FMCG giants turn up advertising heat as competition intensifies

India's largest FMCG companies are stepping up investments in advertising and brand building as competition intensifies from regional manufacturers, digital-first brands and quick-commerce-native challengers. The strategy comes even as companies remain focused on cost optimisation and margin management, signalling that advertising is increasingly viewed as a strategic investment rather than a discretionary expense.

The urgency is evident in consumption trends. According to NielsenIQ, small manufacturers continued to outpace larger rivals in Q1 2025, recording around 8% volume growth compared with roughly 4% for large players. Rural markets also remained the strongest growth engine, expanding nearly four times faster than urban India.

Annual reports and earnings disclosures show a clear pattern. Marico increased advertising and sales promotion expenditure by 15% to ₹1,300 crore, HUL raised advertising and promotion spending to ₹6,261 crore, Britannia lifted brand investments by nearly 39%, Dabur's advertising expenditure rose to ₹888 crore, while Colgate-Palmolive India increased brand investments by 10%. Godrej Consumer Products stood out as one of the few exceptions, reporting a marginal decline in advertising expenditure during FY26.

Marico acknowledges that intensifying competition across offline and online channels, aggressive pricing and rival marketing campaigns pose risks to market share and pricing power. “The higher investments were supported by a structured cost management framework comprising procurement agility, supply chain efficiencies, productivity initiatives and overhead optimisation, enabling it to fund growth investments while offsetting inflationary pressures,” the company said. 

Britannia has also indicated that higher advertising investments will remain central to its growth strategy, while Colgate said premium products are growing significantly faster than the broader toothpaste category, reinforcing the role of branding in driving premiumisation.

"Going forward, we will continue to focus on driving growth across core and adjacent categories through a robust pipeline of innovations, agile execution and higher investment in advertising and brands," Managing Director and CEO Rakshit Hargave said.

This trend has carried into the current fiscal, with most leading FMCG companies reporting higher advertising and promotional spending in the first quarter. This signals that brand investments remain central to their growth strategy despite an increasingly competitive market.

Advertising Becomes a Competitive Moat

For large FMCG companies, the response to rising competition is no longer simply higher advertising budgets but a fundamental rethink of how those investments are deployed.

Rajiv Dubey, Vice President, Head of Media and Head of Brand Activations at Dabur India, said the company is combining the trust of its legacy brands with sharper digital capabilities across e-commerce, quick commerce and D2C channels to stay competitive.

"Our response is to combine the trust and scale of Dabur's heritage brands with sharper digital capabilities across e-commerce, quick commerce and D2C channels," Dubey said.

He added that Dabur's Digital Marketing GCC is strengthening its AI, data and marketing technology capabilities to deliver faster consumer insights, more personalised communication and better marketing effectiveness across the consumer journey.

That shift reflects a broader change sweeping the FMCG sector, according to Shradha Agarwal, Co-founder and CEO of Grapes. "National brands are no longer competing only with other national players—they're also up against regional brands, digital-first challengers and quick-commerce-native brands. That has made it much harder to win consumers consistently," she said.

Agarwal said advertising today is less about awareness alone and more about maintaining visibility across television, digital platforms, retail media, commerce channels and influencers as consumers navigate multiple touchpoints before making a purchase. Sustained media investments also help brands command a premium by building trust and recall—particularly in quick commerce, where buying decisions are often made within seconds.

Many ad executives say advertising intensity is increasingly driven by the need to capture consumer attention and strengthen competitive positioning, rather than by any standard industry benchmark.

Vishal Nicholas, Head - Strategy & Solutions - BX, dentsu India, says, “The biggest competitor for FMCG brands today isn't another FMCG company—it's consumer attention. Consumers are constantly juggling entertainment platforms, creators, marketplaces and D2C brands, making attention the scarcest resource. In that environment, sustained advertising is no longer optional; it's the price brands must pay to stay relevant."

If you are a large company with a portfolio straddling consumer segments and price points you could be investing to both defend share and accelerate premiumisation, Nicholas explains. 

Sajal Gupta, CEO of Kiaos Marketing, said there is no single optimal advertising-to-sales ratio, with investment levels varying by portfolio mix and category dynamics.

"HUL and Marico continue to invest aggressively... while ITC remains below 2% because of its diversified revenue mix, where advertising plays a relatively smaller role," Gupta said.

The Next Phase: AI and Commerce Media

As media consumption fragments further, marketers believe the next wave of advertising investment will increasingly be shaped by artificial intelligence and commerce media.

Dubey said Dabur's future investments will continue to focus on innovation, premiumisation and technology-enabled brand building, with greater emphasis on AI-powered personalisation and attention-based media planning to improve marketing effectiveness.

Agarwal too expects AI to become indispensable as brands grapple with exploding content requirements while marketing budgets remain under pressure.

"Content demand has exploded, with many companies now needing thousands of creative assets annually, while marketing budgets have grown only modestly. AI will become indispensable because it enables brands to produce content faster and at a much lower cost," she said.

Industry executives also expect a larger share of digital advertising budgets to shift towards commerce media as marketers increasingly prioritise measurable returns on ad spend.

More Advertising, Less Attention?

Consumers today are exposed to unprecedented amounts of commercial content. AI is making content cheaper to produce, meaning everyone can flood channels with creatives. According to dentsu's ‘The Brand Reset’ study, developed with Kantar and Lumen Research, attention—not impressions—is increasingly emerging as the critical link between advertising, brand equity and long-term sales.

If media becomes abundant, attention—not content production—becomes the bottleneck. That creates a paradox: companies may spend more on advertising while getting less incremental attention from each additional dollar, say experts. 

“The winners may not be those with the biggest budgets, but those that build proprietary demand engines—first-party data, retail media capabilities, communities, creators, and distinctive brand assets that algorithms can't easily commoditise,” quips Nicholas.