FMCG cos to amp up marketing this fiscal
namkeens, snacks and sweets, he said. “We are coming up with ad films that will be aired. The festive season is big for us, and that’s where our marketing spend is primarily skewed towards.
You will see us back on air big time." In response to the challenges of higher inflation, companies had pared their A&P budgets to protect margins. For instance, Hindustan Unilever Ltd (HUL), one of the largest FMCG companies in India, reported a moderation in A&P spending in the September quarter to 7% of sales. This was in line with the inflationary pressures witnessed by the industry.
Notably, HUL’s average A&P spending between FY19 and FY21 stood at 12%. However, this has risen sequentially. Analysts at BNP Paribas expect the company’s marketing expenses at 9.5% of June quarter sales.
With declining raw material costs, the brokerage also expects FMCG companies to partially reinvest gross margin gains to boost ad spending, and promotional offers to drive demand, BNP Paribas said in its India consumer report on 12 July. In its FY23 annual report released last month, FMCG major Dabur India said it is witnessing a “reversal" in the commodity cycle, resulting in a fall in prices of most key commodities, barring food and beverages. “This allows us to expect an expansion in gross margins for the current year.
This expanded gross margin will be allocated in two primary ways. A portion will be allocated for A&P investments, which had experienced some moderation due to high inflation. Two, the remaining part will be for gradual improvement of our operating margins," the maker of Vatika shampoo and Real drink said.
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