FMCG companies optimistic about gradual improvement in consumption

Leading fast-moving consumer goods companies are confident of a gradual improvement in consumption over the coming quarters, supported by falling inflation and improving affordability following lower Goods and Services Tax (GST) rates.

In a quarterly update, Godrej Consumer, the maker of ‘Good Knight’ mosquito repellent, said demand conditions in India strengthened progressively during the third quarter.

“We remain confident of a gradual improvement in consumption over the coming quarters, supported by falling inflation and improving affordability following lower GST rates,” it said.

Echoing a similar sentiment, Marico, the maker of Parachute hair oil and Saffola edible oil, in its Q3 update said that it remains optimistic about a gradual improvement in consumption in the quarters ahead, supported by easing inflation, lower GST rates driving affordability, MSP hikes, and a healthy crop sowing season.

FMCG player Dabur, in its third-quarter update, said it witnessed early signs of demand recovery, aided by GST rate revisions.

Consumer sentiment improved in both urban and rural areas following trade stabilisation, according to Dabur. Rural demand continued to outperform urban demand this quarter as well, it added.

The new GST rates, implemented on September 22, 2025, reduced taxes on consumer products such as toothpaste, hair oil, shampoo, soap, and biscuits to 5% from 18% previously. This led to a disruption in inventory levels in the third quarter.

“In October 2025, distributors and retailers focused on liquidating the existing higher-priced inventory in the channel,” said Dabur.

Dabur expects the organised trade channel to maintain its strong growth momentum, with e-commerce, including quick commerce, expected to grow in strong double-digits.

Meanwhile, Marico expects operating profit growth to touch double digits on a year-on-year basis. “Among key inputs, copra prices have corrected 30% from the highs and are expected to exhibit a downward bias in the months ahead, followed by the flush season. Vegetable oil prices remained at elevated levels, while crude oil derivatives were benign. Owing to the above, we expect an uptick in gross margin on a sequential basis, after bottoming out in the preceding quarter. We anticipate further gross margin improvement in the coming quarters, driven by the lagged pass-through of lower copra costs,” it said.

Godrej Consumer said its standalone business is well-positioned to deliver double-digit revenue growth for the quarter, underpinned by close to double-digit underlying volume growth.