FMCG companies working on restoring grammage in the smaller packs of Rs 5 and Rs 10

NEW DELHI: Makers of daily essentials and staples, from snacks and confectionery to shampoo and tea, said they are working on restoring grammage in the smaller packs of Rs 5 and Rs 10 as it may not be feasible to cut those prices when the overhauled goods and services tax (GST) is implemented over the next month or so.

“Since our products come at fixed prices of Rs 5 or Rs 10, it is impractical to change pricing,” said Vipul Prakash, chief executive, DFM Foods, which sells Crax salty snacks. “We will, however, increase grammage per pack wherever possible.”

This would be a reversal from the past two years, when companies resorted to shrinkflation —reducing weight or quantity in packs — while keeping prices the same amid steep inflation in raw materials and packaging. Prices of palm oil used extensively for baked goods, snacks, personal care products and cosmetics, coffee and cocoa, for example, rose by up to 100% over the past two years.

The GST Council, the decision-making body for the levy, is expected to meet on September 3-4 in New Delhi.

Prime Minister Narendra Modi had announced sweeping GST reforms in his Independence Day speech, the first such major revamp. The Centre proposes to scrap the 12% and 18% slabs, while retaining 5% and 18%, with most daily use items taxed at the lowest slab.

“Biscuits, which have nearuniversal usage, are overwhelmingly consumed down to the smallest village, priced at `5-10,” said Varun Berry, executive vice-chairman and managing director, Britannia Industries.

Quick to Implement
“While the proportion of Rs 5-10 packs for Britannia is around 62%, for the larger industry, it is even greater. Hence, a reduction from 18% to 5% will benefit the right segment of society,” said Berry of Britannia.

Companies are working on making quick changes.

“Relevant grammage which had to be taken off will come back in packs and this will be done very quickly; we will work on adjustment in weight, particularly for small packs,” said Akshay Bector, managing director of ketchup, bakery products and mayonnaise maker Cremica Food Industries.


“The entire FMCG market has been quite constrained; the expected GST reduction should help in spurring demand.” Several large companies making snacks, biscuits, noodles and shampoo said they will add weight, but many didn’t want to comment citing competitive confidentiality.

“It’s not usually feasible to change prices of sachets, for example, from Rs 10 to Rs 9, as new packs would need to be printed, and it’s also inconvenient for transactions and book-keeping. So we will put back weight across all existing small packs, as it will be faster,” said a senior executive at a leading shampoo and cosmetics maker. “We will, however, reduce prices of bigger packs, depending on the new tax slabs.”

Distributors said they expect added quantity in packs to be deployed as a competitive edge as soon as GST 2.0 is in place. “Companies making candies, noodles and tea have sounded us off that they could replenish fresh stocks within days of the GST reductions being announced, and get some first mover advantage,” said a prominent fast-moving consumer goods (FMCG) distributor in New Delhi. Nestle, ITC, Tata Consumer and Hindustan Unilever are key players in these categories.

Brokerage firm Jefferies had said lower GST could boost demand. “A lower tax on these (everyday essentials including packaged foods, personal care and ayurveda) products can help improve demand at a time when the consumer sector has been facing a moderate growth trend,” it said in a note after the PM’s speech.

Brokerage firm Nomura expects snack-makers among FMCG categories to be key beneficiaries, with GST expected to drop on such products to 5% from 12%.

“Companies would look to pass more value to their customers through higher volume for relevant categories or lower price points,” said Krishna Khatwani, head of sales, Godrej Consumer Products, which makes Cinthol soap and Ezee detergent.

The GST reforms are expected to give a strong push to demand after the marginal revival seen in the June quarter. Sales of packaged foods, cleaning items and personal care products increased 6% by volume in the first quarter of FY26, NielsenIQ had said in its quarterly update earlier this month, in comparison to 5.1% in the preceding quarter.