Rural markets extend their lead with 7.7 per cent volume growth even as GST transition softens overall momentum
The fast-moving consumer goods (FMCG) sector grew 12.9 per cent in value during the September quarter on a year-on-year basis, according to new estimates from NielsenIQ. Overall volumes were up 5.4 per cent, while prices increased 7.1 per cent in Q2 CY2025.
Unit sales rose faster than overall volumes, signalling sustained consumer preference for smaller packs. The sector’s value expansion was slightly below the June quarter’s 13.9 per cent, partly due to disruptions from the GST transition.
Rural Momentum
Rural regions continued to outpace cities, with volumes expanding 7.7 per cent in Q3 CY2025, with the seventh straight quarter of rural outperformance. Urban markets reported 3.7 per cent volume growth. However, both segments grew slower than in the June quarter, when rural areas registered 8.4 per cent volume growth and urban centres posted 4.1 per cent.
“The Indian FMCG sector continues to demonstrate resilience, with rural markets leading the charge for seventh consecutive quarters. While urban recovery is gaining traction, particularly in smaller towns, rural demand remains the cornerstone of volume expansion. E-commerce continues to be a key growth engine, especially in the top eight metros. With inflation easing, the outlook for consumption remains optimistic and the impact of GST changes on consumption is expected in the next two quarters”, said Sharang Pant, Head of Customer Success – FMCG, NielsenIQ India.
He added, “Sustaining this momentum will require deeper channel engagement and sharper, value-led propositions. The industry is entering a phase where agility and consumer-centric innovation will be critical to future success. Additionally, the rapid rise of small/new manufacturers outpacing overall industry growth highlights shifting market dynamics and intensifying competition.”
Category Trends
Food categories maintained a stable 5.4 per cent year-on-year growth in Q3 2025, supported by stronger demand for staples, even as volume declined in impulse and habit-forming segments. Home and Personal Care (HPC) softened, with consumption rising 5.5 per cent versus 7.3 per cent in the June period.
NielsenIQ attributed the slowdown in HPC partly to temporary GST-related effects, while food demand remained relatively firm.
Ecommerce Gains
The share of ecommerce in FMCG sales in metro areas rose by one percentage point. NielsenIQ estimates that online’s value contribution stands at 5 per cent for all-India urban markets, 13 per cent across metros, and 15 per cent in the top eight metros.
“Q3 ‘25 Omnichannel volume growth remains driven by E-comm, with Modern Trade also contributing this quarter. However, a marginal softening in E-comm volume growth is observed in Q3 ‘25. At the category level, Food shows slight moderation in volume growth, led by Staples and Habit-Forming baskets. Another factor contributing to this volume slowdown is the drop in shopper penetration (Q3 ‘25 vs. Q2’25)”, read NielsenIQ reports.
Offline sales in metros continue to weaken as consumers shift to online channels, though modern trade is showing signs of recovery. Modern trade’s share in FMCG sales across the top eight metros rose to 17.1 per cent in the September quarter from 15.9 per cent in June. Ecommerce penetration has overtaken modern trade in Delhi-NCR and Kolkata, accounting for 16.8 per cent of sales against 13.5 per cent for modern trade, and has crossed 20 per cent in key southern metros.
Smaller Players Lead
Smaller manufacturers sustained steady momentum in Q3 2025, supported by healthier volume growth in both food and HPC segments on a low base. Larger FMCG companies, meanwhile, saw a moderation in consumption trends during the quarter.
