FMCG major Godrej Consumer's advertising investment shot up by 47 per cent to Rs 1,011 crore in FY24 in the domestic market, even as it has reduced SKUs by around 30 per cent through a rationalisation process.
Godrej Consumer Products Ltd (GCPL), which aims for double-digit volume growth, is spending more on brands, automation and SKU rationalisation with a "keen focus on simplification", according to the latest annual report of the company.
"In line with our strategy of category development, we have made significant investments in advertising. We were the fifth largest advertiser in India in 2023, from being number 17 in 2021. We are adding to this with investments in distribution," GCPL Managing Director and CEO Sudhir Sitapati said.
GCPL's spending on 'Advertising and Publicity' was Rs 1,011 crore for the financial year ended March 2024. This was 47 per cent higher than Rs 687.34 crore a year before.
"In India, we are now spending over Rs 1,000 crore in advertising, from Rs 350-400 crore a few years ago, a significant increase. We realised that our categories were being run differently across the world, advertising agencies were different, production was being done differently," he said.
The company owns popular brands like Cinthol, Godrej No 1, HITS and Good Knight.
"From multiple agencies, we moved to a single agency, which is our in-house agency, the LightBox," Sitapati said, adding that "from multiple executions, we are moving to a single execution, shooting differently in the same location with different models for different countries".
This is a "very efficient process" in the context of advertising increase and resulted in savings of 40 bps, he noted.
On a consolidated basis, including foreign markets like Indonesia, Africa, the US, and some other markets, GCPL spent Rs 1,336.12 crore on advertising and publicity.
Besides, Sitapati said, "We have reduced our SKUs overall by roughly 30 per cent".
Raymond Consumer Care, which it acquired in April last year from the Singhania family with brands like Park Avenue and KamaSutra, has reduced 550 SKUs to just 100, he said.
"On people, we also reduced the number of managers overall by creating larger, richer roles and introducing more modern tools. So, we have actually physically reduced in size despite our growth," he said.
GCPL, as per the strategy, has prioritised resource optimisation and operational efficiency through a stock-keeping unit (SKU) rationalisation strategy across its product lines, focusing particularly on high-performing products, according to the latest annual report.
"This approach has streamlined our portfolio, resulting in notable improvements in manufacturing efficiency and waste reduction," it said.
This optimisation initiative has also resulted in reducing overall inventory levels from 93 days to 67 days, it added.
"SKU rationalisation has aligned our inventory more closely with actual demand, making our supply chain more efficient by reducing excess inventory and lowering the risk of overstocking and associated costs," it said, adding that it has "also improved the accuracy of demand forecasts and refined planning processes".
According to the company, "While new brand development remains pivotal for value creation, we plan to phase out smaller brands where it aligns with our broader value realisation strategy".
These initiatives will help it enhance its competitiveness in the market and promote sustainability throughout our value chain, it added.
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