Consumer goods firms' ad spends surge in Q3

NEW DELHI: Advertising and promotion spends of large consumer companies including HUL, Colgate-Palmolive, Dabur, Parle, Emami and Jyothy Labs surged beyond pre-Covid levels in the December quarter compared to the corresponding year-ago quarter on account of demand recovery, new launches and the festive season, the companies said in their earnings statements, adding that they will continue to increase ad spends in sync with demand recovery and revival in consumer sentiment.India’s largest consumer goods maker Hindustan Unilever’s consolidated advertising and promotion spends increased 19% over the corresponding year-ago quarter, while the home-grown Dabur’s year-on-year ad spends increased 38% in the quarter. “Going forward, we will continue to deploy A&P spends where required, and investments will continue in high growth areas,” Dabur chief executive Mohit Malhotra said. He said the company focused on strengthening its core healthcare portfolio with heavy investments behind power brands as well as new products. Dabur, which makes Real juice and Vatika hair care products, added a slew of new brands in the quarter both in the personal care and hygiene space to support which it escalated advertising and promotional spends.Most consumer goods makers have reported strong growth riding on recovery in urban demand, favourable base and gradual resumption of out-of-home consumption. While rural India has been the primary growth driver, urban demand has started to normalise driven by growth in e-commerce and modern trade.Ram Raghavan, managing director of oral care maker Colgate-Palmolive which increased its advertising spend by 360 basis points in the December quarter, said the oral care company will continue to invest in brands with higher ad spends to support innovations. The Colgate Palmolive management said growth is largely driven by volumes given the company has significantly increased its marketing spends behind brand building and promotions.Escalation of ad and promotional spends was also as a direct consequence of higher consumption of discretionary products, momentum of which is expected to increase, analysts said. Edelweiss Securities executive vice president - institutional equities, Abneesh Roy wrote in a report last week: “Skin-creams, hair dyes, cosmetics, value-added hair oils, male grooming, styling products, deodorants, ice-creams and juices faced severe headwinds in the March-September months. In the third quarter, all discretionary segments of consumer staples have seen a good recovery quarter-on-quarter, and we expect this calendar year to be a strong year for most of these segments.”Jyothy Labs, which makes fabric care, dishwash, mosquito repellent and personal care products, increased ad spends by 44% in the December quarter to support its brands Maxo, Margo and new launches as consumer sentiment improved in urban markets while rural consumers continued to lead demand. Jyothy Labs managing director MR Jyothy said: “We are seeing momentum across our business segments. Our focus on execution, strengthening brands with enhanced media support and geographical expansion has delivered strong sales and profitable growth.”Apart from uptick in premium daily use products, the festive season also marked a return of demand for skincare, creams and other personal care goods, while out-of-home consumption picked up with offices re-starting to operate from their premises.Emami director Harsha Agarwal said: “Our ad-spends have returned to pre-Covid levels, and we will continue to invest in existing brands and categories, to increase market penetration where we believe we have a strong right-to-win.” The maker of the Boroplus and Zandu franchise of personal care and immunity-boosting products reported growth across channels in the last two quarters which it expects will continue.

from Economic Times https://ift.tt/2MKfuKr