Advertising sector is booming in India right now as almost every brand is looking to attract the target audience with engaging ads. The growth of social media has made people more aware of the benefits of advertising and more individuals are picking this stram as a career path.
In this race of promotions, there is one industry that is still not spending much on advertising can you guess it? Well, you must have guessed after seeing the title and yes, we are talking about the milk industry. In an age when TV screens are flooded with soap and shampoo ads, milk industry is still relying on word of mouth.
Comparison with other brands
Dairy companies only spend around 1-2% of sales on advertisements, these numbers are far less compared to other consumer staples companies. Branded milk companies are getting a huge advantage due to this. Flipkart for example reportedly spends over 30% of its revenue on advertising while Hindustan Unilever (HUL) spends about 10% of its sales.
“An effective advertisement of soap can win new consumers and additional revenues of ₹20 per new consumer per month whereas an advertisement of dairy brand can win revenues of ₹1,000 per new consumer per month,” an ICICI Securities report explained.
People are less prone to change their milk habits
Another thing is that milk brands don’t fight much on the price and depend on the quality of milk sell. Consumers are very less likely to shift from one dairy brand to another frequently because they form a habit of a particular quality and taste. Milk is one segment that needs more organized companies and big money can be made.
But the stickiness in consumer preference also makes it difficult for new players to capture customers from established players. Another positive thing is that people are still buying milk from unorganised neighborhood vendors to picking up branded milk and related products off the shelves.
According to ICICI Securities report, Indian dairy sector is expected to grow at about 15% compounded annual growth rate and there is a possibility of a shift of consumers from unorganised sector to organised sector.
Source: BusinessInsider
