FMCG, auto and consumer companies step up festive marketing spends by up to 20%

Kolkata | New Delhi: India's leading consumer goods companies are committing enhanced marketing budgets this festive season, with several planning to raise spending by as much as 20% year-on-year, seeking to capitalise on healthy demand and partly outweigh pressure on margins. Dealers and retailers, meanwhile, have started adding inventory, signalling growing confidence in a volume-led recovery.

Companies including Hyundai Motor, Maruti Suzuki, Hero MotoCorp, Amul, Parle Products, Haier, Havells, Hisense, and Godrej Appliances are stepping up marketing investments, betting on stronger demand during Onam this month through the Dhanteras-Diwali period in November-the country's biggest consumption window.

Also read: Independence Day sales surge up to 25%, lifting festive demand

Hyundai and LG told analysts recently that dealers have started stocking festive inventory well ahead of the usual schedule to capitalise on booming demand, exemplified by record Independence Day sales.

"There is no doubt there is some pressure on margins" from commodity prices and rupee depreciation, said Haier India CEO Satish NS, but festive marketing remains critical to gaining market share. The country's third largest electronic company plans to spend around ₹60 crore on marketing this festive season.

Dairy major Amul has also increased its marketing budget by nearly 20%, managing director Jayen Mehta said, citing "phenomenal growth" across categories through the year.

The spending comes at a time when companies are grappling with margin headwinds. Most consumer-facing companies flagged higher input costs in their June quarter earnings, driven by raw-material inflation due to the West Asia crisis and a weaker rupee. With companies wary of passing on the full increase to consumers for fear of dampening demand, advertising and marketing budgets are emerging as a key lever to protect volumes and win market share.

The festive quarter, spanning October to December, is traditionally the biggest marketing season for consumer electronics, smartphones, automobiles, two-wheelers, apparel and FMCG. Virat Khullar, head (marketing) at Hyundai Motor India said the company is getting "positive market signals and consumer sentiment leading into the festive season" and expects the momentum to strengthen further going forward. The company will have new vehicle launches, consumer offers, and consumer engagement through a "well-rounded marketing approach" leveraging digital platforms, television and print media.

Also read: Festive demand set to lift FMCG growth, but margins face pressure

Hero MotoCorp chief business officer Ashutosh Varma said the company will continue to invest behind the brand through focused advertising and consumer engagement across its portfolio to strengthen customer consideration during the festive season.

TV maker Hisense India is taking an even bigger bet. Its festive marketing budget will rise to around 8% of sales, from 4.5% last year, as it bolsters offline presence and sees healthy inventory loading, said Pankaj Rana, CEO.

Havells, which doubled advertising expenditure in the June quarter from a year earlier, is set to maintain elevated spending, including on its Lloyd brand, the management told analysts. Arvind Fashions, which sells brands including Arrow, Tommy Hilfiger and Calvin Klein, has also stepped up marketing investments since the last quarter.

For India Inc, the message is clear: with consumers showing signs of returning to market, companies are willing to spend to capture the festive rupee-even if it comes at expense of margins.