Under the new GST structure, several consumer goods earlier taxed at 18% — including toothpaste, toothbrushes, hair oils, shampoos, soaps, biscuits, chocolates and Ayurvedic products—now attract 5% GST. Products previously taxed at 12%, such as instant noodles, cheese and namkeens, have also moved to the 5% slab.

The change is expected to improve affordability in the long term, benefiting Colgate-Palmolive India, Hindustan Unilever (HUL), Dabur India, Godrej Consumer Products, Tata Consumer Products, Nestlé, Marico, Britannia and Patanjali. However, in the short term, most companies reported disruption in trade and inventory liquidation as distributors and retailers adjusted to the new price regime.

Top listed FMCG companies selling biscuits, soaps, staples and juices reported mixed volume growth in the September quarter, with companies such as Britannia reporting a dip while Hindustan Unilever reported flattish volume growth year-on-year

What part of the product portfolio of FMCG companies was impacted by the revised GST rates?

Barring tobacco and makers of aerated drinks, where GST rates were unchanged, a large share of the product portfolios of most FMCG companies fell under the revised rates.

Dabur India said almost 66% of its portfolio benefited from the GST rate cut, taking 86% of its total portfolio to the 5% bracket. Dabur estimated an impact of about ₹100 crore, or 3-4% of quarterly revenue, due to the GST transition during the period. It reported a 2% jump in September-quarter volumes, with consolidated revenue up 5% year-on-year.

"While the GST reduction is structurally positive, it led to a temporary disruption in trade as the channel anticipated forthcoming rate reductions," the company said during its post-earnings call last month.

HUL said 40% of its portfolio—and about half of its SKUs—are now in the 5% GST category. The company made pricing and package weight changes across 1,200 SKUs, fully passing on benefits to consumers. However, this led to a transitory impact on volume growth, especially in its personal care and hair care segments, where over 90% of the portfolio underwent GST-related rate changes. The company reported flat volumes in the September quarter.

Biscuit maker Britannia Industries said the new rates impacted about 85% of its portfolio, leading to short-term headwinds in September as distributors and channel partners de-stocked and consumers delayed purchases in anticipation of lower prices. Packaged biscuits now attract 5% GST, down from 18% previously.

Mumbai-based Godrej Consumer Products said almost one-third of its portfolio—primarily toilet soaps and smaller categories such as talcum powders, shampoos, and shaving creams—now benefits from a reduced GST of 5%. GST on its soaps portfolio fell from 18% to 5%.

The biggest loser in terms of volumes, however, was oral care company Colgate-Palmolive India. Colgate reported a 6% year-on-year revenue decline, marking its weakest performance in several quarters, as the GST transition disrupted trade across channels.

The company attributed the fall to temporary destocking at distributor and retailer levels and pantry rationalization by consumers. The management pointed to a high base effect from the previous year. GST rates on toothpastes were reduced from 18% to 5%.

How did companies implement the revised rate cuts?

For most companies, the transition to the revised rate was a challenge. Retailers stopped picking up stock in the first few weeks of September in anticipation of lower rates, after Prime Minister Narendra Modi announced the GST revision plan on 15 August. The transition led to short-term trade disruptions as the channel adjusted to new pricing and cleared old inventory.

Britannia said channel de-stocking and delayed consumer purchases impacted revenue by 2-2.5% during the quarter. Volumes declined 3% year-on-year during the period, according to estimates by analysts at Jefferies. The company has undertaken grammage increases (in ₹5-10 packs) and reduced product prices to pass on the benefit.

Godrej Consumer implemented a combination of pack weight changes and price reductions. The company reported a 3-4% hit to standalone top line and a 2% decline in its personal care business (soaps, deodorants, and hair colour) during the quarter, primarily due to the transition.

Hair oil and shampoo maker Dabur India passed on the benefits through price reductions and grammage changes, which led to a temporary moderation in sales in September as trade partners anticipated lower retail prices.

Tata Consumer Products Ltd, which sells tea, coffee and branded kitchen staples, said its foods and beverages portfolio—including Capital Foods, Organic India, and Tata Soulfull—was impacted towards the end of the quarter, leading to a temporary "hiccup" in sales as buyers postponed purchases. The company noted that ready-to-drink beverages were largely unaffected due to their impulse-driven nature and continued to deliver strong growth.

Post-GST, Tata Consumer cut prices across its packaged water range — the ₹10 bottle now sells at ₹9, and the ₹20 bottle at ₹18. September quarter revenue was up 18% year-on-year for the company.

When will normalcy resume?

Companies expect demand to normalise through October and November. Most companies said the stocking of goods with revised rates will be complete within the ongoing quarter.

"We have been monitoring liquidation of inventory. The impact wasn't restricted only to September—there will be a carry-forward impact into October, with the first 15-16 days also affected due to GST," Mohit Malhotra, CEO of Dabur India, said on an earnings call on 30 October.

"I think it (restocking) will happen within the quarter. Most of it has happened within the month actually, but certainly everything will happen within the quarter," Sudhir Sitapati, managing director and CEO of Godrej Consumer, said during the company's quarterly earnings call on 31 October.

HUL expects normal trading conditions to resume by early November, once new prices stabilise.

"There will be a point of disturbance for a month or so because there will be multiple prices in the market—old MRP sold at new GST, new MRP with old grammage, and so on. This disturbance will persist in the trade till early November. Post that, we expect prices to stabilise and normal trading conditions to return," Ritesh Tiwari, chief financial officer, said during HUL's post-earnings call on 23 October.