Marketing pays for food and drinks firms

21 January 2010

FRANKFURT: Food and drinks firms which regularly increase their investment in marketing typically see more rapid revenue and profit growth than their cautious rivals, a new study has found.

Deutsche Bank analysed the performance of 30 of the biggest companies in these sectors – including Carlsberg, Danone, Diageo, Nestlé and Reckitt-Benckiser – over the last 15 years.

It found that organisations which committed more funds to communications saw their sales rise 30% more quickly than competitors adopting the opposite approach.

Moreover, the profits of businesses in the former group expanded at a rate that was 50% greater than those falling into the latter category.

Deutsche also revealed the results of a survey of 50 investors, with 73% of its panel arguing they did not have a "good idea" of how food and beverage makers spent their marketing budgets.

A further 83% of respondents stated that they either did not understand, or would like to improve their knowledge of, certain aspects of marketing practice.

The same number believed that corporations do not provide sufficient disclosure regarding their activities in this area in their financial releases.

Deutsche suggested "investors should be paying much more attention to this topic than is currently the case," with advertising and promotions a sector where this requirement is particularly important.

This is because marketing "builds and protects the value of consumer brands", and is thus vital to the on-going growth of their parent companies.

More articles on the impact of increasing and reducing advertising expenditure during a recession are available to Warc subscribers here.

Data sourced from Marketing Week; additional content by Warc staff