Adspend of fast moving consumer goods (FMCG) companies rose marginally by 5.49 per cent during 2002-03, compared with a 14.15 per cent rise in 2001-02.
Advertisement expenditure-to-sales ratio was the highest in the last five years at 5.08 per cent during 2002-03. The ratio was 4.4 per cent in 1999-00 and 2000-01 and moved up marginally to 4.89 per cent in 2001-02.
The higher adspend-to-sales ratio, however, did not translate into higher sales growth - it rose a modest 1.5 per cent in 2002-03, the lowest in five years when FMCG majors posted single-digit growth in sales.
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A study of major FMCG companies, manufacturing food products, personal care products and paints, unravels an aggregate adspend of Rs 1,612.27 crore in 2002-03, which is an increase of 5.49 per cent over the Rs 1,528.33 crore in 2001-02.
FMCG sales grew at their lowest-ever pace of 1.5 per cent in the last fiscal year, compared with 2.62 per cent in 2001-02, 4.13 per cent in 2000-01 and 8.8 per cent in 1999-00.
Reckitt Benckiser was the largest to spend bulk of its revenues on advertisements. In 2002-03, it spent 17.33 per cent of its sales revenue on this account, up from 15.41 per cent in 2001-02 and 10.43 per cent in 2000-01.
Cadbury too spent over 10 per cent of its revenue on advertisements. The advertisement expenditure of Cadbury accounted for 10.89 per cent of its sales in 2002-03 and it was 10.03 per cent in 2001-02.
FMCG giant Hindustan Lever remained on top in terms of total adspend with an annual expenditure of Rs 841.86 crore in 2002-03. However, advertisement expenditure of the company increased by just 2.2 per cent in 2002-03 compared with 18.3 per cent in previous year, 2001-02.
Nestle ranked second with an adspend of Rs 150.71 crore during the year ended December, 2002. Reckitt Benckiser claimed the third sport with an expenditure of Rs 100.33, followed by Cadbury with Rs 87.67 crore, GlaxoSmithKline Consumer with Rs 85.91 crore and Whirlpool of India with Rs 50.37 crore.