DIAGEO INDIA STEPS UP BRAND INVESTMENT AS MARKETING SPEND SURGES 57%

Diageo India sharply increased advertising and marketing expenditure in the second quarter of FY27, underscoring its commitment to premiumisation and long-term brand building. While sales posted modest growth, the higher investment weighed on profitability, as the company continued to strengthen its Prestige and Above portfolio and explore new opportunities.

Diageo India significantly accelerated its investment in brand building during the second quarter of FY27, increasing advertising and marketing expenditure by around 57 per cent year on year to ₹378 crore as the company intensified efforts to strengthen its premium portfolio and support long-term growth ambitions.

The substantial rise in promotional spending came even as the company delivered steady top-line growth. Net sales rose 2.8 per cent year on year to ₹3,258 crore, reflecting continued consumer demand for premium alcoholic beverage brands and the resilience of the company’s higher-end offerings.

However, the increased focus on marketing and consumer engagement had an impact on profitability. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 4.3 per cent during the quarter, highlighting the pressure on margins from elevated brand investment. The results illustrate the balancing act facing consumer goods companies as they seek to drive growth through greater visibility and market engagement while managing near-term profitability.

Industry observers note that premiumisation remains one of the strongest trends shaping India’s alcoholic beverages market. Consumers are increasingly trading up to higher-quality products, encouraging companies to invest more aggressively in brand positioning, innovation and customer engagement. Against this backdrop, Diageo India appears willing to absorb short-term margin pressures in pursuit of stronger long-term gains.

The company’s strategy is centred on its Prestige and Above portfolio, which continued to register growth during the quarter. These categories have become increasingly important to the business as consumers seek premium experiences and display a greater willingness to spend on aspirational brands.

By channeling more resources into advertising and marketing, Diageo India aims to reinforce brand equity, expand consumer reach and strengthen its competitive position in a market that is becoming increasingly premium and brand conscious. Marketing investments are also expected to support product launches and help the company unlock new growth opportunities across segments.

The move signals confidence in the underlying strength of the Indian market despite a challenging operating environment. Companies across consumer-facing industries have been navigating cost pressures, shifting consumption patterns and intense competition, making strategic investments in brand development a key differentiator.

For Diageo India, the latest quarter reflects a clear emphasis on future growth rather than short-term earnings optimisation. While the increased spending weighed on EBITDA performance, management’s continued focus on premiumisation suggests that building stronger brands and expanding its presence in higher-value segments remains a strategic priority.

As the Prestige and Above portfolio continues to gain traction, investors and industry participants will be closely watching whether the company’s elevated marketing investments translate into stronger market share, sustained revenue growth and improved profitability over the longer term. For now, the second-quarter performance underscores a deliberate choice: investing today to strengthen the foundations for tomorrow’s growth.