India was no exception – though it was largely due to the global slowdown – the government’s foot-dragger approach to many a policy, and high inflation rate did not help the matters any.
The slowdown has led to tightened purse strings, however as per a Nielsen report, ‘Global Online Consumer Confidence, Concerns and Spending Intentions – 3rd Quarter, 2011′: consumer sentiment in India is the most optimistic in the world, for the seventh quarter in a row. (Data Source: Nielsen global consumer online confidence survey, Q3, 2011)
Click here to download the report from Nielsen website
As for the economy, in January, World Bank predicted that in the year 2012, India would grow at a pace of 8.7 per cent (and the oft-compared economy, China would grow at a slower pace of 8.4 per cent).
There is too much water under the bridge since then, and current fiscal is now expected to show growth figures of around 7%, as per Fitch, the credit rating agency.
However, hope is back for 2012, with credit rating agencies reaffirming India’s ratings in the fag end of 2011.
Moody’s, in a recently released report, reaffirmed India’s sovereign rating at BAA3. Though it has added that growth downturn is likely to persist for two more quarters.
As per data released by Fitch in December 2011, the economy is likely to grow by 7.5 per cent in 2012-13. Though, in the current fiscal it is likely to be around 7 per cent.
Interestingly, the government’s forecast is 7.5 per cent growth in the current fiscal. In its mid-year review released in mid-December, the government revised the growth projection to 7.5 per cent from 9 per cent forecasted in the pre-Budget survey.
Another good news coming at the end of the year is easing out of food inflation. The index stood at 1.81 per cent in the period up to December10, 2011, while in the previous week it was at 4.35 per cent. The reason behind the improved numbers is the fall in the prices of cereals and vegetables.
Inflation, till now, has led to a sharp increase in raw material prices, hurting the FMCG companies. As a result, leading FMCG companies like Hindustan Unilever, Procter & Gamble, Reckitt Benckiser, Godrej Consumer Products, Marico and Dabur were compelled to increase their product prices.
However, according to a report by FICCI, the Indian FMCG market is now expected to grow at rate of 10 per cent (current estimates: Rs 2,600 crore) over the next 10 years and reach a size of Rs 4,13,000 crore by 2015, which would further increase to Rs 6,65,000 crore by 2020. It is good news for media fraternity, as FMCG is their main stay.
In this back drop, let us check growth expectations of the media industry. In the beginning of the year, KPMG had predicted that the industry size would grow to Rs 341 billion – an approximate growth of 16 per cent.
Meanwhile, as per PricewaterhouseCoopers estimates, the entertainment and media (E&M) industry in 2010 stood at Rs 646 billion as compared to Rs 580.8 billion in 2009. This was lower than the projected growth rate of 15.1 per cent for last year. The reason for lower growth rate was the decline witnessed in the film segment. The other two key industry segments: television (15.4 per cent growth as compared to 15.6 per cent projected) and print (10.7 per cent as compared to 8.5 per cent projected), showed good growth. As per the estimates, the E&M industry size would have been Rs 735 billion for 2011, but this does not look achievable now.
In December, both Zenith Optimedia and group M indicated a sluggish growth for 2012 globally.
As per Zenith Optimedia, global ad spending in major media will grow to $486 billion (4.7 per cent growth). It had earlier predicted a 5.3 per cent growth in 2012. However, Asia Pacific (excluding Japan) is expected to grow by an average 10.4 per cent a year and 33 per cent of the global growth is expected to come from the four Bric markets (Brazil, Russia, India, China).
Group M, meanwhile expects a 6.4 per cent increase in global ad spending in 2012, As for 2011, it expected to show a 5 per cent increase in ad spends over 2010, to $490 billion.
As for India, the experts believe that growth rate in 2011 would be in single digits, while Zenith Optimedia prediction of around 11% growth might hold true of 2012.
Look out for the second part of our yearenders tomorrow