In response to the recent Goods and Services Tax (GST) rate rationalization, fast-moving consumer goods (FMCG) companies are adopting divergent strategies to maintain affordability and consumer loyalty. While some firms have temporarily exited fixed price packs, others are increasing product grammage to retain the psychological pricing thresholds that dominate consumer buying behavior.
The GST Council’s sweeping reform, effective September 22, introduced a simplified three-slab structure—5%, 18%, and 40%—replacing the earlier four-rate regime. This has led to significant tax reductions on processed foods and personal care items, prompting FMCG companies to pass on the benefits to consumers. However, the challenge lies in preserving the integrity of fixed price points such as ₹1, ₹2, ₹5, ₹10, and ₹20, which are critical for low-value, high-volume products typically sold in sachets and impulse packs.
Hindustan Unilever Ltd (HUL) has opted to increase the grammage of its products while maintaining the existing price points. “In line with the recent GST rate rationalisation, we are passing on the benefits directly to our consumers. For price-point packs, we’ve opted to increase weight or volume as applicable to avoid odd pricing and coinage-related challenges,” said a company spokesperson.
Conversely, Parle Products and Dabur have temporarily moved out of fixed price packs. Parle has reduced the price of its ₹5 biscuit pack to ₹4.45 and the ₹10 pack to ₹8.90. “This will be for the interim and we plan to return to the fixed price points in a month or so,” said Mayank Shah, Vice President, Parle Products. He noted that packaging changes require a lead time of up to two months, and the company intends to revert to fixed price packs once new wrappers accommodating higher grammage are ready.
Dabur has similarly adjusted prices for its ₹1, ₹10, and ₹20 packs, now selling them at ₹0.90–₹0.94, ₹9, and ₹18 respectively. Company officials acknowledged that fixed price points are becoming less relevant with the rise of digital payments, though cash transactions still dominate in rural and semi-urban markets.
Industry experts view these adjustments as short-term measures. “Ultimately, companies will increase volumes and come back to coinage of ₹2, ₹5 and ₹10, because ₹4.5 or ₹4.6 is not practical,” said Abneesh Roy of Nuvama Institutional Equities.
Bikaji Foods International has confirmed its plan to increase grammage in impulse packs to fully pass on GST benefits. The move aligns with consumer expectations and avoids disruption in demand caused by non-standard pricing.
As companies navigate packaging constraints and consumer psychology, the FMCG sector is expected to stabilize pricing strategies within the next two months, restoring the “magical price points” that underpin mass-market consumption.
