FMCG growth moderates in December quarter as GST transition impacts pricing

Sales growth of the FMCG industry has moderated to 7.8 per cent in the December quarter of 2025 amid the GST rationalisation and a high base due to increased festival season sales, a report from data analytics firm NielsenIQ said.

Volume growth has also dipped to 2.6 per cent in the December quarter on a year-on-year basis, which was the lowest in 2025, it said.

“Both price and volume growth softened sequentially, particularly within traditional trade, which experienced temporary supply and pricing recalibrations during the initial phase of (new GST rate) implementation,” said NielsenIQ India FMCG Quarterly Snapshot Q4 FY25.

The moderation reflects a combination of a higher festive base in the previous year and transitional adjustments linked to GST 2.0 rate revisions, it said. However, the report also said that the recent data indicate improving availability of GST-related launches and pricing alignment across the retail network, suggesting stabilisation following the transition.

In the December quarter, modern trade (large retail chains) recorded a three-fold acceleration versus the previous quarter, and e-commerce channel shares reached 18 per cent in FMCG sales in the top 8 metros. This was due to the quick adaptation of changes in prices by the organised channels.

“Nearly 60 per cent of the FMCG portfolio underwent GST rate revisions, requiring coordinated pricing adjustments across manufacturers, distributors, and retailers. While these changes temporarily impacted traditional trade performance, organised channels adapted more quickly,” it said.

Moreover, the gap between urban and rural markets has narrowed in the December quarter, though rural still outpaced the urban market in terms of growth.

“Rural markets continued to outpace urban consumption for the eighth consecutive quarter; however, the growth gap narrowed in October-December 2025. Rural regions recorded 2.9 per cent volume growth, moderating against a higher base, while urban markets grew 2.3 per cent, supported by recovery in Metro consumption and normalisation in e-commerce demand,” it said

Besides, the e-commerce channel, which includes hyper-local delivery platforms (quick-commerce), has also strengthened further in the December quarter of 2025. It now accounts for “6 per cent of urban India FMCG sales, 14 per cent across all metros and 18 per cent in the top 8 metros,” the report said.Now, quick commerce is contributing over three-fourths of e-commerce FMCG sales and remains the key growth engine, it said.

“Regionally, southern metros have surpassed 21 per cent e-commerce share, while northern and eastern metros are narrowing the gap with modern trade. Western markets continue to see modern trade leadership, though e-commerce is steadily gaining share from traditional trade,” it said.

About the consumption trends, the report said across baskets, food as well as home & personal care (HPC) saw a moderation in volume growth.“Food consumption benefited from GST-driven price corrections and stabilisation in edible oil prices, helping it outperform HPC in consumption growth. HPC recorded 1.9 per cent volume growth, reflecting sharper moderation due to higher exposure to GST revisions,” it said.

The report also highlighted that small manufacturers sustained growth momentum in the December quarter of 2025, continuing to outpace the broader FMCG market in volume growth.

“While overall volumes moderated across segments, large FMCG players implemented comparatively steeper price reductions to align with GST adjustments and competitive pressures,” it said, adding, “Smaller manufacturers demonstrated greater agility in pricing and portfolio adaptation, reinforcing their competitive positioning.”