Steep rise in FMCG brands' adex during October-December quarter

Often considered as the backbone of Indian Adex, major FMCG companies’ advertising spends grew in double-digits during the October-December quarter of FY24 in comparison to the corresponding quarter of the previous year.

Known to be one of the top advertisers of the country, Hindustan Unilever, in Q3 of FY24 saw a spike of 34.49% (YOY) in its spending on advertising and promotion as it spent Rs 1626 crore compared to the Rs 1209 crore it spent in the same period last year.

However, the FMCG brand has reduced its QoQ ad spends by 6% in Q3FY24 in comparison to Rs 1,742 crore it had spent in Q2FY24.

Dabur increased its adex by 36.13% increase on a YoY basis to Rs 244.54 crore in Q3FY24. It had spent Rs 179.64 crore on the same in the corresponding quarter, last year.

Adding to the FMCG frenzy was Godrej Consumer Products (GCPL) whose ad spending zoomed by 24.47% to Rs 343.27 crore versus Rs 275.78 crore in the corresponding quarter of the previous year. Comparing the previous quarter, the brand’s ad spend has reduced by 0.8%.

Colgate Palmolive India has significantly upped its spending on advertising in Q3 of FY24 to Rs 204.26 crores by 20.20% on a YoY basis compared to the Rs 169.93 crores it spent the same period last year. However, compared to the previous quarter, it has reduced its ad spend by 0.8% in Q3FY24.

P&G reported a growth of 14% in its advertising spends to Rs 127 crore from Rs 111 crore in the corresponding quarter of the previous year.

Gillette reported a 4% reduction in adex to Rs 75.77 crore for the second quarter ended December 2023.

Marico recorded an 11.82% spike (YoY) in its spending on advertisements and sales promotion as it spent Rs 246 crores in Q3FY24, as opposed to Rs 220 crores it spent in Q3FY23. Compared to the previous quarter, Marico’s Q3FY24 saw a staggering decrease of 8.2% in ad spends.

Companies such as HUL, ITC, Marico, Dabur, and Godrej Consumer Products said urban markets continued their moderate growth, while consumer demand from rural India remained subdued even as they expect an improvement in coming quarters.

However, Dabur India said its rural demand grew 200 basis points ahead of urban in the December quarter. Its India business ended the third quarter with volume growth of 6%.

Mohit Malhotra, CEO, Dabur India, said, “Moderating inflation coupled with buoyant consumer sentiments and our focussed investment in distribution footprint expansion in rural India helped demand from the hinterland bounce back for Dabur.”

Like past quarters, modern trade channels are doing well and continue to outpace general trade. Similarly, the volume growth of premium products is significantly ahead of mass products in the market.

Echoing the view, Marico said, "General trade continued to drag as it grappled with liquidity and profitability constraints, while alternate channels grew healthily." Marico's India business posted a volume growth of 2 per cent in the third quarter year on year though its turnover was down 3 per cent to Rs 1,793 crore.

"During the quarter, demand trends were stable with no visible improvement from the preceding quarter. Rural demand remained soft, while urban demand steadied its moderate growth trajectory," said the earnings statement from Marico which owns brands like Saffola, Parachute, and Livon, among others.

Within the sector, mass home and personal care categories aligned closely with the rural demand trajectory, while packaged foods led the sector owing to higher urban salience and penetration-led growth, it said.

Moreover, the late arrival of winter also impacted the pickup of relevant products such as lotions, oils and creams.

HUL’s CEO and MD, Rohit Jawa, said, “Our focus on providing the right consumer value, excellence in execution, increased investments behind brands and capabilities, premiumisation and market development continues to serve us well.”

Prabha Narasimhan, MD and CEO, Colgate Palmolive India, said,  “With  consumers  at  the  core,  our  focus  remains  on  strengthening  the  strategic  pillars  of  driving  superiority-  in  our  products,  communication,  and  overall  experience.”

As the general elections are approaching, the makers expect a gradual recovery of demand from rural markets aided by increased government spending, recovery in winter crop sowing and better crop realisation.

"With macro indicators signalling positivity, continued government spending and more favourable consumer pricing across FMCG categories, we remain optimistic of a gradual uptick in consumption trends over the next 4-5 quarters," said Marico, adding, "Our consolidated revenue growth is expected to move into the positive territory in the last quarter of the year as the base catches up." Rural India contributes around 35 to 38% of the total FMCG sales.

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