Consumer Goods companies step up ad spends in bid to push sales

In a last-ditch effort to meet fiscal year-end sales targets, consumer goods companies are increasing their advertising and marketing spends by up to 20% year-on-year this quarter, with some even surpassing high-demand Diwali quarter ad spends.Sectors such as automobiles, retail, electronics and fast-moving consumer goods (FMCG) are driving this surge as many companies’ sales remain below targets amid muted consumer sentiment, industry executives said.

Some companies are also reinvesting higher profits into advertising as they look to cash in on events such as the Kumbh Mela.

“The January-March quarter will be our highest spending on advertising, marketing and promotion for this fiscal,” said Angshu Mallick, chief executive of Adani Wilmar, the country’s largest packaged edible oil company.

“There are multiple religious and social events including Kumbh Mela and Eid is earlier this quarter, when sales of oil, rice, maida and besan peaks. Hence, spending is up by 15-20% over last year. We are also building inventory in the channel,” he said.

Apart from religious and social events, brands have also earmarked higher budgets for the ongoing end of season and Republic Day sales this month.

Companies will also raise the pitch early for summer products like ACs, ice cream and beverages due to a shorter winter, executives said.

“We would start the advertising campaign earlier from mid-February with a budget higher by almost 20% year-on-year as sales projection is good,” said KJ Jawa, managing director of Daikin India, one of the largest air-conditioner makers.

Sales of consumer goods across categories have been muted this fiscal due to high inflation in daily lives of consumers and low salary increases. Sales of passenger vehicles increased by a modest 1.8% to 3.14 million units during the April-December period of this fiscal as compared to 7.3% growth in the year-earlier period.

Latest data from researcher NielsenIQ shows volume sales of electronic products in India remained flat in January to September 2024 while those of FMCG grew 5.3%, though the pace slowed in September quarter by three percentage points compared to the March quarter.

Auto companies like Maruti Suzuki, Hyundai, Honda Cars, JSW MG Motor India and Kia have stepped up advertising and marketing spending by up to 20% in the March quarter over last year, as per industry executives. Most of them have also launched new models in the last two months.

“We are strategically leveraging high-impact associations such as the Australian Open, YouTube takeovers, OTT platforms, and prime-time showcases like Bigg Boss and the India-England T20 series,” said Virat Khullar, AVP and vertical head (marketing) at Hyundai Motor India.

A senior auto industry executive said companies across the board have been making tactical spends to attract buyers. Tactical spends or marketing campaigns account for about 40% of ad spends by auto companies while the remaining goes into brand campaigns.

Jayen Mehta, managing director of Gujarat Cooperative Milk Marketing Federation, which owns the Amul brand, said media spending will be much higher from now till summer as compared to last year since the brand has associated with all big cricketing events, Eid, marriage season and it expects robust summer.

Emami, which this month rebranded its male grooming product due to falling sales in past few quarters, has earmarked ₹15 crore for advertising on it this quarter.

As per a January report by Nuvama Institutional Equities, the margin improvement due to various cost-initiatives and focus on innovations will keep advertising spends competitive for FMCG companies.