Higher marketing and promo costs dent Tata Consumer's Q2 numbers

Cost pressures to sustain as company is committed to increasing advertising spends

A sharp rise in advertising and promotional expenses weighed on the operating performance of Tata Consumer Products in the September quarter (Q2). Consolidated operating profit margins (OPM) for the maker of Tata Tea and Tata Coffee slipped 74 basis points (bps) to 13.6 per cent as marketing expenses spiked by 27 per cent over the year-ago quarter.

On a standalone basis, advertising costs were up 47 per cent. The OPM dipped despite the rise in gross margins by 194 basis points year-on-year (YoY). This was aided by tapering in prices of tea and price hikes.

The company indicated that marketing expenses will