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Sales growth in India's FMCG market slowed in volume terms during the recent September quarter as the transition to revised GST rates caused temporary disruptions. While overall value growth rose, rural markets continued to lead demand for the seventh straight quarter, though the gap with urban areas has started to narrow. Smaller towns supported urban recovery, and e-commerce remained a strong contributor to FMCG sales. Modern trade also showed signs of revival. The sector's performance was influenced by stable food demand, slower home and personal care growth, and a stronger contribution from small manufacturers.
Sales in India's FMCG sector recorded slower volume growth during the recent September quarter as companies faced disruptions linked to changes in GST rates, according to a new report from NielsenIQ. While volume growth eased to 5.4 per cent, the sector posted a value rise of 12.9 per cent driven by a combination of higher prices and a shift toward smaller pack sizes. The report noted that unit sales grew faster than overall volume, indicating a clearer preference for small, affordable packs. Advertisement
The rural market also witnessed a mild slowdown, moving from 8.4 per cent to 7.7 per cent year-on-year, yet maintained its lead over urban markets for the seventh consecutive quarter. Rural areas accounted for around 38 per cent of total FMCG demand, supported primarily by low-unit packs. Urban demand improved gradually, especially in smaller towns, although sequential growth remained slow. The gap between rural and urban growth has started to narrow as urban consumption stabilises after earlier softness.
In previous quarters of 2025, rural regions had reported growth of 8.3 per cent and 8.4 per cent, showing a broader pattern of sustained demand from these areas. The report highlighted that metropolitan cities continued to experience weaker offline sales due to consumers shifting toward online platforms. At the same time, modern trade channels showed clearer signs of recovery.
NielsenIQ said through the report that rural markets remained the main driver of FMCG expansion, while urban recovery was supported by smaller towns. The company added that e-commerce continued to be an important contributor to growth across the eight major metro cities. The share of e-commerce in overall FMCG sales increased by 1 per cent across these metros, although a slight moderation in online volume growth was seen during the recent quarter.
With inflation easing, the outlook for consumption remains steady, although the full impact of GST changes is expected to reflect over the next two quarters. The transition to the GST 2.0 framework temporarily slowed down growth in the home and personal care segment. This category includes shampoos, soaps, household products, lotions, creams, dental care items and personal hygiene goods, all of which saw softer volume performance.
Food categories maintained stable consumption levels with 5.4 per cent growth, supported by steady demand in staples and lower growth in impulse and habit-forming categories. Home and personal care reported 5.5 per cent growth, marking a slight slowdown. Over-the-counter products sold through pharma channels performed strongly, recording a 14.8 per cent rise in value sales, backed by a 9.7 per cent increase in prices.
During the September quarter, smaller manufacturers continued to support FMCG growth, benefiting from steady demand in both food and home-personal care categories on a lower base. Larger players experienced softer consumption trends during the same period.
Source PTI
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