Odisha News Hour

Ad spending by FMCG companies increases

<p>As commodity inflation moderates and players have more flexibility to increase their ad budgets, fast-moving consumer goods (FMCG) corporations have increased their advertising and sales promotion (ASP) expenditures by 11–45% in the December quarter (Q3FY24) compared to the previous year.</p>
<p><img decoding=”async” class=”alignnone wp-image-422611″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-ad-spending-by-fmcg-companies-increases-fmcg-11zon-750×422.jpg” alt=”theindiaprint.com ad spending by fmcg companies increases fmcg 11zon” width=”1081″ height=”608″ title=”Ad spending by FMCG companies increases 12″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-ad-spending-by-fmcg-companies-increases-fmcg-11zon-750×422.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-ad-spending-by-fmcg-companies-increases-fmcg-11zon-768×432.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-ad-spending-by-fmcg-companies-increases-fmcg-11zon-390×220.jpg 390w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-ad-spending-by-fmcg-companies-increases-fmcg-11zon-150×84.jpg 150w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-ad-spending-by-fmcg-companies-increases-fmcg-11zon.jpg 1024w” sizes=”(max-width: 1081px) 100vw, 1081px” /></p>
<p>The increase in advertising expenditures is the result of businesses trying to combat local brands, which are becoming more and more competitive in a deflationary climate, and support volume growth. For the last several quarters, most players have had anemic volume growth as rural demand remains weak and urban demand has been steady.</p>
<p>Experts said that players were unable to raise their advertising expenditures due to an inflationary climate, but this is now shifting as input costs decline. According to analysts, gross margins increased by 400–450 basis points on average in Q3 over the same period the previous year, which is good news for FMCG companies trying to boost marketing and advertising in the face of increased competition.</p>
<p>ASP as a proportion of sales increased to 7-17% in Q3FY24, up from 5-16% in the preceding five quarters, according to data gathered from business statistics.</p>
<p>Analysts and executives from FMCG firms predict that the trend will continue in Q4 as players prioritize growing their sales volumes.</p>
<p>Mohit Malhotra, CEO of Dabur India, said, “Moderating inflation has helped us step up investments behind our brands.”</p>
<p>“We want to drive competitive volume growth, so this trend should continue,” he said.</p>
<p>Dabur’s demand in rural areas increased 200 basis points more than that of urban areas in Q3 due to a mix of distribution growth and brand expenditures; nonetheless, the Ghaziabad-based company intends to widen this difference going forward.</p>
<p>Dabur grew by 36.1% year over year in the December quarter to Rs 245 crore, behind only Jyothy Labs, which increased its advertising expenditure by 45.1% to Rs 61 crore in the same time.</p>
<p>Hindustan Unilever (HUL), the biggest consumer products firm in the nation, raised its advertising expenditures in Q3 to Rs 1,626 crore, up 34.5% from the previous year (or Rs 417 crore). However, in comparison to the same period previous year, Godrej Consumer, Colgate-Palmolive India, Procter & Gamble Hygiene and Healthcare, and Marico boosted their advertising spending by 24.5%, 20.2%, 14.4%, and 11.8%, respectively.</p>
<p>The level of competition is rising. Therefore, we will need to spend more in advertising and promotions to lean into,” HUL’s chief financial officer, Ritesh Tiwari, said last month during the company’s Q3 analysts call.<br />
At the same investor call, HUL’s CEO and MD, Rohit Jawa, said that the business was focusing more on brand strength in order to stand out in a crowded industry.</p>
<p>“We want to use this transitional time between high inflation and deflation to further enhance our brand power. This explains the noticeable increase in above-the-line advertising. In order to drive theme spending, we have also increased below-the-line advertising when necessary, according to Jawa.</p>
<p>The MD and CEO of Marico, Saugata Gupta, predicted that government expenditure and competitive pricing for FMCG products will drive future trends in consumption.</p>
<p>“We anticipate the efforts we have taken in general trade to boost company prospects. We have seen signals of recovery in our core portfolio in the domestic market. Regarding the company’s long-term plan, he said, “We have also increased investments behind our brands.”</p>