Indian FMCG giants boost adspend

06 August 2009

NEW DELHI: Many of the biggest FMCG firms in India increased their advertising expenditure levels in the last quarter, with television being one of the main beneficiaries of this trend, according to AdEx India.

A forecast from FICCI and Technopak has predicted the annual value of the Indian FMCG market will rise from $25 billion (€17.4bn; £14.7bn) in 2008 to at least $43bn by 2013, and the category is also expected to be one of the main drivers of future adspend growth.

The sector accounted for 40% of TV spots by volume in Q2, with companies including Cadbury, Coca-Cola, Hindustan Unilever and Reckitt Benckiser among the major brands investing heavily in the medium.

AdEx India also reported that Hindustan Unilever boosted its total advertising spend by 25.8%, to 561.1 crore rupees, in this period, amounting to 12.4% of the company's sales.

GlaxoSmithKline's consumer arm also increased its marketing budget by 47.8%, to 74.9 crore rupees, or 16% of revenues.

Colgate Palmolive, by contrast, cut back its commercial communications outlay by 15.9%, to 12.2% of sales, although it also managed to post one of the biggest upticks in sales in the three months to June.

Dabur's expenditure climbed by 40.7%, to 114 crore rupees, or 15.3% of sales, while Marico and Godrej both posted improvements of over 26%, to 84.9 crore rupees and 43.3 crore rupees – or 12.2% and 9.9% of revenues – respectively.

Anand Shah, an analyst at Angel Broking, said the fact "the focus has shifted to volume-led growth and new product launches have fuelled advertising. Gross margin expansion due to favourable raw material prices is another factor."

Dabur introduced products including a new hair oil and a fruit drink, called Real Burst, to the market in the last quarter, and has also partnered with NDTV on a reality TV show, Rakhi Ka Swayamvar.

GSK also launched Junior Horlicks Toddler Biscuits and an energy drink, Chill Dood, in Q2, while Godrej started selling new soaps including Cinthol Fresh Aqua and a new extension to its Godrej No. 1 range.

V. Suresh, the company's vice-president of marketing, argued that raising its adspend "definitely helped us increase our market shares in these categories and establish the new products."

Data sourced from Livemint; additional content by WARC staff