I have always believed that homegrown consumer businesses in India spend advert money in very inefficient ways - especially those who don’t have the experience of building brands over a period of time.
Lux advert spend is actually much more than it needs to be, they can probably cut down spends by 20% and still continue to grow the brand. On a scale of 1200 Cr revenue Lux ASP spend is pretty close to Page which does the same on a revenue scale of 2500 Cr.
For a brand like Lux where the brand pull at the economy segment does not do too much for them, I’d rather have them do trade discounts and clear inventory rather than spend money on advert. Advert spends need to be targeted clearly, that’s how one gets a better ROI rather than spend money on brand ambassadors who may not do too much over the long term for the brand.
I was a participant on the call and I saw this as a positive - for my own reasons. It tells me that the management is grounded and not getting carried away by the vision to build a brand and overspending in the process. I believe that Lux can grow sales at 12-15% without having to spend so much money on ASP, they can be as effective at 20 Cr lower spends which can impact bottom line significantly. This is anyway not a high end brand though they do have some products they are trying to position as semi premium. I think trade channel discounts can move the needle much more than brand spends in most of their product categories