FMCG Companies Outline Strategy for Balancing Volume and Pricing

Fast-moving consumer goods (FMCG) companies in India are preparing a mixed strategy to pass on Goods and Services Tax (GST) benefits to consumers. With pack sizes, price points, and consumer preferences in play, firms are adopting a dual approach — increasing grammage for smaller packs and reducing prices for larger packs. This balanced roadmap ensures affordability for daily consumers while addressing regulatory expectations.

Dual Approach: Grammage for Small Packs, Price Cuts for Larger Packs

Industry executives reveal that most FMCG companies will focus on maintaining popular price points such as ₹5, ₹10, ₹15, and ₹20, which contribute nearly half of sales across categories. To avoid disrupting these critical price bands, firms will increase product weight (grammage) in smaller packs instead of cutting prices.

For larger packs priced above ₹20, direct price reductions are expected. According to Mohit Malhotra, CEO of Dabur India and member of the CII-FMCG committee, this strategy is both practical and consumer-friendly, ensuring price benefits reach buyers without creating confusion in trade and distribution.

Why Popular Price Points Cannot Be Vacated

Small unit packs form the backbone of FMCG sales in rural and semi-urban markets. Malhotra emphasized that vacating these entry-level price points is not feasible, as it risks eroding a significant share of revenue. Even minor price rounding could lead to disputes between retailers and consumers, while cross-subsidisation might harm smaller pack sales.

This delicate balance highlights why companies prefer to maintain consistent pricing for impulse and low-unit packs while passing on benefits through quantity increments.

Government Guidelines on Pricing Expected Soon

Industry sources indicate that the government is likely to issue official guidelines on GST-related price revisions within the week. These will set the stage for FMCG companies to intensify advertising campaigns and communicate pricing changes more effectively to consumers.

Such transparency is crucial for building trust and ensuring that rate cuts are passed on in both spirit and practice.

Big FMCG Players Announce Price Reductions

Leading FMCG giants Hindustan Unilever (HUL) and Procter & Gamble (P&G) have already announced revised prices effective September 22, targeting large pack categories.

• HUL has reduced prices by 10–15% across soaps, shampoos, toothpaste, face powder, jams, ketchup, nutrition products, coffee, and soups.

• P&G has cut prices by 5–15% in segments including shampoos, oral care, baby care, healthcare, and grooming.

Both companies are currently supplying markets with new stock featuring lower Maximum Retail Prices (MRPs). For a short transition, products in circulation may display both old and new prices, but consumers will be entitled to purchase at the reduced rate.

Communication and Advertising Campaigns

Parle Products, one of India’s largest biscuit manufacturers, has confirmed that it will launch advertising campaigns highlighting price changes. The company’s Vice-President, Mayank Shah, stated that while larger packs will reflect direct cuts, smaller packs are likely to receive extra grammage since coinage plays a critical role in their sales strategy.

Pack Size Adjustments Across Categories

Industry insiders note that different product categories will adopt unique strategies:

• Snacks – Small impulse packs will see grammage increases, while family packs will undergo price cuts.

• Bakery & Condiments – Companies like Cremica Food Industries plan to restore grammage previously reduced due to inflationary pressures.

• Bikaji Foods – CFO Rishabh Jain highlighted that larger packs of snacks will see direct price drops, while small packs will get weight increases.

This adaptive approach helps brands remain competitive while catering to varied consumer segments.

Caution Over Anti-Profiteering Measures

A key concern for FMCG companies is the risk of anti-profiteering action if GST benefits are not quickly transferred to consumers. By implementing price cuts and grammage changes transparently, companies aim to avoid regulatory scrutiny while safeguarding consumer trust.

Industry leaders, including Akshay Bector of Cremica, emphasize that restoring product weight in small packs will be done swiftly to align with consumer expectations and compliance requirements.

Conclusion

The FMCG sector is navigating the GST transition by balancing pricing strategies with consumer affordability. With a clear focus on protecting popular price points and delivering value in larger packs, companies are adopting a consumer-first approach. Government guidelines, upcoming ad campaigns, and proactive adjustments from industry giants like HUL, P&G, Dabur, Parle, and Bikaji highlight a coordinated industry effort to ensure GST benefits reach households across India.