The Hindu Business Line : Sugar confectionery sector cuts adspend

IT appears as if the slackening growth rate of the Rs 1,600-crore sugar confectionery industry has had an adverse impact on this category's advertising spends as well. For the first time in the last four years, advertising spends have fallen.

According to estimates by AdEx India (a division of TAM Media Research), there has been an over 11 per cent fall in combined ad spends for television and print between January-September 2004 at Rs 36.97 crore against the corresponding period of the previous year.

Also, while ad spends by sugar confectionery companies on television have decreased to about Rs 35.94 crore during the first nine months of 2004 against Rs 41.19 crore during the same period of 2003, those on print have seen a marginal increase.

Could this perhaps be a result of slackening growth rates the industry has seen this year? Compared to cumulative growth rates of about 24 per cent till 2001, the industry is expecting only about 5-6 per cent sales growth in 2004.

Along with slackening growth rates, the industry has also seen an over 10 per cent increase in input costs including rising costs of sugar and packaging material this year. Since the industry operates at specific price points of 25 paise, 50 paise and a rupee, it is averse to hiking prices and this consequently leads to a margin squeeze.

To top it all, the category has not witnessed as many new product launches as perhaps in the last few years. Analysts tracking the sector said that typically, advertising budgets are enhanced at the time of new product launches and then reduced when the product begins to gain acceptance in the market.

When contacted, the Lotte India's Managing Director, Mr N.C. Venugopal, told Business Line that his company has, in fact, raised spends on advertising and promotions this fiscal by 15 per cent. "We have decided to spend about 9.5 per cent of sales in advertising and promotion this fiscal against 8.5 per cent in 2003-04," he said.

The Executive Director of Candico - one of the few domestic companies operating in this market - Mr Karan Gupta also said his company has increased its advertising and marketing budget for this fiscal and dismissed the fall in industry ad spends as being probably "cyclical".

According to AdEx, Perfetti Van Melle Pvt Ltd was the highest spender on television with 49 per cent of the total ad spends, followed by Parle Products (17 per cent), ITC Ltd (9 per cent), Nutrine Foods (8 per cent) and Hindustan Lever Ltd (7 per cent).

The brands that ruled television advertising during the period under review included Chatar Patar (15 per cent), Parle Smoothies (10 per cent), Alpenliebe Cream Stawberry (9 per cent), Alpenliebe Lolipop (9 per cent) and Mentos Mint (7 per cent).

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