Consumer goods companies are heading into 2026 expecting a pickup in volume-led growth, supported by stable commodity costs, easing inflation and revised goods and services tax (GST) rates, even as a weakening rupee continues to pose risks to margin guidance.

Senior executives across fast-moving consumer goods (FMCG) and consumer durables companies said demand conditions are improving after a prolonged period of sluggish growth, aided by easing food inflation, GST changes and a more supportive macroeconomic environment.

"If I had to look ahead to 2026, a large part of growth is likely to be volume-led. Commodity prices have softened and GST changes have kicked in, so in the food industry—where I have better visibility—you should see much healthier volume growth in 2026, especially compared to the first half of 2025," said Manish Tiwary, chairman and managing director, Nestlé India.

Tiwary said improving consumer sentiment, aided by GST changes and a milder commodity outlook, is beginning to reflect in impulse-driven, low-ticket categories, even as macroeconomic improvements take time to translate into higher wallet share.

Yet, it remains an open question how much of the anticipated improvement reflects a genuine, broad-based recovery in household demand, and how much is driven by base effects after muted growth in 2025.

A year of recalibration

The year 2025 also marked a period of transition for what was once considered a relatively stable consumer goods sector.

Several legacy companies underwent leadership changes, with Nestlé, Britannia Industries and Hindustan Unilever appointing new chief executives to steer the next phase of growth. At the same time, revised GST rates provided tailwinds to the sector, although sales saw a temporary dip during the transition period.

Analysts say 2026 is shaping up to be more promising, with early signs of demand recovery and renewed focus on volumes and innovation under new leadership teams.

"2025 has been a year of recalibration for India's consumer economy. A sharp easing in inflation materially improved household sentiment, while the FMCG sector focused on operational discipline, premiumisation, and channel profitability," said Naveen Malpani, partner and consumer & retail industry leader at Grant Thornton Bharat.

Malpani said companies are adapting to shifting consumer behaviour amid broader changes in business models. "Business models are changing; there have also been multiple leadership transitions across companies. The past two to three years have been challenging overall, including the most recent quarters. That said, conditions have stabilised now. From a demand perspective, rural markets are likely to continue leading growth."

Sanjay Chitkara, co-chief sales and marketing officer at LG Electronics India Ltd, described 2025 as a year of mixed macroeconomic and industry-specific challenges for consumer durables.

"A prolonged cool summer, transition to GST 2.0 temporarily disrupting sales momentum and elevated global raw material costs were some of the challenges that the industry was grappling with. Despite a challenging season, LGEIL improved its market share in key categories such as refrigerators, TVs and air conditioners, owing to the company's disciplined cost management, localization emphasis, strategic pricing actions and broadening consumer reach," he said.

Rural resilience, urban questions

While rural demand has outperformed urban markets, companies continue to face uneven growth.

Rural FMCG volumes rose 7.7% in the September quarter, compared with 3.7% in urban markets, according to data from NIQ. Overall FMCG volumes grew 5.4% during the quarter. For the first nine months of the year, volumes increased by an average of 5.6%, up from 4.6% a year earlier.

"FMCG is coming out of a growth slowdown period. The GST 2.0 effect is going to come into picture in 2026, helping growth. Low inflation is also helping manufacturers to pass on some price benefits to the shoppers. This is also going to help with demand. Add to this the lower base in 2025 due to muted growths, therefore, we will see better growth in 2026," said K. Ramakrishnan, managing director, Worldpanel by Numerator (formerly Kantar), which tracks household consumption of daily goods.

That optimism is also visible in the data. The Centre for Monitoring Indian Economy's Consumer Pyramids Household Survey (CPHS) shows a steady post-festive recovery in confidence, with the Index of Consumer Sentiments (ICS) rising 2.4% in October and a further 2.2% in November, after growing at an average 2% between June and August.

Kantar expects urban markets to grow faster in the coming period, albeit marginally. However, the drivers behind the prolonged urban slowdown remain less clear, even as inflation cools and price benefits flow through.

Upbeat sentiment, cautiously

Macroeconomic indicators such as easing inflation are also expected to support consumption.

India recorded retail inflation of 0.25% in October and 0.71% in November, helped by a sharp decline in food prices. Consulting firm BCG said Indian consumers are entering 2026 with strong confidence and spending intent.

According to BCG's Global Consumer Radar Report, 60% of Indian consumers expect their total spending to rise over the next six months, up from 50% in September 2024. About one-third of consumers planning to spend more said the increase would be driven primarily by discretionary purchases, the highest proportion globally.

Only 17% of Indian consumers believe recent global conflicts or political events will slow India's growth, compared with over 60% in the UK, France and Germany. Additionally, 61% expect "good times" ahead, versus 34% who anticipate widespread unemployment or economic stress, implying a net optimism of 27%.

CEOs echoed similar expectations.

Demand is improving, and GST rate cuts have been transformational by improving long-term affordability and accessibility while strengthening branded FMCG, said Saugata Gupta, CEO and managing director of Marico Ltd.

"The government's policies have helped keep the rural economy steady and consistent. Some GST benefits, particularly in food, will also support urban demand, so I expect overall demand conditions to remain stable. That said, traditional FMCG players are losing some share to startups and digital brands. At the same time, incumbents are responding by investing in organized trade and recalibrating their portfolios. Over the next two to three years, volumes should improve," Gupta said.

2026 outlook: Channels, pricing and margins

Looking ahead, Malpani said premiumisation and value would continue to coexist, while newer channels such as quick commerce are reshaping buying behaviour.

"Urban consumers will continue to seek value products, while premium offerings will see higher uptake across both urban and rural markets. This will be a key trend in 2026. From a business model standpoint, quick commerce has become a default top-up channel. What was once used occasionally is now a regular part of household shopping, consumers are increasingly using these platforms for routine purchases," he said.

Companies are stepping up marketing and distribution to capitalize on the demand recovery.

Snacking company Bikaji Foods International Ltd is rolling out mass-media campaigns across its core bhujia-consuming markets.

"Beyond this, we are pushing range selling. All distributors have adequate inventory, and we are focusing on market servicing because, at the end of the day, what is available and visible is what sells. Our primary focus will be to build the brand and strengthen large marketing initiatives," said Manoj Verma, chief operating officer at Bikaji Foods International Ltd.

Verma said demand has remained strong even after the Diwali period, which is typically slower. "Usually, there is a lull after Diwali due to pre-festival stock loading, especially through gifting. However, for the first time, we have witnessed strong demand even after Diwali. This could be driven by two factors: first, the underlying positive momentum, and second, some degree of down-stocking across channels ahead of Diwali, up to around 23 September, due to reduced MRPs following GST changes and expected price benefits," he said.

Commodity outlook and pricing risks

Nestlé's Tiwary said commodity costs remain "sober". "We are hoping that in 2026 we see more volume growth rather than price growth," he added.

Vineet Agrawal, CEO of Wipro Consumer Care & Lighting and managing director of Wipro Enterprises, said palm oil prices have cooled in recent weeks due to strong production in Malaysia and Indonesia and weaker exports.

"When prices were rising, we did not pass on the full increase, which impacted margins. With prices now easing, we will have to watch competitive behaviour before taking pricing decisions," he said.

"), pointer; position: relative; box-shadow: none !important;">LG's Chitkara, however, expects price increases in air conditioners due to Bureau of Energy Efficiency (BEE) rating changes effective January 2026. He said the higher costs would be offset by the GST price cut implemented in September 2025, keeping prices broadly in line with pre-GST-cut levels seen earlier in 2025.

Overall, companies expect the commodity environment to remain stable with normal fluctuations. Still, questions remain around margin protection in a volume-led growth phase, particularly amid currency volatility and rising competition.