FMCG Faces “Soft Patch” from GST Cuts and Weather Disruption
The Fast-Moving Consumer Goods (FMCG) sector experienced a temporary period of slower growth, described as a “soft patch,” caused by a combination of pre-festive weather disruptions and the implementation of recent GST rate rationalization.
Dual Factors Causing Slowdown
- Supply Chain Disruption from Weather: Adverse weather conditions, including unseasonal or heavy rains in various regions, disrupted logistics and distribution networks. This physically slowed down the movement of goods, impacting stocking and sales volumes in both urban and rural areas.
- GST Transition Impact: The government’s GST rate cuts (GST 2.0) introduced temporary confusion and caution in the distribution channel. Distributors often delayed placing fresh orders or reduced their inventory in anticipation of the price changes or due to the time needed to clear old stock carrying the higher tax rate.
Expected Festive Rebound
- The industry considers this slowdown to be transitory or a temporary “soft patch.”
- FMCG companies anticipate that the underlying positive factors—the onset of the peak festive season and the eventual price reduction reaching consumers—will trigger a strong rebound in growth and sales volumes in the coming quarter. This period of disruption is viewed as a necessary precursor to the anticipated festive boom.
Source :- CNBC TV18