Spending profusely

The revenue growth rate of FMCG companies is at par with the growth in advertising spend

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.

Highest advertising spenders in Rs terms

Company nameNet sales
Advt. & sales promotion (₹cr)Advt. as % of revenue
Tata Motors26279685013.23
Hindustan Unilever31972394412.33
Mahindra & Mahindra7194916252.26
Tata Global Beverages7993132616.58
United Spirits10615130012.25
Godrej Cons. Products8276120714.58
Dabur India7827112414.37
State Bank of India2079747970.38
Maruti Suzuki India508017651.51

Highest FMCG spenders by per cent of revenues spent on advertising

Company nameAdvertisement & sales promotion spend (₹cr)
FY15      FY14      FY13
Advertising spend as % of revenue
FY15     FY14      FY13
Zydus Wellness1101009325.4724.8624.06
Bajaj Corp1451138817.6716.8714.49
GSK Consumer Healthcare71781149616.6516.6515.58
Gillette India25517615514.612.2212.57
Godrej Consumer Products1207110989214.5814.5813.9
Dabur India1124100083714.3714.1313.57
Hindustan Unilever39443675329012.3312.5712.18
Godfrey Phillips India29728727411.9813.6614.35
Jyothy Laboratories1811469611.9511.028.63
ADF Foods24161311.548.858.16
Camson Bio Technologies1414189.6311.6516.06
P&G Hygiene & Health Care1711601378.329.4610.59

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