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How FMCG players' copious ad spend surge in Q1FY24 will fuel Indian adex growth

Despite challenges, FMCG majors see recovery in rural markets, moderating inflation, and focus on volume-led growth, omnichannel presence, and strong balance sheets in the coming quarters

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BestMediaInfo Bureau
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How FMCG players' copious ad spend surge in Q1FY24 will fuel Indian adex growth

With the April-May-June quarter of FY2023 coming to an end and most of the FMCG majors, a category which is often referred to as the backbone of adex in India, upping their ad spends year on year in a double-digit fashion, the market sentiment is that of positivity when it comes to the earlier predicted double-digit adex growth this fiscal.

As per Dentsu India Digital Report, it is the FMCG sector which contributes 30% (Rs 25,638 crore) of total advertising spends, including 38% (Rs 11,403 crore) contribution to total digital spends.

Notably, adding to the yearly ad fervour around the Indian Premier League, one of the most sought-after lucrative impact properties in India was the dual-screen broadcast, by Star Sports on Television and by JioCinema on Digital. Henceforth, it was only prudent for marketers to leverage both platforms for an increased share of eyeballs.

That being said, the first half of the previous fiscal year saw FMCG players not emerging ‘spendthrift’ owing to the inflationary trends that were prevalent at the time, but with the subduing of the same in the second half, dynamics began changing as hope was pegged on gradual sectoral recovery for positive results in FY24.

Known to be one of the top advertisers of the country, Hindustan Unilever, in Q1 of FY23 upped its ad spends by 12.82% YoY to Rs 1,505 crore in comparison to Rs 1,334 crore it had spent in the same quarter, last year.

Similarly, Colgate Palmolive India also increased its ad spending by 11.23% (YoY) to Rs 181.31 crore in the quarter ended June 30, 2023.

The company had spent Rs 163 crore in the corresponding quarter of the previous year.

In Q1FY24, Emami spending on advertisements and sales promotion also soared up by 11.42% on a YoY basis to reach Rs 15,187 lakh as against Rs 13,630 lakh it had spent in Q1FY23.

While HUL, CPIL and Emami, all three registered a little more than single-digit spike in their ad spends, it was Dabur and GCPL which went out all ‘ad’ guns blazing in Q1FY24.

Dabur India reported a 29.99% spike (YoY) in its spending on advertising and publicity which stood at Rs 204.34 crores in Q1FY24.

In last fiscal’s corresponding period, it spent Rs 157.20 crores on advertising.

Adding to the FMCG frenzy was Godrej Consumer Products whose ad spending zoomed in by 59.09% on a Year-on-Year basis to reach Rs 320.39 crore in the first quarter ended June 30, 2023. Last year, it spent Rs 201.39 crore in the corresponding quarter.

On the other hand, Marico registered a 6.53% increase in its spending on advertising and sales promotion on a YoY basis in the April-June quarter of the current fiscal year.

As opposed to Rs 199 crores spent on advertising in Q1 of FY23, Marico, the parent company of Nihar Naturals, Parachute Advanced and Saffola amongst others had allocated ad budgets worth Rs 212 crores in Q1FY24.

Last year, some of the various reasons behind the adex predictions missing the mark and India’s adex accounting for a high single-digit growth was the inflationary trend prevalent for FMCG players, consumer durables, etc. However, what emerged as a game-changer was the ad vacuum created by startups.

This time around, industry players are hopeful that with moderating inflation for various categories, there is a positive sentiment build-up for the Indian adex to grow in double digits.

Sharing his views on the quarterly update, HUL’s CEO and MD, Rohit Jawa, expressed that even though the operating environment remains challenging, the FMCG markets are recovering gradually.

As a result, while the company remains focused on driving its long-term strategic priorities including market development and building distinctive capabilities for the future, he expressed confidence in the medium to long-term prospects of the Indian FMCG sector and HUL’s ability to deliver consistent, competitive, profitable and responsible growth.

“In the near term, the FMCG industry will continue to witness rebalancing of the price-volume growth equation and a gradual recovery in consumer demand. In this environment, we will continue to provide superior value to our consumers and invest in our brands,” he said.

Similarly, Colgate Palmolive India’s Managing Director, Prabha Narasimhan, also asserted that the FMCG company is also witnessing early signs of recovery in rural markets and therefore remains optimistic about continued improvement.

The result of the AMJ quarter in her view has been driven by good execution against the company’s strategic focus on growing the oral care category, she added.

Harsha V Agarwal, Vice Chairman and Managing Director, Emami, also expressed happiness over the 7% growth reported by the FMCG company in domestic business despite the challenging operating environment.

“While erratic summer and unseasonal rains impacted summer product offtakes, our non-summer portfolio grew strongly by 16%. International business also continued its growth trajectory with 11% constant currency growth. With inflation moderating further, we look to the future with increased optimism and confidence,” he said.

Further, he also added that with the development of digital eco-system, both e-commerce and D2C will play a key role in the organisation’s growth and that Emami will continue to invest in strengthening its presence in omni-channel to reach out to consumers.

According to Sudhir Sitapati, Managing Director, GCPL, the company started the year on a positive note and achieved healthy volume-led sales growth. That being said, GCPL now remains focused on driving volume-led growth, along with healthy investments in its brands and improvement in profitability.

“We continue to have a strong balance sheet. We are on track to reduce wasted cost and drive profitable and sustainable volume growth across our portfolio through category development,” he said.

Info@BestMediaInfo.com

Emami Dabur IPL Q1FY24 Godrej Consumer Products Colgate Palmolive Marico ad spends Hindustan Unilever FMCG Inflation advertising
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