FMCG Revenue Soars Amid Competitive Pressures: Margin Gains Still Limited

A recent report by the Systematix Group highlights that FMCG companies, although achieving an impressive 9% year-on-year (YoY) revenue growth in the third quarter of FY26, may witness limited margin gains. This contrast stems from GST-related adjustments, pricing corrections in significant categories, and a persistently competitive market environment.

The analysis notes that despite the 9% YoY revenue hike, driven by a notable 6% volume growth, some part of the increase was fuelled by GST cuts and channel restocking activities rather than sheer pricing power. For instance, cuts in GST on products like biscuits, noodles, and snack foods enhanced volumes and sales realisations, temporarily boosting overall growth.

However, lingering challenges such as price reductions in categories including tea and edible oils and heightened competition in detergents and paints sectors have curtailed the ability of FMCG companies to enhance profitability. The Systematix report stresses that sustainable growth will hinge on performance excluding GST-related benefits, with the focus on maintaining stable margins amid ongoing competitive pressures.