Adspend of fast moving consumer goods (FMCG) companies rose by 14.12 per cent during 2001-02, compared to a 7.01 per cent rise in 2000-01. The higher adspend did not translate into higher sales growth -- it rose a modest 4.90 per cent in 2001-02, the third straight year when FMCG majors posted single-digit growth in sales.
A study of 12 major FMCG companies -- manufacturing food products, personal care products and paints -- unravels an aggregate adspend of Rs 1,690 crore in 2001-02, which is an increase of 14.12 per cent over Rs 1,481 crore in 2000-01. The adspend growth rate has gone back to 1999-2000 levels, when it had risen by 14.31 per cent to Rs 1,384 crore.
FMCG sales grew at their lowest ever pace of 4.90 per cent last fiscal, compared to 9.27 per cent in 2000-01 and 8.50 per cent in 1999-00. Advertisement expenditure-to-sales ratio drifted lower to 13.25 per cent during 2001-02.
The ratio was 14.87 per cent in 1998-99, which was down to 14.11 per cent in 1999-00 and moved up marginally 14.41 per cent in 2000-01.
Colgate-Palmolive continued to spend bulk of its revenues on advertisements. In 2001-02, it spent 19.90 per cent of its sales revenue on this account, up from 18.18 per cent in 2000-01, 17.80 per cent in 1999-00 and 16.29 per cent in 1999-99.
Cadbury spent over 10 per cent of its revenue on advertisements. The advertisement expenditure of Cadbury accounted for 11.21 per cent of sales in 2001-02 and it was 10.12 per cent in 2000-01.
Hindustan Lever remained the largest in terms of total adspend with an annual expenditure of Rs 823.82 crore in 2001-02.
Colgate-Palmolive ranked second with an adspend of Rs 230.99 crore during the year ending March 2002. Nestle India claimed the third spot with an expenditure of Rs 154.27 crore, followed by Reckitt Benckiser with Rs 90.66 crore and Britannia with Rs 90.63 crore.
Reckitt Benckiser reported the highest growth in adspend at 48.60 per cent in 2001-02, followed by Berger Paints, up 46.96 per cent, Cadbury 21.53 per cent, Nestle India 20.09 per cent and Hindustan Lever, up 18.27 per cent.
Colgate-Palmolive, currently facing severe competition in the oral care segment, reported 7.96 per cent rise in adspend. Britannia (up 6.26 per cent) and GlaxoSmithKline Consumer (up 9.47 per cent) reported a single-digit growth in adspend.