Precision over mass targeting: FMCG majors ride demand revival with smarter spends

After several sluggish FY 2025, green shoots are emerging in India’s urban consumption landscape—prompting fast-moving consumer goods (FMCG) majors to recalibrate their marketing playbooks and advertising investments.

Q1 FY26 results from HUL, ITC, Nestlé, Dabur, and Marico point to a demand recovery—especially in urban markets—with sales growth ranging from 5% to 23%. "Urban demand is finally coming out of the recent slump," FMCG heads noted in earnings commentaries, attributing the revival to steady rural growth, monetary and fiscal policy tailwinds, and easing inflationary pressures.

The revenue of India’s largest fast-moving consumer goods (FMCG) company–Hindustan Unilever Ltd (HUL)--rose 5.1% year-on-year to ?16,514 crore, with sales up 5.4% underlying volume growth. Marico registered a robust 23.3% jump in revenue to ?3,259 crore, fuelled by strong traction across hair care, premium personal care, and foods. Britannia recorded a 9% rise in revenue to ?4,622 crore.

This consistent performance was underpinned by a more favourable pricing environment and stronger urban market offtake. The momentum is expected to remain upbeat in the coming quarter, supported by a good monsoon and the onset of the festive season, which has traditionally boosted both rural and urban consumption, industry leaders say.

Despite a good show, HUL, GCPL, and Colgate-Palmolive trimmed ad spends in Q1 FY26 even as Marico and Emami ramped up their advertising budgets year-on-year, data says.

“These cuts are not a pullback, but a pivot toward performance-based, platform-specific advertising,” say industry leaders.

Dabur India, for instance, cut its Q1 FY26 ad spend by 14.4% year-on-year, a move CEO Mohit Malhotra called strategic, aimed at sharpening marketing efficiency. “We’ve become sharper with our marketing investments. Despite lower spends, we focused on expanding rural reach and using digital and modern trade channels more efficiently.”

Besides, hefty investments in AI over the past year have made brands smarter, points out Sajal Gupta, CEO of Kiaos Marketing, “HUL, for instance, is using AI to drive sharper efficiencies in media and trade deployment.”

Notably, HUL has created platforms like Sangam and eNRM to optimize campaigns through market-mix modelling, while Consumer 360 and Content Supply Chain create virtual consumer twins to deliver hyper-personalised, trend-aligned content. Moreover, AI-led tools such as TY, TRESemmé’s virtual hair stylist, and LUMI, Lakmé’s beauty advisor, are turning consumer journeys into rich, content-to-commerce experiences—redefining how the company connects and grows in a consumer-first world.

The Festive Lens: All Eyes on Q2
“Urban demand showed signs of revival in Q1; brands are taking a cautiously optimistic stance heading into the festive season. Expect earlier and sharper activations—front-loading spends in shorter bursts—rather than the old ‘save-it-all-for-Diwali’ approach,” said Anil Solanki, Media Lead at DentsuX.

Brands are seeking deeper engagement in high-growth micro-markets, with a stronger tilt toward digital, regional, and influencer-led content.

According to Solanki, the broader FMCG sentiment is shifting from caution to cautious optimism. As demand picks up in metros and Tier-I towns, rural resilience remains a quiet strength, offering a dual-engine recovery outlook for the rest of FY26. “TV is regaining attention for mass reach in category buys, but digital continues to lead for targeted, conversion-driven activations,” he noted.

With Rakshabandhan, Janmashtami, Ganesh Chaturthi, Dussehra, and Diwali packed between August and October, brands are entering a make-or-break quarter. Media platforms expect a sharper ramp-up in Q2 as companies get aggressive with launches, promotions, and activations—particularly in categories tied to auspicious buying such as real estate, jewellery, FMCG, fashion, gifting, indulgence, and personal care.

“Marico, which posted 9% domestic volume growth in Q1, expects double-digit growth in the next two quarters and targets around 25% revenue growth this year, driven by core brands, new businesses, and pricing actions,” CEO Saugata Gupta told PTI.

For many, the challenge lies in navigating uneven category recovery. While staples remain flat, urban-oriented SKUs in personal care and indulgence segments are getting a facelift—in both packaging and promotion. Companies are focusing on premium packs, value bundles, and D2C channels, often supported by city-level ad experiments.

“Efficiency over scale is the mantra now,” said a media buyer working with multiple FMCG brands. “Marketers are no longer chasing GRPs—they want measurable engagement and conversion-led visibility.”

The advertising battlelines are being drawn—not with blunt force, but with targeted, data-led precision. As India heads into its festive season, the biggest spenders may not be the loudest—but they’re aiming to be the smartest.

“It’s no longer about spending more—it’s about spending smarter,” said Sajal Gupta. “Brands are moving from mass visibility to precision relevance. Marketing spends are being strategically adjusted to build relevance and scale in high-potential pockets.”

Urban India back in focus
While rural markets remain a growth engine, the renewed uptick in urban discretionary categories—including personal care, health and wellness, and food & beverages—is driving sharper targeting. Brands are leaning into metro-specific activations, programmatic ad buying, and contextual storytelling to connect with urban consumers who are increasingly digital-first yet still influenced by traditional touchpoints like TV and OOH.

Industry watchers say the shift is not about bigger budgets, but smarter allocation. Digital and influencer-led strategies are being paired with mass-media bursts around product launches and festivals—especially as the festive quarter approaches.