Urban demand adds lather to FMCG growth
Aided predominantly by a strong urban demand, the December '05 quarter is expected to see a continuation of good performance by FMCG companies in the year so far. Overall, sales are expected to grow in the range of 12-15per cent, while profits are expected to grow by 15-20per cent.
The FMCG sector has been one of the best performers in the stock market with the BSE FMCG index returning about 60per cent in a year, while the ET Brandex returning about 66per cent during the same period.
Aided predominantly by a strong urban demand, the December '05 quarter is expected to see a continuation of good performance by FMCG companies in the year so far. Overall, sales are expected to grow in the range of 12-15per cent, while profits are expected to grow by 15-20per cent.
“The rural market has started to pick up too and will pick up sharply in the coming quarters. Urban growth rates in most categories are quite upbeat and seem to be getting better every quarter,” said the CEO of a leading Indian FMCG company. The past few months have seen the FMCG sector maintain its growth at good levels, aided largely by rising demand in urban markets. But while rural demand has revived, it is still very low in single digits.
But urban demand has been strong enough to drive sales growth of FMCG companies such as HLL, Godrej Consumer Products, Dabur and Marico Industries. Even companies such as Colgate Palmolive (India), which were finding the going tough last year, have started to show good sales growth.
The return of pricing power, even if it was occasioned by a severe hike in input costs, is a welcome relief to the industry. After years of promotions, discounts, price cuts which have taken a toll on margins and even sales growth in categories like detergents and shampoos, there have been price hikes in the range of 5-8per cent in these and other segments.
Thus, apart from volumes growing, a changing product mix and price hikes are expected to have a salutary effect on revenue growth, and may even lead to sales growing higher than expectations.
“Most companies are investing heavily in innovation across price segments. The noise levels in the marketplace too have gone up and created excitement in the consumer space,” said a senior Dabur India official.
However, this will not mean that margins will improve as companies are being careful enough to target price hikes in a manner that does not give any leeway to competition or discourage consumers from spending. In that respect, the fact that sales are growing despite slender price hikes is a comforting sign for the industry. Margins may be under pressure, especially for those companies whose raw materials include petro-based intermediates like cosmetics and detergents.
But the units set up by companies in tax-saving locations will come to their rescue in limiting the damage of rising input costs. That will also be the reason companies will report a robust improvement in profit and higher than sales growth though costs may be rising. The current quarter may also see a change in trend: larger companies narrowing the gap between them and their mid-sized counterparts on the sales growth front.
Consumption levels have picked up sharply, helping the industry market maintain its growth rate at an upbeat 6per cent. Categories innovating the most continue to record good growth rates. Biscuits, for instance, grew at 13per cent, shampoos grew at 16.3per cent, while washing powder grew at 9.4per cent, according to AC Nielsen estimates.
New categories with relatively lower penetration levels such as namkeens, batteries, biscuits, hair oils, scourers, shampoo, mosquito repellents are growing faster than highly-penetrated (over 80per cent) categories like toothpaste, soaps and detergents.
Mid-sized companies such as Dabur, Marico, Parle Products, J&J, Godrej Consumer, P&G and others are leading growth rates. Fast moving consumer goods heavyweights are eyeing global acquisitions, which are proving to be not only more economical than local ones but also giving them a foothold in international markets.
Industry chieftains said valuations of smaller Indian brands have hit the roof with too many merchant bankers chasing few available brands. Multinational companies keen on gaining a foothold in the Indian market are willing to pay an astronomical price for the distribution network of Indian brands than the brand itself.
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E4M Our strategy is to target younger audiences through Sports: Rajiv Dubey, Dabur
The Head of Media at Dabur India spoke exclusively to exchange4media on the World Cup, associating with Indian Idol, the company’s digital spending and much more
With quirky campaigns, memes and moment marketing, timed with the ongoing World Cup and particularly the India-Pakistan matches, Dabur India has got considerable consumer attention for its popular brands – Red Paste, Cool King Hair Oil, Chyawanprash, Dabur Vita and the recently launched Bae Fresh Gel toothpaste.
The 140-year-old company is going big on key sporting events, World Television Premiere (WTP) movies and reality shows. It is now gearing up to become the title sponsor of popular talent show ‘Indian Idol’ on Sony TV for the first time, shared Rajiv Dubey, who leads the media strategy at Dabur.
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Swapan Seth's new book 'COOL' is out
The book is a reflection of the author's 'eclectic taste across categories'
Advertising professional and art collector Swapan Seth has announced the launch of his new book COOL. The book is described as "a ready reckoner to the hip and the happening, of the known and the very unknown."
The book is a reflection of the author's "eclectic taste across categories: from boltholes to exotic hideaways."
COOL has been published by Simon & Schuster India and is available on Amazon.
Seth is an ad veteran with a long and illustrious career in the industry. He became the youngest-ever Creative Director at Clarion at age 24. He was VP at 26 at Trikaya Grey. Two years later, he started his agency Equus.
He writes for publications such as The Economic Times, Hindustan Times and India Today. This is his second book and he has previously published THIS IS ALL I HAVE TO SAY.
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Disney Star signs 9 sponsors for Asia Cup PAK
Charged by Thums Up, Nerolac Paint+, Amazon Pay, Jindal Panther, My11Circle, MRF, Samsung Galaxy Z Flip5, Wild Stone and Thums Up come on board
e4m Staff Disney Star has signed nine broadcast and digital streaming sponsors for the upcoming Asia Cup.
Charged by Thums Up, Nerolac Paint+, Amazon Pay, Jindal Panther, My11Circle, MRF, Samsung Galaxy Z Flip5, Wild Stone and Thums Up have come on board for the upcoming tournament.
As reported earlier by exchange4media, Disney Star has sought Rs 26 crore for the co-presenting sponsorship on TV and Rs 30 crore for Disney+ Hotstar.
According to industry sources, the associate sponsorship on Star Sports has been priced at Rs 19.66 crore, whereas for the ‘powered by’ sponsorship on Disney+ Hotstar, the broadcaster is seeking Rs 18 crore.
As per the information available with exchange4media, Disney+ Hotstar has three sponsorship tiers-- co-presenting (Rs 30 crore), powered by (Rs 18 crore) and associate sponsorship (Rs 12 crore). The broadcaster is offering an estimated reach of 120-140 million for co-presenting sponsors, 90-100 million for powered by and 60-70 million for associate sponsorship.
A spot buy for 10 seconds has been priced at Rs 25 lakh for the India vs Pakistan matches, while for the non-India matches, the ad rate for 10 second is Rs 2.3 lakh. The India matches plus the final for ODIs has been priced at Rs 17 lakh per 10 seconds.
Asia Cup is scheduled to be held from 30 August, 2023, to September 17, 2023.
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Sorted 360 wins creative & social media mandate of Reliance Mall
The agency will manage offline and online campaigns for Reliance Mall
Sorted 360, an integrated creative and social media agency, has won the mandate to providing brand solutions for Reliance Malls across India.
“Sorted 360 is set to enhance Reliance Malls' market presence with their unparalleled creative prowess and strategic thinking,” read a press release.
“Sorted 360's commitment to pushing the boundaries of creative communication aligns perfectly with Reliance Malls' ethos. With a pan-India presence spanning across 19 cities and growing, Reliance Malls has consistently captivated customers by offering an array of Reliance brands and third-party fashion & lifestyle brands. The mall has established an unparalleled connection with its patrons through superior quality, a remarkable value proposition, and an unmatched shopping experience,” it read further.
"We are thrilled to welcome Sorted 360 as our trusted partner in advancing our brand presence across the nation," said the Head of Marketing at Relaice Malls. "Their proven expertise in retail, shopping center management, and innovative creative strategies make them the perfect fit for our vision."
"Partnering with Reliance Malls is a testament to our commitment to shaping extraordinary brand experiences," remarked Prerana Anatharam, Co-founder of Sorted 360. "We are excited to leverage our strategic and creative acumen to further elevate Reliance Malls as the epitome of convenience, choice, and excellence."
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KlugKlug onboards Hemang Mehta as Country Manager for Indias
Mehta was most recently Head of Agency Relationships at Network 18 Media & Investments
KlugKlug has appointed Hemang Mehta as its Country Manager for India.
Mehta will play a pivotal role in driving KlugKlug's growth and expansion within the Indian market and be responsible for Sales & GTM Strategy
Prior to that, he has also represented organisations like Exponential (now VDX.tv), India Today Digital and Rediff.com. His expertise spans various domains including digital media sales, mobile marketing, media planning, and buying, social media marketing, and more.
Hemang Mehta expressed his enthusiasm about joining KlugKlug, saying, "I am thrilled to be a part of KlugKlug, a forward-thinking platform that is reshaping the influencer marketing landscape. As much as I look forward to collaborating with the exuberant team at KlugKlug, I am super excited to interact with the brands to deliver powerful data-backed Influencer solutions that will guarantee business outcomes."
Commenting on the appointment, Kalyan Kumar, Co-Founder and CEO of KlugKlug, stated, "We are excited to welcome Hemang Mehta to our team as the Country Manager for India. His extensive experience in digital media sales and marketing will be instrumental in driving our efforts to provide influencer marketing solutions to our clients. We believe Hemang's leadership will be key in scaling our operations and expanding our reach within the Indian market."
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