From GST Boost to Global Conflicts: How FY26 fared for FMCG marketers

FY26 will likely be remembered as a year when India’s FMCG sector was forced to constantly recalibrate in response to forces far beyond its control. 

What began with optimism around GST rationalisation soon gave way to a far more complex reality shaped by geopolitical tensions, LPG shortages, and persistent input cost volatility. 

For marketers, the year was less about executing plans and more about continuously rewriting them.

Margins under pressure, marketing under scrutiny

As cost pressures mounted, profitability came under strain and marketing budgets were inevitably pulled into the equation.

“Marketers were in a position where they had planned for big spends, but suddenly had to reconsider,” an FMCG industry media head said off record. “With margins shrinking, budgets have been tapered or reallocated, and that will reflect in overall media spends, especially in the first half.”

This recalibration is visible in company disclosures as well, underscoring how uneven the response has been across the sector.

For instance, Dabur reported advertising and publicity spends of Rs 673.55 crore for the nine months ended December 31, 2025, slightly lower than Rs 688.24 crore in the same period last year.

In contrast, Hindustan Unilever increased its ad spends to Rs 4,752 crore from Rs 4,566 crore in the corresponding period, signalling continued investment behind brands despite cost pressures.

Emami reported a 4.4 per cent rise in advertising and sales promotion expenses to Rs 527.25 crore, up from Rs 505.14 crore a year ago.

On the other hand, Godrej Consumer Products saw its advertising and publicity expenses decline 2.7 per cent to Rs 1,030.94 crore from Rs 1,059.14 crore.

Taken together, these numbers reflect a sector that is not uniformly cutting spends, but selectively reallocating based on category dynamics, margin pressures, and growth priorities.

N Chandramouli, CEO of TRA Research, described this as a structural reset. “What we observed was a decisive shift from expansive, top line driven marketing to far more calibrated and accountable investments. Budgets were not necessarily reduced, but reallocated towards more targeted, conversion led initiatives.”

A policy push that met a global wall

The fiscal year opened with a strong policy signal. GST rate cuts across several FMCG categories were designed to stimulate consumption and ease price pressure on consumers. Companies moved swiftly to pass on these benefits, either by reducing MRPs or increasing grammage.

There was a clear expectation that these interventions would drive demand recovery, particularly in the January to March quarter. The FMCG Media Head said, “The GST cuts were seen extremely positively and we were anticipating a strong recovery, especially in the last quarter of the year.”

However, that expected momentum was short-lived.

As geopolitical tensions intensified globally, the cost environment began to shift dramatically. Crude linked inflation started feeding into every aspect of the FMCG value chain, from logistics to raw materials and most significantly, packaging.

“Whatever gains came from GST cuts were effectively neutralised within months,” the executive noted. “By March, input costs, especially packaging, were fluctuating so rapidly that even short term planning became difficult.”

When crude moves, everything moves

The link between global conflict and local cost structures became starkly visible through FY26. Rising crude prices had a cascading effect on FMCG operations, given the sector’s dependence on petroleum derivatives.

Packaging costs emerged as a key pressure point. “In some cases, suppliers were revising prices almost daily,” the media head said. “There were instances where prices jumped sharply overnight and there was no guarantee on what the next day would look like.”

Alongside this, LPG shortages added another layer of disruption. While not as visible as fuel price hikes, LPG constraints created operational uncertainties across parts of the supply chain, further tightening the margin environment.

Krishnarao Buddha, Independent Brand Consultant and former Head of Marketing at Parle Biscuits captured the broader macro impact succinctly. “Geopolitical disruptions typically have a lagged impact on FMCG, but the immediate effect is inflationary pressure driven by petroleum prices, which pushes up input and packaging costs and puts margins under stress.”

Efficiency drives experimentation

Interestingly, constraint did not lead to stagnation. It led to experimentation.

A CMO at one of India’s top FMCG conglomerates pointed to a dual shift in mindset. “This has been a year where the defining theme has been the pursuit of efficiency. With tighter budgets, brands have had to make far more deliberate choices on where to deploy resources.”

At the same time, the CMO added, “Constrained environments have also driven experimentation. Brands have been forced to move beyond traditional approaches and lean more into data and content to sharpen their go to market strategies.”

Chandramouli reinforced this evolution. “Brands leaned heavily into first party data and hyperlocal insights to drive efficiency. In many ways, uncertainty forced discipline and that discipline has made marketing far more strategic and resilient.”

The consumer becomes more deliberate

While marketers grappled with cost and allocation challenges, consumer behaviour evolved in parallel.

For much of the year, demand remained stable, supported by policy measures and gradual volume recovery. “You are seeing volume growth come back for a lot of FMCG organisations,” the CMO noted, adding that this was “always a positive sign for the sector.”

However, consumers became more cautious in how they spend their money.

“Consumer behaviour became far more deliberate,” Chandramouli said. “We saw increased price sensitivity and a growing preference for smaller packs or value offerings. But value did not mean cheap but justified.”

This nuance reshaped communication strategies.

“Messaging moved away from purely aspirational storytelling to a stronger emphasis on functional benefits, trust, and transparency,” he added. “Brands that could clearly articulate their value proposition were the ones that stayed relevant.”

Essentials hold firm, discretion slows

Despite widespread uncertainty, FMCG consumption remained relatively resilient, particularly in essential categories.

“Staples and daily use products tend to remain steady even in volatile environments,” Buddha said. “There is no immediate impact on consumption in these categories, unlike discretionary spending.”

The contrast was visible elsewhere. High value purchases such as automobiles and travel saw consumers delaying decisions.

“In uncertain times, people tend to defer big ticket purchases and adopt a wait and watch approach,” Buddha explained.

Agility becomes non negotiable

If there is one lesson that cut across organisations, it was the need for agility.

“Agility is no longer optional, it is foundational,” Chandramouli said. “Brands that succeeded were those that could respond in near real time, whether it was recalibrating pricing narratives, shifting media spends, or adapting campaigns.”

He also pointed to the growing importance of regionalisation. “India is not one market, it is many,” he said, highlighting the role of local insights and vernacular communication in driving relevance.

At the same time, precision in media investments proved more effective than scale. “Sharper investments delivered better outcomes than larger ones,” he noted.

Living with the new normal

As FY26 drew to a close, one idea became increasingly clear across the industry. Volatility is no longer episodic. It is continuous.

The FMCG media head put it bluntly. “This is becoming the new normal. Something or the other will keep happening, and marketers have to stay prepared.”

The CMO echoed a similar sentiment. “Given the current geopolitical environment and volatility in energy inputs, the outlook remains a wait and watch scenario where agility will be critical.”

Buddha offered a longer view. “If disruptions persist, markets eventually stabilise into a new normal, but until then businesses have to navigate both cost pressures and demand dynamics carefully.”

FY26 did not just test FMCG marketing. It redefined it.

The year showed that marketing was no longer only about driving demand or building brands. It was about operating with precision under pressure, adapting in real time, and finding growth even when the ground beneath keeps shifting.