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Q4-16: Colgate marketing spends up 28.4 percent

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BENGALURU: Colgate-Palmolive (India) Limited (Colgate-Palmolive) spent 28.4 percent more towards advertisement and sales promotion (ASP) in Q4-16 (quarter ended 31 March 2016, current quarter) at Rs198.37 crore (18.1 percent of Total Income or TI) as compared to the Rs154.49 crore (15 percent of TI) in the corresponding year ago quarter (year-over-year or y-oy-). The Indian FMCG major’s ASP in the current quarter was 25 percent higher quarter-over-quarter (q-o-q) as compared to Rs 158.65 crore (15.6 percent of TIO) in the immediate trailing quarter.

During the year ended 31 March 2016 (FY-16, current year) Colgate-Palmolive spent 1.4 percent more towards ASP at Rs 724.20 crore (17.4 percent of TI) as compared to Rs 714.25 crore (17.9 percent of TI) in the previous year.

Note: The unit of currency in this report is the Indian rupee - Rs (also conventionally represented by INR). The Indian numbering system or the Vedic numbering system has been used to denote money values. The basic conversion to the international norm would be:

(a) 100,00,000 = 100 lakh = 10,000,000 = 10 million = 1 crore.

(b) 10,000 lakh = 100 crore = 1 arab = 1 billion.

Colgate-Palmolive managing director Issam Bachaalani said, “We strongly believe in developing innovative new products which is a key driver of the company’s long term sustainable growth. Long term growth potential for ‘oral care products’ remains positive and is anticipated to drive progression in the next five years. This can largely be attributed to external factors like increasing disposable earnings, increasing lower and upper middle class strata, opportunity to convert under penetrated toothpaste market and rising oral health awareness and solution in the segments.”

Successful new product launches included Colgate Pain Out, Colgate 360 Toothbrush – Gold and Black, Colgate Total Charcoal Deep Clean, Colgate Active Salt Neem, Colgate Zig Zag Black and Colgate Sensitive Pro-Relief (CSPR) Enamel Repair, and Palmolive Hand wash.

Trends

Over a 16 quarter period starting Q1-13 until Q4-16, the company’s ASP showed a linear increasing trend in terms of absolute rupees as well as in terms of percentage of TIas per the figure (A) below. Colgate-Palmolive’s ASP was highest during this 16 quarter period in Q2-15 at Rs 201.00 crore (20.1 percent of TI), while the second highest ASP spend was in Q1-6 at Rs 200.50 crore (19.8 percent of TI). Its ASP spend in Q4-16 is hence the third highest ASP spend during the period under consideration.

The company reported 6.8 percent y-o-y growth in TI in Q4-16 at Rs 1,091.11 crore as compared to Rs 1,022.00 crore and was 8.3 percent higher q-o-q as compared to Rs 1,000.36 crore. For FY-16, TI increased 4.5 percent to Rs 4,162.29 crore from Rs 3,891.94 crore in FY-15. TI shows a linear increasing trend during the 16 quarter period under consideration.

Please refer to the figure (B) below. Colgate Palmolive reported profit after tax (PAT) of Rs 145.89 crore (13.4 percent of TI) for Q4-16, which was 10.8 percent lower y-o-y as compared to Rs 163.63 crore (16 percent of TI) and 8.5 percent lower q-o-q as compared to Rs 159.41 crore (15.8 percent of TI). The company’s PAT showed a slow linear increase in PAT in absolute rupees, but a marked linear decline in terms of PAT as percentage of TI over the 16 quarter period under consideration.

For FY-16 PAT increased 3.1 percent to Rs 576.51 crore (13.9 percent of TI) from Rs 558.98 crore (14 percent of TI) in the previous year.

Among the major brand building and ATL marketing initiatives by the company inf fiscal 2016 include:

On 5 April 2016, Colgate-Palmolive announced Virat Kohli, India’s T20 cricket captain as the new ambassador of Colgate Super Flexi toothbrush. On 17 March 2016 the company announced Ranveer Singh as the new brand ambassador for Colgate MaxFresh. TVC campaigns featuring both the icons and the respective products were launched.

On 3 August 2015, after two months of a nationwide hunt, the Colgate Visible White Makeover Contest reached its culmination and announced winners. These 10 winners of the contest received personal grooming tips from the brand ambassador Sonam Kapoor at a makeover session in Mumbai.The campaign rolled out in March 2015, when consumers across the nation were encouraged to click a picture of their dazzling white smile and upload it on a Facebook URL and through WhatsApp. Furthermore, the grooming session was filmed by youth television channel, Bindaas and aired on 9 August.

Actress and former Miss Universe Lara Dutta had been roped in as the brand ambassador fo rColgate Total Charcoal Deep Clean on 21 July 2015 and a new TVC was launched for the product.

On 15 July 2015, Colgate MaxFresh launched a new age energetic music video, which teamed up the dancing flair of Telugu superstar Allu Arjun with the vocal prowess of singer Anushka Manchanda. The track is called taazgi ka dhamaka and has been directed by renowned filmmaker Pradeep Sarkar.

On 9 June 2015, the oral care player launched a toothpaste to address the inflammatory gum problem of pyorrhea – Colgate Active Salt Neem. Colgate signed Bollywood actress and former Miss World Priyanka Chopra as the brand ambassador.

In May 2015, the company launched promotional offer with Baskin Robbins, Gelato and Café Coffee Day encouraging consumers to try the efficacy of Colgate Sensitive Original and Colgate Sensitive Pro-Relief and at the same time enjoy their all-time favourite ice cream or coffee.

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