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Despite inflationary pressure, FMCG players increased their adex in Q1 FY23

Leading FMCG players like HUL, Emami, Marico and Colgate Palmolive have recorded an increase in the net revenue and also in their ad expenses on a year-on-year basis in Q1 FY23

In the aftermath of the pandemic, even though restrictions have opened, and life is getting back to normal, the fight for FMCG players in India isn’t over as geo-political tensions and inflation have hit the sector hard. Despite these, FMCG companies have increased their ad spends during the April-June quarter of FY2023. 

In Q1 of FY2023, the ad spends of HUL were up 29.64%, Emami’s by 10.96%, Marico’s by 13.71%, GCPL’s by 36.82% and Colgate-Palmolive by 1.78% on a YoY basis. Although Dabur reduced its ad spends by 16.55% on a YoY basis. 

Hindustan Unilever (HUL) spent Rs 1,334 crore on ads and promotion in the first quarter of the fiscal year 2023, up 29.64% from the corresponding quarter in the previous year. The company had spent Rs 1,029 crore in Q1FY 22.

In the quarter ended March 31, 2022, the FMCG major had spent Rs 1,296 crore on advertising and marketing. 

HUL reported a consolidated net profit of Rs 2,391 crore for the first quarter ended June 2022. A net profit of Rs 2,100 crore was posted by the company in the April-June quarter of the previous fiscal, resulting in an increase of 13.85% on a YoY basis.

Emami’s expenditure on advertisement and sales promotion increased by 10.96% this year with Rs 10,594 lakh in Q1 FY23 as compared to the corresponding quarter of FY22 which stood at Rs 9,548 lakh.

However, its Q1FY23 ad spends witnessed a decline of 2.24% as compared to the spends of Q4 FY22 which stood at Rs 10,835 lakh.

In its Q1 FY23 report, while Emami reported a PAT of Rs 9,652 lakh in the Q1FY23 which is a 3.82% increase from the corresponding quarter of the previous year, which stood at Rs 9,297 lakh.

Another leading FMCG player, Marico also saw an increase in the net profit to Rs 377 crore, which is a 3.28% increase as compared to the corresponding quarter of FY22 which was Rs 365 crore.

This was followed by an increase in the expenses allocated to advertising and sales promotion on a year-on-year basis with Rs 199 crores, which is a 13.71% up when compared to the Q1 FY22 which stood at Rs 175 crores.

But on a quarter-on-quarter basis, Marico has seen a decline of 2.51% as the ad-ex for the last quarter of FY22 stood at Rs 204 crores.

Colgate Palmolive, in Q1 FY23, recorded a 10.10% decline in Net Profit with Rs 20,967 lakh as compared to Rs 23,323 lakh in the corresponding quarter of last year on a YoY basis.

Despite the fluctuations in the net profits, the company’s advertising expenses have seen a constant rise. On a YoY basis, Colgate Palmolive recorded 1.78% increase with Rs 16,300 lakh as compared to Rs 16,015 lakh in the corresponding quarter of FY22.

Moreover, the company also saw a 11.04% rise in ad spends in Q1 FY23 as compared to Q4FY22 which stood at Rs 14,679 lakh.

Godrej Consumer Products ad spends were up 36.82% to Rs 201.39 crore from Rs 147.19 crore in the corresponding quarter of the previous year. The company had spent Rs 185.05 crore on advertising in Q4FY22. The company increased its marketing investment despite a decline in net profit. 

GCPL reported a decline of 16.56% (YoY) in its consolidated net profit at Rs 345.12 crore in Q1FY23, on the back of commodity inflation and upfront marketing investments. It had recorded a net profit of Rs 413.66 crore in the April-June quarter a year ago.

In Q1 FY23, Dabur India recorded a Net Profit of Rs 441.06 crores, an increase of 0.68% over the Rs 438.30 crore it brought in during the corresponding quarter of FY22.

However, Dabur spent Rs 157.20 crores on advertising and publicity-related expenses in Q1 FY23, which is 16.55% less than the Rs 188.37 crore it spent in Q1 FY22. In contrast to other FMCG players, as compared to the Rs 150.33 crore it had spent in Q4 of FY22, the ad spending on a quarter-on-quarter basis is up by 4.57%.

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