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FMCG firms kept Q1 ad spends tight, plan to ramp up in coming quarters
Compared to last year, many FMCG companies focused on arresting margin erosion due to higher raw material costs in the quarter.
Dabur India said it invested more in trade schemes and less in media spends in Q1, but indicated that advertising expenditure will increase going forward.
'We have redirected the money from ATL (above the line) into BTL (below the line). Depending on competitive intensity, the trade inputs are given — consumer schemes and trade schemes. We invested more in consumer and trade, that's why the netting is more, and less on media,' Mohit Malhotra, chief executive officer, Dabur India, told analysts. He added: 'Going forward, advertising investments will continue to be higher. We want to increase our gross margins and invest in advertising support… We will continuously endeavour to increase overall advertising and promotion expenditure, investing in brands and distribution.'
The maker of Good Day biscuits, Britannia Industries, told investors that it rationalised its advertising spends in the quarter.
'We did rationalise our A&P (advertising and promotion) spends during this quarter. We focused on IPL, which was also on digital. Digital has been a pretty important agenda for us, and we just focused on IPL because this was the IPL quarter, and that gave us the right kind of dividends,' said Varun Berry, executive vice-chairman, managing director, and chief executive officer, Britannia Industries.
Berry added that the company's strategy worked and it did not advertise across all brands. 'We just focused on our top four brands and advertised those brands,' he said.
While Marico's advertising spends as a percentage of sales remained largely stable in Q1, Pavan Agarwal, chief financial officer, said: 'There has been some cut in India A&P, but we have not cut in the focus categories of premium, VAHO (value-added hair oils), foods, and PPC (premium personal care). These categories we have invested in adequately.'
He said the company ensured its share of voice was higher than its share of market in focus categories. Agarwal added that Marico deferred some new film shoots, which were discretionary, and extracted inefficiencies out of media and non-media spends.
'But going ahead, we believe that A&P will trend upwards in the India business, and at a consolidated level, we will continue to invest behind all the focus categories and new parts of the business,' he said.
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