FMCGs or Fast-moving consumer goods are products which sell quickly and at a relatively low cost. Such goods have a short shelf life due to high consumer demand or due to their perishable nature. Moreover, these goods are purchased frequently, are consumed rapidly, are priced low, and are sold in large quantities. For example shampoo, moisturizers, toothpaste, soaps, detergents, cleaning products etc
Interestingly, it is an estimate that India will be the fastest-growing market for fast-moving consumer goods (FMCG) food and drink brands' advertising expenditure over the next three years, with ad spend rising 14 per cent per year.
(B) Top Five FMCG Companies as per Market Cap
Following are the Top Five FMCG Companies as per Market Capitalisation in descending order
(C) Advertisement Expense of top 5 FMCG players
Selling and Distribution as per Market Cap in descending order:
i) Hindustan Unilever Ltd
Hindustan Unilever Ltd (HUL) is the No. 1 Advertiser With deepest reach. HUL is one of the largest advertisers in the country based on media spends. The Company creates an increasing amount of tailored digital content itself to connect with consumers and make it easy for them to choose Company's brand.
Further, it is the No.1 FMCG and 5th overall, in India by market cap. Eight Million stores sell HUL's products. A countrywide network of logistics warehouses ultimately delivers HUL's products to millions of retail outlets. The Company has over 50 brands.
ii) ITC Ltd - FMCG Segment
ITC Ltd's expenditure on Marketing and Distribution is ~5.67% of its Net Sales. The Company’s aims at enabling customers to make informed purchase decisions communications. The Company also makes efforts to educate customers on responsible usage of its products and services
Moreover, ITC has 25 FMCG Mother Brands. Moreover, the Business has creative brand campaigns and use social media platforms towards deepening consumer engagement.
Additionally, the Company has recently begun to enhance this digital journey through the even establishment of dedicated marketing command centres, interestingly called Sixth Sense. The project is being driven aggressively by ITC chairman Sanjiv Puri.
Vivel’s ‘Voice of Art’ Campaign on gender equality won Gold in Drivers of Digital Awards for best innovation and creativity in social media and best content in marketing.
Secondly, Savlon’s #NoHandsUnwashed Campaign won Gold at The Indian Public Relations and Corporate Communications Conference and Silver at Mad Over Marketing Awards for Best Public Awareness Campaign.
Also, the Cannes Lions Creativity Report listed the Savlon’s signature campaign – Healthy Hands Chalk Sticks amongst the decade’s most iconic works.
The Company also pioneered an innovative model - ‘ITC Store on Wheels’ - to directly service consumers in residential complexes.
The availability of ITC’s products is in over 6 Mn retail outlets across various trade channels in the country. Moreover, the Company has a robust distribution network.
iii) Nestle India Ltd
Advertisement and Distribution expenses of Nestle India (NIL) amount to ~10% of its Net Revenue for FY20. The management of Nestle India feels e-commerce will create another channel of growth. Interestingly, NIL might focus on increasing marketing spends to support new launches in future. Nestle India complies strictly on non-advertising of infant nutrition products. This also results in a barrier to entry.
iv) Dabur India Ltd
Dabur India Ltd is at 4th largest FMCG Company as per the Market Cap. It has one of the largest distribution network in India, covering ~6.9 mn outlets.
Also, Dabur India proactively engages with the media in promoting its products. The Company engages through various mediums, including news articles, TV advertisements, print advertisement, banners and hoardings, social media advertisements, YouTubeInfluencers and digital campaigns to connect to a wide range of consumers.
Further, for FY21, Company's spends on Digital platforms, including e-commerce, account for around 20% of the total Advertising spends, up from 12.7% a year ago.
A total of 130 Digital First/Digital Only films were created and aired across platforms in FY21. Additionally, 830 videos were on YouTube linked to Health, Lifestyle and Beauty. Moreover, the Company roped in influencers to improve its connect with consumers and build awareness and consideration of our brands. Nearly 39% of these influencers belong to the health and fitness arena while 24% were mom bloggers. Given the growing rural and semi-urban user base for digital content, 25% of content created during the year was regional.
v) Godrej Consumer Products Ltd
The total expenditure on Advertisement and Distribution as % of Revenue of Godrej Consumer Products is 14.16%.
In FY 21, when salons were close, the Company did partnership with Bollywood celebrities like Karan Johar and Neha Dhupia on Godrej Expert Rich Crème to establish the ease of coloring at home . Further, the Company also tailored its approach based focus markets and partnered with regional content creators on YouTube and Social media Platforms.
The Company has 6 million outlets in India. Rural sub-stockist network in India grew by 30% in FY21.
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References: Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry's Publications.
Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.
