Indian FMCG firms boost advertising spend

10 November 2009

NEW DELHI: Most of India's biggest FMCG companies substantially increased their advertising expenditure over the last two quarters, a trend which is contributing to continued sales growth in the rapidly-developing market.

According to figures from the BL Research Bureau, the country's biggest consumer packaged goods manufacturer, Hindustan Unilever, boosted its advertising and promotional spend by 31% in the six months to September, to 1,132 crore rupees ($241m; £145m; €161m).

During this period, its sales grew 6%, to 8,703 crore rupees, and the CPG giant has recently been taking an increasingly diversified approach, from localising its products to using "roadblocks" on specific TV networks.

Among its rivals, Dabur raised its ad budgets by 47%, to 234 crore rupees, with revenue levels expanding by 23%, to 1,591 crore rupees.

Marico similarly diverted 40% of extra funding to A&P in the same timeframe, to 176 crore rupees, generating 1,389 crore rupees in sales.

Milind Sarwate, its chief of strategy, finance and human resource, argued "the relationship between sales growth, adspend to sales ratio and market share is complex."

"Generally, companies with high market share enjoy a favourable terrain. The equity of their brands allows them to retain market share without expending too much on advertising and sales promotion."

Godrej posted the biggest increase in marketing communications expenditure, up 61% year-on-year, albeit to just 94 crore rupees, with sales improving by 43%, to 1,014 crore rupees.

GlaxoSmithKline Consumer registered advertising expenditure of 156 crore rupees in the half-year to September, an uptick of 57%, with sales rising by 20%, to 964 crore rupees.

By contrast, Colgate Palmolive reduced its outlay by 9%, to 141 crore rupees, but sales grew by 16%, to 955 crore rupees, despite this.

Data sourced from Hindu Business Line; additional content by Warc staff