FMCG sheds Covid hangover with Q3 ad binge
FMCG) companies exceeded pre-Covid levels for the first time in the December quarter, reflecting a push to spur demand amid a booming economy.
Dabur, Colgate-Palmolive, Emami, Godrej Consumer Products, United Spirits, and Jyothy Labs have gone past levels of FY19, an ET study showed. Advertising and promotion (A&P) spending has been rising at Hindustan Unilever (HUL), India’s biggest consumer goods company, and Marico, but hasn’t crossed pre-COVID levels.
The study covered the eight companies, which have consistently reported A&P data since FY18.
Ad spend took a hit across the board during the pandemic and was subsequently squeezed by inflation.
India’s economy surged by a six-quarter high of 8.4% in October-December, according to data released on February 29.
The A&P recovery indicates companies are going to push the advertising pedal hard in the face of increased competition from regional brands amid the softening of input prices as they seek to spark a demand recovery, industry executives said.
Colgate-Palmolive’s A&P expenditure was 14.64% of sales in the December quarter, against 12.65% in FY19. For Jyothy Labs it was 8.97% versus 6.18% in FY19.
Hindustan Unilever chief financial officer Ritesh Tiwari told investors recently that A&P spend was at 10.7% in the December quarter, up 270 basis points year-on-year.
A hundred basis points equals one percentage point.
“Our absolute A&P investments were almost Rs 400 crore higher than last year as we continue to invest competitively behind our brands,” he said.
