Diageo India, the maker of Smirnoff and J&B in the country, raised advertising and sales promotion expenditure nearly 57% year-on-year to ₹378 crore in the September quarter, according to its standalone results for the period ended September 30, 2026.
That is up from ₹241 crore in the same quarter last year. As a result, marketing spend rose to 11.6% of net sales value from 7.6%.
What the quarterly numbers show
The increased brand investment came alongside modest revenue growth and softer profitability:
- Net sales value: ₹3,258 crore, up 2.8% year-on-year.
- EBITDA: ₹643 crore, down 4.3%, with margin contracting to 19.7% from 21.2%.
- Profit after tax: ₹462 crore, down 2.1%.
- Prestige & Above net sales: ₹3,065 crore, up 6.3% and 94.1% of net sales value.
- Popular segment: ₹181 crore, down 22.7% on a like-for-like basis.
Diageo India attributed the pressure on EBITDA and margins partly to proactive advertising and promotion investment ahead of the festive season.
Premium brands are carrying growth
The results show a portfolio that is becoming more concentrated in premium products. Growth in the Prestige & Above segment was led by local-flavour innovation in Smirnoff, the relaunch of J&B Scotch and gains in luxury brands. The J&B relaunch was enabled by the India-UK free trade agreement.
The popular segment, by contrast, faced policy-related headwinds in Maharashtra and Karnataka, including excise slab changes in Karnataka. That hit realisations and dragged the segment lower even as premium brands advanced.
A deliberate margin trade-off
Diageo India’s managing director and chief executive Praveen Someshwar said the company “delivered a resilient quarter despite a strong prior-year base and regulatory headwinds” while continuing to invest behind its brands for long-term growth.
For the first half, marketing spend climbed about 44% to ₹690 crore from ₹479 crore. Marketing spend was 11.6% of net sales value in the half, compared with 8.4% a year earlier. Net sales value rose 4.2% to ₹5,961 crore and gross margin expanded to 47.1% from 45.7%, supported by pricing, product mix and productivity initiatives. Still, first-half EBITDA margin narrowed to 18% from 19%.
The company also entered the ready-to-drink segment with Smirnoff Ice, giving consumers a convenient new choice. For brand marketers, that is a test of whether familiar equity can stretch into a new consumption occasion.
What marketers should watch
Diageo India’s results are a useful case study in separating brand-building investment from short-term margin management. For marketing leaders, the signal is to track marketing spend as a share of net sales, not only in absolute rupees, and to compare premium and mass-market segments separately.
A simple framework is to set different success metrics for premium and popular brands. Premium brands should be evaluated on margin and share of voice; popular brands need a regulatory-risk overlay, especially in states where excise policy shifts can change unit economics overnight.
The key question for the festive quarter is whether the higher spend converts into demand that sustains beyond the season. With premium brands already contributing 94.1% of net sales value, Diageo India is effectively doubling down on the part of the portfolio that offers better margins and stronger brand equity.
Source: Storyboard18
