FMCG cos line up ad blitzkrieg to cash in on festive mood

Written by Yogima Seth | New Delhi | Updated: Aug 24 2009, 05:53am hrs
Slowdown is over, at least for the consumer durable companies in the country with all major players eyeing 25-30% growth during the festive season this year.

While a good part of it will come from introduction of new products in the market across different categories, companies have lined up higher expenditure for advertising and promotion to garner a bigger pie of the market.

For instance, LG Electronics India is eyeing around 25% growth and expects to generate revenue of Rs 2,800 crore in the festive season, starting September, as against the corresponding period last year. We are hoping to maintain nearly 25% growth this year as against 15-16% last year when the recession had set in and this will come on the back of higher disposable income in the hands of the consumers and improved consumer sentiments, says V Ramachandran, director (sales and marketing), LG Electronics India.

According to Ramachandran, while the recent tax proposals have increased the purchasing power of Indians, the disbursal of arrear to government employees under the Sixth Pay Commission is also bringing in money into the system. Buoyed by this, the company has increased its promotional expenditure this year by nearly 60% from Rs 68 crore last year to Rs 110 crore this year.

Likewise, Godrej Appliances is eyeing 30% growth in September-December period this year and revenue of nearly Rs 700 crore vis--vis Rs 500 crore last year. The country had entered into recession by September last year and therefore all sectors, including consumer durables, witnessed a slowdown and our growth got restricted to merely 17-20% as against 30% expected earlier. However, this year the consumer sentiments have improved and people are once again into buying mode which along with our new range of refrigerators and washing machines that would be launched during the festive time will help us register nearly 30% growth in the next four months, says Kamal Nandi, vice president (marketing), Godrej Appliances.

Even Whirlpool India is planning to increase its advertising and marketing spend by 10-15% this year from Rs 45 crore spend last year. The company is eyeing a revenue of Rs 500 crore this year during the festive months beginning from September, a growth of 25-30% over the corresponding period last year. Samsung Electronics is also eyeing 30-35% growth in this festive season and expects to close this calendar year at $2 billion as compared to $1.7 billion in 2008.

Amidst all this the companies have not factored in the impact of near absence of rains in some parts of the country in their overall sales. The extended summers have boosted the sales of refrigerators and air conditioners and going forward we have the festivals coming up which will negate the impact of low rains in sales from rural India that contributes 20% to our total sales. However, we might feel the pinch after December, adds Ramachandran of LG Electronics.