In a potential game-changer for the Fast-Moving Consumer Goods (FMCG) sector, industry expert Abneesh Roy from Nuvama Institutional Equities anticipates significant GST rate cuts on staple items. This move is expected to provide a substantial boost to consumption, particularly benefiting companies with high exposure to the current 12% GST bracket.

Expected GST Reductions

Roy predicts a reduction in GST rates from 12% to 5% on staple items such as ghee, butter, and namkeens. This change is anticipated to be implemented before Diwali, potentially catalyzing a surge in consumer demand.

Companies Set to Benefit

The impact of these GST cuts is expected to vary across FMCG companies, depending on their exposure to the 12% GST bracket:

Bikaji, with its significant 70% exposure, is positioned to be a major beneficiary. Roy projects that the company's volume growth could accelerate from high single-digit to double-digit figures post the rate cut.

Positive Factors for FMCG Sector

Several factors are aligning favorably for the FMCG sector:

• Tax rebates
• Anticipated interest rate cuts
• Multi-year low consumer and food inflation
• Favorable monsoon conditions

These elements collectively paint a promising picture for the sector's growth prospects.

Top Picks and Sector Outlook

Roy's top picks in the FMCG space include:

• Hindustan Unilever Limited (HUL)
• Britannia Industries
• Bikaji Foods International
• Nestle India

For the cigarette segment, a bucket reclassification is expected, potentially accompanied by a slight increase in taxation.

Urban vs Rural Demand

The recovery in urban demand is anticipated to be gradual. Meanwhile, rural demand is expected to continue outpacing urban growth, indicating a shift in consumption patterns.

Margin Expansion Prospects

The second half of the fiscal year looks promising for margin expansion in the FMCG sector. This optimism is fueled by:

• A 30% correction in coffee prices
• Recent palm oil duty cuts

These factors are likely to ease input costs for FMCG companies, potentially boosting their profitability.

As the FMCG sector braces for these changes, companies are positioning themselves to capitalize on the expected surge in consumer demand. The combination of GST rate cuts, favorable macroeconomic factors, and potential margin improvements could usher in a new phase of growth for the Indian FMCG industry.

India's fast-moving consumer goods (FMCG) sector has seen a shift in growth dynamics, with Parle retaining its crown as the most preferred brand for in-home consumption, according to the latest Brand Footprint India 2025 report by Worldpanel.

Parle's Continued Dominance

Parle has maintained its position as India's most-favoured FMCG brand for in-home consumption for an impressive 13th consecutive year. The brand achieved a Consumer Reach Point (CRP) score of 8,605 million, solidifying its stronghold in Indian households.

Britannia's Strong Performance

Britannia secured the second position in the in-home consumption category with 8,241 million CRPs. However, the company outshone its competitors in the out-of-home consumption segment, leading with 655 million CRPs.

Top 5 In-Home FMCG Brands

The report highlighted the top five in-home FMCG brands in India:

Notably, Surf Excel made its entry into the top five with an impressive 24% CRP growth.

FMCG Sector Growth Slowdown

The overall FMCG brand CRP grew by 4.3% to reach 120 billion in 2024. However, this growth rate represents a slowdown compared to the 7% growth observed in the previous year. The deceleration was primarily led by the foods and beverages categories.

Dairy Sector Shows Resilience

While most categories experienced a slowdown, the dairy sector demonstrated modest improvement, with growth increasing from 5% to 6%.

Comprehensive Market Analysis

The Brand Footprint India 2025 report provided a thorough analysis of the FMCG market, examining 447 brands across various categories including food, homecare, health & beauty, beverages, and dairy.

This comprehensive study offers valuable insights into consumer preferences and market trends in India's dynamic FMCG sector, highlighting the continued dominance of established brands and the evolving landscape of consumer choices both in-home and out-of-home.