaps, toothpaste, and shaving cream, now attract just 5 per cent tax instead of 18 per cent. Dairy spreads, butter, ghee and ready-to-eat snacks have also moved to the 5 per cent slab, while basic foods like UHT milk, paneer, roti and paratha now fall under the nil rate category.

 

The All India Consumer Products Distributors Federation (AICPDF), representing over 450,000 distributors and 13 million kirana retailers, expects the GST overhaul to boost FMCG growth by 2-3 percentage points this ongoing festive season.

FMCG drives festive sales on quick commerce

 

FMCG, led by healthy foods, emerged as the top driver of festive shopping this season on quick commerce, according to Unicommerce, an e-commerce enablement SaaS platform. Consumers are increasingly opting for faster delivery, with quick commerce orders recording over 85 per cent growth in volumes during the first week of festive sales.

 

E-commerce order volumes jumped 21 per cent Y-o-Y in the first six days of the festive season compared to last year. The analysis is based on over 40 million transactions processed through Unicommerce’s Uniware platform.

 

Tier-II and Tier-III cities continued to drive a major share of orders, making up around 58 per cent of total transactions in the first week of the festive season.

FMCG sector eyes turnaround

 

The FMCG sector grew at a slow pace in the year ending July 2025, but experts expect a recovery. According to a report by Worldpanel by Numerator, the market is nearing a turnaround. The report noted that recent GST rate cuts and cooling prices could boost spending, giving the market a push.

 

Volumes grew 3.9 per cent, down from 5.4 per cent last year, as rising commodity costs for cocoa, coffee and palm oil widened the gap between value and volume growth. While categories like snacking and fabric care saw higher spending, overall consumption stayed flat, signalling cautious but hopeful market conditions.

Festive season 2024: Shoppers balanced premium and value

 

During the 2024 festive season, FMCG products, especially packaged foods, sweets, and festive decorations, recorded a growth of 8-12 per cent. In Tier-II cities, essentials like rice, pulses, ghee, and edible oils saw sales jump by up to 30 per cent.

 

During the 2024 festive season, Indian consumers showed a mix of aspiration and caution. Many buyers moved towards premium FMCG products while keeping an eye on affordability.

 

The gold market offered a parallel story. Despite record-high prices in October 2024, with 10 grams of 24-karat gold averaging around ₹80,600, jewellers reported a drop in volume by 5-27 per cent, but transaction values rose by more than 20 per cent as buyers opted for lighter ornaments and coins.

 

Rural and urban consumption patterns continue to diverge. Improved post-harvest incomes are driving FMCG sales in smaller towns, while urban centres remain the focus for big-ticket purchases like electronics, jewellery and automobiles.

 

With the festive season in full swing and Diwali celebrations approaching, the FMCG sector can expect to see a strong performance, supported by rising consumer demand and growing sales across both traditional and digital channels.