The revenue growth rate of FMCG companies is at par with the growth in advertising spend
16-Oct-2015 •Vikas Vardhan
FMCG and other consumer-goods companies have witnessed one of the highest periods of growth post the subprime crisis in 2008. However, while their revenues increased significantly, they have also spent huge money on advertising their products. Their expenditures on advertisement and sales promotions have grown consistently in line with the rising revenues. FMCG companies have seen their revenues go up by 17 per cent CAGR in the last five years, whereas the expenditure on advertising has grown by 16 per cent CAGR during the same period. Zydus Wellness spent 25 per cent of its revenues on promotions in 2015.
Apart from FMCG and other consumer-goods companies, there are companies from the sectors like automobile that spend a lot on advertising. Of the top three advertising spenders, two are from the automobile sector. SBI is the biggest spender among banks.
Till now huge expenditures on advertising have been backed by extraordinary growth in consumer spending and domestic demand but it is yet to be seen if this growth and advertising spend will sustain for long.
| Company name | Net sales (₹cr) | Advt. & sales promotion (₹cr) | Advt. as % of revenue |
| Tata Motors | 262796 | 8501 | 3.23 |
| Hindustan Unilever | 31972 | 3944 | 12.33 |
| Mahindra & Mahindra | 71949 | 1625 | 2.26 |
| Tata Global Beverages | 7993 | 1326 | 16.58 |
| United Spirits | 10615 | 1300 | 12.25 |
| Godrej Cons. Products | 8276 | 1207 | 14.58 |
| Dabur India | 7827 | 1124 | 14.37 |
| ITC | 38835 | 814 | 2.1 |
| State Bank of India | 207974 | 797 | 0.38 |
| Maruti Suzuki India | 50801 | 765 | 1.51 |
| Company name | Advertisement & sales promotion spend (₹cr) FY15 FY14 FY13 | Advertising spend as % of revenue FY15 FY14 FY13 | ||||
| Zydus Wellness | 110 | 100 | 93 | 25.47 | 24.86 | 24.06 |
| Colgate-Palmolive | 714 | 689 | 490 | 17.94 | 19.24 | 15.49 |
| Emami | 392 | 277 | 279 | 17.68 | 15.24 | 16.42 |
| Bajaj Corp | 145 | 113 | 88 | 17.67 | 16.87 | 14.49 |
| GSK Consumer Healthcare | 717 | 811 | 496 | 16.65 | 16.65 | 15.58 |
| Gillette India | 255 | 176 | 155 | 14.6 | 12.22 | 12.57 |
| Godrej Consumer Products | 1207 | 1109 | 892 | 14.58 | 14.58 | 13.9 |
| Dabur India | 1124 | 1000 | 837 | 14.37 | 14.13 | 13.57 |
| Hindustan Unilever | 3944 | 3675 | 3290 | 12.33 | 12.57 | 12.18 |
| Godfrey Phillips India | 297 | 287 | 274 | 11.98 | 13.66 | 14.35 |
| Jyothy Laboratories | 181 | 146 | 96 | 11.95 | 11.02 | 8.63 |
| ADF Foods | 24 | 16 | 13 | 11.54 | 8.85 | 8.16 |
| Marico | 650 | 561 | 598 | 11.33 | 11.97 | 13.01 |
| Camson Bio Technologies | 14 | 14 | 18 | 9.63 | 11.65 | 16.06 |
| P&G Hygiene & Health Care | 171 | 160 | 137 | 8.32 | 9.46 | 10.59 |
