Indian FMCG firms see growth

04 August 2009

NEW DELHI: Most of India's largest FMCG companies enjoyed a substantial increase in both their volume and value sales during the last quarter, having adopted a range of different strategies in an effort to overcome the financial crisis.

GlaxoSmithKline Consumer Healthcare led the multinational operators in terms of overall improvement from April to June, recording a 25% upturn in sales, while volumes also rose by 12%.

The consumer-facing arm of the UK-based pharma giant increased its marketing expenditure by around a quarter over the course of the most recent financial year.

Zubair Ahmed, its managing director, has previously argued that pursuing such a strategy was based on the premise that the current climate provides "an excellent opportunity for brands to emerge stronger" at the end of downturn.

Colgate Palmolive enjoyed total sales growth of 15% in Q2 this year, with volumes also rising by 12%, helping its share of the Indian toothpaste sector reach some 52.3% in all.

However, the company cut its adspend levels by 16% in the three-month period to June, meaning its marketing expenditure as a proportion of sales fell from 17% to 12.5% year-on-year.

Hindustan Unilever boosted its sales by 13% in this period, but volume improved by just 2% on an annual basis, well below analysts' expectations.

One factor said to have impacted the Indian arm of the Anglo-Dutch corporation was that consumers have begun to trade down to cheaper brands in highly profitable sectors like soap, tea and detergent.

By contrast, Dabur, the domestic consumer packaged goods manufacturer, registered a 22% uptick in sales, which, when coupled with volume growth of 16%, amounted to its best performance in three years.

Its sales in the toothpaste, food and skincare segments expanded by over 20%, helped, according to ceo Sunil Duggal, by the fact that "the urban economy has seen a revival in terms of demand and availability of cash with the consumer."

Godrej's value and volume sales both climbed at a similar rate to those of Dabur, a result it attributed to improved conditions in rural areas.

"We are looking at doubling our coverage in small towns to 8,000 from 4,000 over the next three years. Village-coverage will go up to 50,000 from 15,000 during this period," its managing director, Dalip Sehgal, said.

Marico also posted sales and volume growth of 17% and 14% respectively, and the company said it remains "cautiously optimistic" about its prospects for the year as a whole.

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