Wipro Consumer slashes ad spending as price rise bites

  • The company could step up advertising spends if commodity prices show signs of easing

Suneera Tandon
Updated28 Jun 2022
Vineet Agrawal, chief executive officer, Wipro Consumer Care and Lighting.
Vineet Agrawal, chief executive officer, Wipro Consumer Care and Lighting.

Wipro Consumer Care and Lighting, maker of Santoor soaps and Yardley talcum powder, has reduced advertising spends and is reviewing raw material procurement, as inflation in commodities such as palm oil raise costs.

“We’ve not cut down on trade promotions. We have definitely cut down on advertising spends both for Q4 (FY22) and Q1 (FY23) when the inflationary effects have happened,” Vineet Agrawal, CEO, Wipro Consumer Care and Lighting said in a virtual interview.

“I think as far as consumer offers or trade offers are concerned, that’s something we have not cut down on because consumers were looking at value in these times. So, that’s something that we might have done marginally, we but have not really cut down on that,” Agrawal said.

The company, which clocked over 8,630 crore in revenue in FY22, however, said inflationary pressures may recede over the next few quarters. The company could “step up advertising spends if commodity prices show signs of easing”, Agrawal said.

Wipro raised prices of its flagship Santoor soap brand by 8.5% in the July quarter, taking the 100 gram pack from 35 to 38. Between September and May, palm oil prices moved up 50%, said Agrawal, though it has seen some correction since. “I just hope that in the next two quarters, unless something changes dramatically and with cooling down of commodities, we can manage without any price hikes,” he said.

Battling record levels of inflation, FMCG firms have been resorting to price increases as well as grammage cuts across brands. Agrawal said the company will have to focus on better procurement and review the formulations to avoid cost increases as much as possible.

“Procurement and formulations become very, very critical in this inflationary environment so that one can avoid cost increases as much as possible,” he said. “In soaps, we would have seven to eight formulations—which doesn’t impact the final outcome of the product. So, we’ll switch, let’s say, between coconut oil and palm oil to ensure that we can have a little bit of cost advantage. In every product category that we have, we look at various alternate formulations,” he said.

Higher prices of everything from fuel to food are also hurting household demand. In the July quarter, the company reported “very flat” to a marginal growth in domestic volumes compared to the year-ago period. On Monday, analysts at ICICI Securities said FMCG volume growth could turn positive in the second half of FY23.

In May and June, business picked up for the company that sells personal wash products, toiletries, facial care products, wellness products and home care products. The urban business grew ahead of rural, it said.

“March and April were definitely tougher than May and June. In May and June, we definitely saw demand improving. However, I would say rural demand is still a tough situation. As a company, we are more dependent on the rural market. Our market shares are higher and distribution is much more strong in rural. Our interest would be that rural picks up as fast as possible,” he said. The company draws 48% of its business from India.

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