Adspend in FMCG on a downslide

Looks like the grand consumption story that market experts reel off does not really go with a 'happily ever after' just yet. The FMCG sector which accounts for maximum advertising in India seems to have embarked on drastic cuts in advertising and promotional spends. This comes as a desperate last-minute measure to reign in expenses and protect margins of the industry players, reports CNBC-TV18's Tanvi Shukla.

Also watch the accompanying video Accounting for 11.5% of total sales, the adspends for FMCG major Dabur stood at Rs 127 crore for Q4. This is 5.5% down from Rs 139.93 crore that the company spent on promotional sales in the previous quarter. The advertising cost cut by 18% for Dabur in the current quarter year on year did not quite tassle out as EBITDA margins have already shrunk 50bps in Q4 . Marico called in a dramatic 25% cut in advertising and promotional sales this quarter compared with a year ago. The downsize comes in the wake of a change in strategy for Kaya advertising and as a measure to cut overall cost for the company. Adspends stood at 8.6% of sales for Q4 at 67.19 crore. Margins, however, remained flat. High input costs to snip FMCG firms' margins in Jan-March Another major sector player, P&G, saw a 15% cut in adspends year on year in Q4. Whats intersting to note is the trajectory traced by the company's expenditure on ads. From Rs44 crore in Q4 last year, adspends shot up to Rs 57 crore in Q3 this year and has not taken a nosedive to Rs 37.9 crore this quarter. Similar trends have been observed in the case of Godrej too. CNBC-TV18 expects FMCG conglomerate HUL to have a final say in the matter with a major cut to be announced in the upcoming results on Monday.