FMCG Prices to Drop Early Next Month, Says Sudhir Sitapati

Godrej Consumer Products Limited (GCPL) Managing Director and CEO Sudhir Sitapati said that consumers should anticipate FMCG products to be sold at lower prices from early to mid-next month, as the revised MRP goods need time to hit the market.

Industry under MRP regime and both dealers and companies are holding stocks priced higher under the previous structure, hence the reduction of GST rates to 5% has led to disruptions of a short duration. Sitapati pointed out, “Handing over money to the trade cannot ensure that consumers immediately get the benefits. It will require some time before we see the new MRPs hitting the market.”

The choice by the GST Council from September 22 will lessen taxes on several daily necessities such as hair oil, soaps, face powders, shampoos, toothbrushes, toothpaste, and a variety of food products, to name a few. Although a market for the transition phase may exist with some temporary adjustments, Sitapati is optimistic about entering into the third quarter.

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GCPL which gets 35% of its revenue from soaps (brands like Cinthol and Godrej) has been making volume sales of about 2% per year over the last four to five years, On the other hand, Sitapati expects the category to grow by at least two percentage points with the GST cut, thereby encouraging the spending power of the households and, in turn, there can be demand pull across the FMCG sector.

“GST rationalisation not only benefits categories with reduced rates but also stimulates overall consumption, positively impacting discretionary spending,” he added.