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Q2 Overview: Top FMCG brands report double-digit ad spend growth, collectively spend Rs. 2,295 crore

18-November-2015
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Q2 Overview: Top FMCG brands report double-digit ad spend growth, collectively spend Rs. 2,295 crore

Most of the top FMCG companies during the second quarter of FY2016 saw over 10% growth in ad spends. The ad spends of brands such as HUL, Dabur, Colgate-Palmolive, Marico, Britannia Industries, Emami, Tata Global Beverages Ltd. (TGBL) and UB Group accounted for ad spends of Rs.2,295 crore during the quarter. Since this category is one of the largest spending category in the media marketing space, we take a look at the ad spends and the results of these companies during Q2FY2016 (July – September 2015 quarter).

HUL announced its results a few weeks ago, and saw its ad spends increase by 23.8% in Q2FY2016. The ad spends of the company in the September ended quarter in FY2016 grew to Rs.1,145.04 crore from Rs.925.05 crore during the same quarter last year. However, the company’s ad spends marginally declined by 0.7% since the last quarter (Q1FY2016) as it stood at Rs.1,153.39 crore. Profit after tax before exceptional items, PAT (bei), grew by 1% to Rs.970 crore, while Net Profit was at Rs.962 crore, the growth rate impacted by the exceptional income from the sale of properties in the base quarter and a higher effective tax rate. 

Emami’s ad spends during the quarter grew by 23.77% from Q2FY2015. Advertising and sales promotion expenses grew to Rs.111.52 crore in Q2FY’16 from Rs.90.1 crore in Q2FY’15. Similar to the other FMCG companies above Emami too saw a decline in ad spends in comparison to the previous quarter. Ad spends declined to 27.38% from Q1FY2015 as it stood at Rs.142.06 crore. The net profit however saw a decline in growth of 49.8% in Q2FY2016 as it stood at Rs.61.06 crore in comparison to Rs.91.52 crore in Q2FY2015.

Dabur India on the other hand saw a 9.89% growth in ad spends in Q2FY2016 as against the corresponding period last year. The advertising and publicity expenses grew to Rs.278.42 crore in Q2FY2016 from Rs.253.35 crore in Q2FY2015. The ad spends however declined to by 18.74% since the previous quarter (Q1FY2016) as ad spends stood at Rs.330.61 crore. The net PAT on the other had saw a growth of 18.15% as it grew to Rs.341.17 crore in Q2FY’16 from 288.75 crore during the same quarter last year.
Colgate-Palmolive India during September ended quarter saw its ad spends decline by 20.59% in comparison to the same quarter last year. The advertising and sales promotion expenses of the company during Q2FY2016 stood at Rs.166.68 crore from Rs.201 crore in Q2FY2015. It also saw a 20.29% lower ad spends that Q1FY2016 which stood at Rs.200.5 crore. The net PAT however saw a high 21.1% growth in Q2FY2016 to Rs.156.93 crore from Rs.129.58 crore in Q2FY2015.

Marico in the quarter ending September saw its ad spends grow by 32.8% in comparison to the same quarter last year. The advertising and sales promotion expenses rose to Rs.158.57 crore in Q2FY’16 from Rs.119.38 crore in Q2FY’15. The ad spends also saw a growth of 5.11% from the previous quarter, Q1FY’16. The company’s net PAT however had seen a marginal decline of 1.49%. The net PAT during the quarter this year was Rs.126.30 crore and in same quarter last year stood at Rs.128.19 crore.

Britannia, too, saw its ad spends grow in higher double digits as it grew by 27.6%. The ad spends in Q2FY’16 grew to Rs.157.80 crore from Rs.123.62 crore in Q2FY’15. The ad spends even posted a double-digit growth of 16.7%. from Q1FY’16 as its ad spends stood at Rs.135.19 crore. The net PAT however saw a decline of 24.23% in comparison to the same quarter last year. The net PAT stood at Rs.203.68 crore during this quarter, while in Q2FY’15 it stood at Rs.253.04 crore.

Tata Global Beverages Ltd. (TGBL)’s ad spends grew by an enormous 70.44% in Q2FY2016. The ad spends in Q2FY’16 grew to Rs.90.64 crore from Rs.53.18 crore in Q2FY’15. It also saw a major growth in comparison to the previous quarter where the ad spends stood at Rs.58.73 crore. The net PAT however saw a decline of 21.15% in comparison with the same quarter last year. The net PAT in Q2FY’16 stood at Rs.108.31 crore, while in Q2FY’15 it stood at Rs.131.22 crore.
United Breweries (UB) on the other hand saw a marginal decline in its ad spends from the corresponding quarter last year. The ad spends of the company declined by 0.5% to Rs.185.70 crore from Rs.186.62 crore in Q2FY2015. The ad spends were much lower that of the previous quarter which was 28.27% higher at Rs.238.20 crore. The net PAT however saw a growth 13% from the corresponding quarter last year as it grew to Rs.48.20 crore in Q2FY’16 from Rs.42.62 crore in Q2FY’15.

With Q3 being the festive season, ad spends are definitely expected to increase even further of FMCG companies in order to compete for space with other brand categories that heavily spend during the festive period.    

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