Publicis Groupe-owned media agency, Zenith, has forecast that India will be the fastest-growing market by some distance over the next three years, with fast moving consumer goods (FMCG) food and drink brands ad spend rising 14 per cent a year. In its Business Intelligence – FMCG Food and Drink reports that tracked 12 global markets including the US and the UK, among others, the agency said that all markets are predicted to grow steadily between 2 per cent and 5 per cent a year.

In India, FMCG ad spends will benefit from blossoming consumer demand as disposable incomes rise rapidly, coupled with the catch-up expansion of the underdeveloped ad market: advertising accounts for only 0.3 per cent of India’s GDP, less than half of the global average of 0.7 per cent.

“FMCG growth will continue to be robust considering various reasons. Firstly, despite the pandemic, it is one category where the demand is constant, if not seen increasing. Secondly, with evolving consumer demand, FMCG continues to see a slate of new product launches and category expansion. Lastly, with the vast population being in Tier 2 and rural areas – it is one untapped potential market where the FMCG brands continue to increase penetration,” said Jai Lala, CEO, Zenith India.

In terms of media p..latforms, Zenith forecasts that FMCG, as well as food and drink (F&B) brands, will increase their ad expenditure on digital channels by 7 per cent a year by 2023. That’s well ahead of the 4 per cent annual growth forecasts for FMCG ad spend as a whole in the 12 markets included in this report.

However, FMCG brands still rely heavily on traditional TV, spending 39 per cent of their budgets on television advertising in 2020, compared to 24 per cent for the average brand. Excluding China, where FMCG brands have already adopted digital advertising as their main form of commercial communication, FMCG brands spent 52 per cent of their budgets on television, compared to an average of 26 per cent. Their principal goal is to maximise brand awareness and reach so they are front of mind at the point of purchase for as many consumers as possible. This is something that TV has historically excelled at, but its declining reach – particularly among the young – is making it less effective.

FMCG brands are therefore following audiences to digital channels. Zenith forecasts that FMCG digital ad spend will increase from $12.3 billion in 2020 to $14.9 billion in 2023 and that its market share will rise from 46 per cent to 49 per cent.