FMCG ad spends hold firm in Q2 FY26 despite GST transition and weak urban demand

New Delhi, November 11, 2025: India’s fast-moving consumer goods (FMCG) companies maintained resilient advertising investments in Q2 FY26 (July–September 2025), despite GST rate transitions, heavy rains, and muted urban demand. 

While topline growth for many players stayed in mid-single digits, ad spends showed a mixed but steady picture—higher year-on-year for several companies, with quarter-on-quarter adjustments as firms recalibrated for GST-driven price cuts, channel destocking and a digital-first festive push.

Executives and analysts expect a better second half on the back of restocking, rural demand recovery and softer input costs. The GST Council’s rate cuts on key personal-care categories have begun to lift affordability, although the near-term impact was a temporary pipeline reset as distributors ran down high-MRP inventory and delayed fresh orders ahead of revised pricing. Heavier-than-usual rains also disrupted sales in summer-sensitive portfolios, adding to the Q2 softness.

How the ad spends stacked up in Q2 FY26

Ad budgets focused on high-ROI levers: owned digital, influencer partnerships and premium innovation in health, hygiene and personal care. 

Company snapshots (Q2 FY26 vs Q1 FY26 and Q2 FY25):

• Hindustan Unilever (HUL): Rs 1,661 crore vs Rs 1,656 crore (Q1 FY26) and Rs 1,501 crore (Q2 FY25). QoQ: +0.3%. YoY: +10.7%.
  
  
• Dabur India: Rs 233.57 crore vs Rs 201.96 crore and Rs 225.63 crore. QoQ: +15.6%. YoY: +3.5%.
  
  
• Emami: Rs 156.39 crore vs Rs 179.75 crore and Rs 145.72 crore. QoQ: –13.0%. YoY: +7.3%.
  
  
• Colgate-Palmolive India: Rs 225.10 crore vs Rs 188.41 crore and Rs 242.00 crore. QoQ: +19.5%. YoY: –7.0%.
  
  
• Bajaj Consumer: Rs 39 crore vs Rs 39 crore and Rs 32 crore. QoQ: flat. YoY: +21.9%.
  
  
• Godrej Consumer Products (GCPL): Rs 375.74 crore vs Rs 313.80 crore and Rs 363.95 crore. QoQ: +19.7%. YoY: +3.2%.
  
  

The sector is betting on a share and premium mix through the transition. YoY adex growth for many leaders signals confidence. Sequential increases at Colgate and GCPL indicate a festive build-up. Cuts at names like Emami reflect GST-linked caution and cost control after a softer quarter.

What GST did to Q2, and what it may do to H2

Rate reductions from July 2025 lowered taxes on several personal-care staples to 5%, improving affordability and long-term category health. In the short term, the move prompted trade to destock older MRP inventory and delay purchases, resulting in a temporary revenue and profitability hit for select companies. Personal care felt the reset more than packaged foods. Combined with monsoon-related distribution issues, this created a soft patch through September.

Most players guide to normalisation in H2. As new MRPs settle and trade pipelines rebuild, festive consumption and rural offtake should support higher throughput. With input costs moderating, several firms see room for double-digit EBITDA growth if demand stabilises and premiumisation continues.

Five adex themes to watch

1. Digital as the demand engine: Performance video, creator partnerships and commerce integrations took a larger share of Q2 budgets, reflecting both efficiency needs and the shift in discovery.
   
   
2. Premium and health skew: Spend followed margin—skin, oral care, hair serums, wellness and OTC-adjacent lines saw higher support.
   
   
3. Selective mass media: TV retained weight for festival bursts and high-reach launches, but many brands re-routed base GRPs into digital to manage ROI during GST transition.
   
   
4. Rural rebuild: With government spending and a better base, rural growth outpaced urban in pockets; hair oils, toothpastes and value packs benefited.
   
   
5. Caution where GST hit hardest: Companies with heavier exposure to rate-cut categories trimmed sequential spends to protect P&Ls ahead of restocking.
   
   

Outlook: Firming into festive, with eyes on rural and restocking

Management commentaries across large FMCG point to a “better second half” as GST effects fade, supply chains normalise, and festival demand lifts offtake. Risks remain—input volatility, patchy urban momentum and uneven monsoon impact—but easing inflation and government spending provide a tailwind. As fuller disclosures arrive from the remaining companies, Q2 already shows a sector using advertising to defend share, push premium portfolios and prepare for recovery in FY26.