Analysts report that major FMCG companies are increasing their advertising and promotional (A&P) spends to boost sales volumes amidst rising competition from smaller regional brands. Godrej and Dabur, among others, have notably raised their marketing expenditures. During its recent post-earnings call, HUL, India’s largest FMCG firm, highlighted its commitment to competitive pricing while significantly investing in advertising and promotions to maintain its leadership in “share of voice” over market share.
Godrej Consumer Products Limited (GCPL) reported a surge in spends, reaching around 10 percent of the company’s turnover in Q2, marking a notable increase of approximately 200 bps from the previous year and 400 bps from two years ago. Sudhir Sitapati, the Managing Director and CEO of GCPL, noted that this resulted in improved market share value in five out of the top six global cells and secured volume market share across all six. In a similar vein, Dabur observed a notable 43 percent surge in its Q2 A&P investments.
During the July-September 2023 quarter, household uptake of local brands experienced a surge of 4-31 percent in various categories such as detergent bars, washing powder, biscuits, and soaps, as reported by market research firm Kantar Worldpanel. Meanwhile, major companies saw growth rates between 2-10 percent within households during the same period.
Analysts emphasised the shift of brands towards digital platforms for better ROI owing to heightened conversion rates. Nestle, for instance, raised its digital advertising expenditure by 20 percent to 70 percent across its brands, attributing this move to the convenience of monitoring customer engagement in the digital realm. The upswing in A&P expenditure is anticipated to endure as companies confront increased competition from local players and endeavour to stimulate volume growth in the present market conditions. Analysts assert that the digital arena presents an efficient avenue to achieve this goal.
