FMCG growth in 2025 led by rural demand, digital channels and quick commerce

For two decades, Parle Products used to sell its iconic Parle-G pack for Rs. 5. This pricing changed to Rs. 4.45 in September, marked by a year of GST transitions, channel disruptions, and the growing dominance of platforms where purchases happen in under two minutes. 

India's FMCG sector achieved 13.9% value growth in the second quarter, driven by 6% volume growth and 7.4% price increases. But beneath these figures, rural markets outpaced urban demand for the sixth consecutive quarter, quick commerce reshaped distribution hierarchies, and digital investments climbed past the 20% threshold even as return measurement remained a challenge.

"From a marketing lens, two clear shifts stood out for us in 2025," says Mayank Shah, Vice President at Parle Products. "The first was the growing prominence of digital as a primary investment area. Beyond scale, the nature of digital marketing itself evolved, with increased use of AI-led tools for sharper targeting, personalisation, and more effective consumer communication."

The second shift Shah identifies centres on quick commerce. Over the past year, platforms like Blinkit, Zepto, and Swiggy Instamart changed how consumers discover and purchase FMCG products. The emphasis on convenience pushed brands to rethink visibility, availability, and messaging. Industry data shows quick commerce now accounts for 70-75% of total e-grocery orders, compared to 35% in 2022, expanding at a compound annual growth rate between 70-80%.

Moreover, Siddharth Gupta, General Manager, Marketing, Britannia, shares, “The year was about building relevance by involving consumers, tapping into culture, and using technology in a way that felt natural. Whether it was storytelling through packaging, co-creating experiences, or using tools like AI and AR to make engagement more immersive, the focus was on building curated and immersive experiences rooted in authenticity.”

Some of its key campaigns include Good Day at Mahakumbh, A bite of Tamil Nadu, Good Day Flavours of Equality, Britannia Pure Magic Choco Frames, and 50-50 4th Umpire, which utilised technology and aimed at engaging consumers.

Distribution depth over digital breadth

While digital captured attention and budgets, physical distribution emerged as the year's most impactful lever for FMCG brands navigating uneven market conditions. With rural markets recording 8.4% volume growth against urban's 4.6%, the infrastructure required to reach dispersed geographies became critical.

Shah points to distribution as the most effective marketing tool in 2025. With India's vast geography and clear differences in product availability across urban and rural markets, expanding and deepening distribution became important. As rural markets continued opening new growth opportunities, the deeper the brands went into these markets, the stronger the results. 

Zoher Kapuswala,Head of Marketing at Ferrero India, adds, "Availability and visibility proved to be the most powerful growth levers across channels," he observes. "Strengthening distribution, retail execution and local activations kept us close to consumers, while digital played a critical role in sustaining relevance and engagement in urban India."

The 8.4% volume increase in rural areas compared to 4.6% in urban areas was driven by smaller towns, which continued experiencing consumption declines owing to channel shifts toward e-commerce.

Britannia’s Gupta says that the rural shopper is evolving rapidly, with rising aspirations for premium formats. This is driven by increasing disposable incomes and the growing influence of digital culture. 

The brand is offering its portfolio at an accessible price point to cater to the rising demand with an expanded footprint. “We support this via hyper-targeted localised strategies, such as the Good Day butter-chai association campaign, which leveraged a weather API to deliver digital ads specifically in regions experiencing rainfall. These ads were further localised by language and demographics, ensuring tailored messaging for cities across North and East India to promote the Butter-Chai association.”

For Fortune Edible Oils & Foods, this translated into centering media strategy where food, culture, and community naturally converge. Mukesh Mishra,Joint President of Sales and Marketing at AWL Agri Business Ltd, explains that the brand scaled up investments in festivals, on-ground activations, and experiential formats.

The approach created touchpoints where people could engage with the brand in more sensory and memorable ways, moving beyond conventional advertising to presence at moments of actual consumption decision.

Akshali Shah, Executive Director at Parag Milk Foods, adds, “We have consciously evolved from being largely sales-led to becoming more marketing-driven, with a clear focus on investing with purpose rather than merely increasing spends. The emphasis was on high-impact media, consistent storytelling, influencer and content-led engagement, and building sustained visibility for our portfolio across Gowardhan, Go Cheese, Pride of Cows, and Avvatar, instead of short-term bursts.”

In mature markets, efforts focused on sustenance and recall, while in newer regions, the emphasis was on customer acquisition. Retail visibility, trade-led initiatives, and local relevance proved far more effective than aspiration alone, according to Akshali Shah.

The convenience premium and its costs

Quick commerce's rise created new opportunities and complications. While the channel delivered significant growth, operating within its ecosystem required different considerations than traditional retail or even conventional e-commerce.

The convenience came at a price. Platforms began auctioning premium listings and time slots, with brands paying higher prices to appear in top search results. Advertising spends surged particularly during peak shopping hours between 7:30-9:30 AM and 5:30-7:30 PM, when costs nearly doubled. Industry executives report margins in categories like biscuits and snacks fell to 13-15%, similar to modern trade levels, while overall margins dropped 3-5 percentage points over three to six months.

Mishra notes how quick commerce completely reshaped buying habits. “Platforms like Blinkit, Zepto and BigBasket became the primary destinations for everyday staple purchases, so we strengthened visibility, bundling and shoppable content at these digital storefronts to influence decisions right at the point of purchase.”

Furthermore, home-chefs and micro-creators began influencing everyday cooking behaviour far more than mainstream voices, which pushed the company to build creator communities instead of doing one-off campaigns.

Despite margin pressure, the channel remained strategically important. Reports suggest that, for giants like Hindustan Unilever, approximately 70% of sales still came from general trade, 20% from modern trade, and 8% from e-commerce, but the company doubled its quick commerce sales in the first half of the financial year. It aligned with Indian shopping behaviours, particularly during festivals where gifting decisions often happened at the last minute.

Building relevance beyond transactions

If distribution reached consumers and quick commerce served their immediacy, the persistent challenge remained creating meaningful brand connections. In a year marked by tactical execution and channel optimisation, several marketers identified genuine emotional relevance as their biggest obstacle.

Mayank Shah describes this as one of 2025's biggest marketing challenges. Many brands had been quick to take positions on issues or causes, but that didn't always translate into something consumers could truly relate to or feel connected with. 

For Parle, the key question became how to make the brand feel more meaningful and present in consumers' everyday lives. It influenced campaign planning and execution throughout the year. Instead of focusing only on messaging or moment-based themes, the company looked at how the brand could naturally fit into daily routines and real consumer contexts.

Britannia’s Gupta, attention spans are shorter, and expectations are higher with people exposed to content across TV, digital, OTT, outdoor, and social platforms. 

“Simply being present was no longer enough; we needed to genuinely stand out and surprise, while still staying rooted in our brand values and cultural relevance. Instead of relying only on scale, we ensure we are present at touchpoints where consumers actively engage with content, using a smarter mix of traditional, digital, and new-age platforms.” 

The brand’s campaigns are designed to be culturally rooted and innovative in format.

Shail Pancholi, Country Director at Wonderful Pistachios, took a different approach to demonstrating impact. The past year marked a decisive shift toward storytelling that makes mindful snacking feel fun, effortless, and part of everyday life in India. 

“Rather than leading only with nutrition credentials, we leaned into bold, visual-first ideas and claimed high-impact OOH hotspots- putting the brand right in the middle of the places our audience lives, works, and hangs out,” he notes. 

This approach delivered impact across markets where demand for taste-led yet nutritious options continues growing.

Kapuswala frames it as moving from campaigns to brand moments. "As we step into 2026, our ambition is to move beyond campaigns to creating brand moments that truly matter and by which we can influence consumer behaviour," he says. 

The year ahead will be more complex for marketers with newer technologies, evolving tools, and ample data. What matters most is staying anchored in consumer understanding and translating it into ideas that are simple, culturally resonant and scalable, Kapuswala continues.

For Shah of Parag Milk Foods, the operating environment in 2025 was marked by greater complexity, from GST-related shifts to channel fragmentation and evolving consumption patterns requiring tighter planning, simpler communication, and agility without losing coherence at a portfolio level. 

“While long-term brand-building remained important, there was a sharper focus on trade marketing, modern retail, and formats that influence decisions closer to the shelf, alongside influencer partnerships that helped our brands stay relevant and credible at scale,” she continues.

The GST reforms that took effect in September added another layer of strategic consideration. With rates on everyday items like soaps, toothbrushes, hair oil, instant noodles, chocolates, and instant coffee moving to 5%, while products like paneer and UHT milk became GST-exempt, brands faced decisions about how to pass benefits to consumers. 

Measuring what matters

As digital's share of marketing budgets grew, demonstrating clear returns became challenging. Mayank Shah notes, “Digital continued to gain prominence in our marketing mix through 2025. About 20% of our overall marketing spends were allocated to digital, reflecting the growing importance of digital platforms in reaching and engaging consumers more effectively.” This share is expected to increase to close to 25% in 2026.

Looking ahead to 2026, Shah identifies sharpening digital focus while bringing far greater clarity to returns as the biggest marketing resolution. However, one persistent challenge outside pure performance marketing is clearly linking digital spends to brand impact. Improving how the company measures and maps ROI from digital advertising will be a key priority in the coming year. Alongside this, the plan focuses more closely on high-growth channels seeing rapid adoption and influence on consumer behaviour, with deeper use of AI and machine learning to improve precision through sharper targeting and more hyper-localised communication.

Kapuswala emphasises this need for measurement discipline. 

"2025 was also the year where integrated activations, performance media and creative amplifications were seamless and the norm at business," he observes. The democratisation of content made content strategy more important, with a surround of permissive content becoming the norm. Consumers upgraded to an omnichannel avatar, driving execution across all channels and geographies, online and offline, modern and traditional, quick commerce and marketplace.

Gupta comments, “Consumers are actively seeking a phygital experience of getting connected online for an offline experience, which will result in stronger communities being built for sustained engagement. Alongside this, immersive brand experiences will evolve beyond only emerging technology-led to more meaningful experiences that are integrated into relatable consumer moments.” 

As a result, the brand’s campaigns will become more integrated and tech-forward, with immersive and culturally relevant storytelling at the core.

From a media perspective, Pancholi explains, “We balanced scale through mass-reach print and outdoor with creator-led digital storytelling that amplified these moments. Looking ahead, our focus remains on building category salience and embedding pistachios into everyday snacking occasions.”

In 2026 and beyond, leaders see premiumisation and health-led consumption increasingly shaping category growth. The focus will be on expanding portfolios, strengthening nutrition and quality-led narratives, and building marketing ideas that are consistent, credible, and sustainable over time. 

Additionally, traditional media lost relevance amid evolving consumer habits and preferences, requiring companies to rethink media strategies based on where, how, and how much time different age groups spend on media. Benign inflation helped expand gross margins, enabling companies to invest more in advertising, yet return measurement remained elusive outside performance channels.

Kapuswala summarises, "2025 reinforced that true impact comes from integrated thinking, where insight, creativity and execution work as one." By building brands with consistency and courage, FMCG brands aim to cut through clutter, earn attention the right way, and deliver impact.