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HUL trims ad spend by 7% in Q3

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MUMBAI: Joining its peer Colgate-Palmolive, FMCG giant Hindustan Unilever Ltd (HUL) has cut down its ad spends in the fiscal-third quarter ended December amid pressure on margins and a slowdown in the economy.

The largest ad spender in India trimmed its promotional budget by 7.14 per cent in the quarter to Rs 6.9 billion compared to Rs 7.43 billion in the earlier year.

The year-on-year percentage of sales to advertising and promotional spending has also decreased from 14.5 per cent in the third quarter of FY‘11 to 11.6 per cent in Q3 FY‘12.

For the nine-month period ended December, HUL‘s ad and promotions spend dropped 7.77 per cent to Rs 19.74 billion as against Rs 21.41 billion a year ago.

Percentage of ad spend to sales during this period also took a blow, dropping to 11.84 per cent from 14.76 per cent.

HUL launched two products in the personal care category in the third quarter of the current fiscal - Dove Nourishing Oil Care shampoo and Sure for Men. In the foods category, it launched Bru Gold coffe, Brooke Bond Taj Mahal Green Tea and a range of Brooke Bond Taj Mahal tea bags in various flavours. In its water category, HUL launched a new variant of Pureit water purifier.

The company launched a promotional exercise by the name Joy of Giving Week and also celebrated Global Handwash Day both in October 2011.

Fuelled by volume growth, sales rose 16.5 per cent to Rs 58.53 billion from Rs 50.27 billion in the corresponding quarter a year ago. Sales and detergents put up a stronger performance than personal products.

Competitive pressures, however, could challenge the sustainability of this volume growth.

Company Name Q3FY12 Ad Spend (in Rs) Ad/Sales Ratio (%)
HUL 6.9 billion  11.6
Dabur India Ltd 1.98 billion 13.6
Marico 1.34 billion 12.5
Colgate- Palmolive 1.07 billion 16.1

Marico and Dabur India are the two FMCG companies that posted an increase in A&P spends in Q3FY12 of 48.63 per cent and 46.9 per cent respectively while Colgate-Palmolive cut its spends by 10.86 per cent.

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