FMCG sector to boost Indian adspend

07 July 2009

NEW DELHI: The FMCG sector will be responsible for much of the growth in Indian adspend this year as other categories reduce their outlay, according to predictions from several ad agencies in the country.

Harish Bijoor Consults, the consultancy, forecasts that advertising expenditure by FMCG companies in India will rise by 4% over the 2009/10 fiscal year.

The sector's digital spending – which currently takes between 1% and 3% of ad budgets – will also expand by around 10% over the next 18 months, although webchutney has previously predicted this total could improve by over 300%.

Leo Burnett India, which boasts clients including Procter & Gamble and Heinz, receives a "sizeable" proportion of its revenue from firms in the fast moving consumer goods industry.

KV Sridhar, the agency's national creative director, said that "about 50% of our revenues come from this segment, and this year I expect growth of between 10% and 12%."

Furthermore, he added that "FMCG is perhaps the only sector that has survived the slowdown."

JWT similarly estimates that 65% of its business is drawn from consumer products' companies, and forecasts spending growth in the category to be in single figures for 2009 as a whole.

Despite this, Rohit Ohri, svp and area director of the network's Delhi office, said FMCG brand owners could be expected to boost their marketing spend at a higher rate than their counterparts in other sectors.

However, Ohri also predicted that "they will become very prudent about the way they spend their money" even as they increase their overall budgets.

HK Press, executive president of Godrej Consumer Products, which has brands in categories from fabric care to soaps and detergents, said the company had dedicated more money to advertising since the start of the new fiscal year.

Similarly, for the financial year ending in the first quarter of 2010, it intends to "increase marketing spends by almost 50%," he added.

Hindustan Unilever's chairman Harish Manwani has also recently announced a plan to cut costs by "eliminating and rationalising tail-end SKUs."

Over the course of the current financial year, the Indian arm of the Anglo-Dutch giant will launch or relaunch two products every month.

The company has a 45% share of the shampoo market, a figure that stands at 44% in the tea and coffee sector, 37% in the laundry market and 28% in the toothpaste segment.
"At a time like this, it is crucial to understand and respond to changing consumer and shopping behaviour," Manwani said.

Data sourced from Mydigitalfc/DNA India; additional content by WARC staff