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FMCG Giants Boost Ad Spend on Lower Costs
7 Feb
Summary
- Leading consumer goods makers will increase advertising budgets.
- Lower commodity and input costs are improving company margins.
- Companies plan to enhance promotional spending by 10-15% YoY.
Consumer goods companies such as Dabur, Godrej Consumer Products, Bajaj Consumer Care, and Amul are planning substantial increases in their advertising expenditures over the coming quarters. This strategic decision is driven by a favorable economic environment characterized by lower commodity prices and easing inflation, which are expected to boost operating margins.
Executives anticipate enhancing advertising and promotional budgets by 10-15% year-on-year. This increased spending, set to continue until approximately the June quarter, aims to capitalize on an expected rise in sales. Factors contributing to this positive outlook include improving consumer demand, upcoming sporting events like the T20 World Cup, and the crucial summer sales period.
Data indicates a broad-based softening across key agricultural inputs and beverage commodities, with wheat and maize prices seeing significant year-on-year corrections. While some edible oil prices remain firm, others like cocoa have seen a sharp decline. Companies like Dabur India and Bajaj Consumer Care have confirmed plans to reinvest a portion of their gross margin gains into advertising, viewing it as a successful strategy for growth.
