Summer brings good news for FMCG companies

After two seasons of flat or negative growth, air conditioner, air cooler and refrigerator makers saw double-digit sales growth

The monsoons may have begun in right earnest this year bringing much-needed respite from the sweltering heat of April and May, but there were some consumer goods companies who didn't mind the hot weather at all. For them, the rising mercury levels meant roaring business after two years of suffering the pangs of a cool summer.

Air conditioner, air cooler and refrigerator makers saw double-digit sales growth in April and May after two consecutive years of flat or negative growth. Cola and beer manufacturers, on the other hand, accelerated their pace of growth thanks to the unusually hot weather this year. Industry estimates peg the volume growth of companies such as Coca-Cola and PepsiCo in excess of 20% in the months of April and May. Last year, it was in the region of about 18 to 19%. Beer makers, on the other hand, saw sales growth in the region of about 15% this summer, higher than the 12% they saw last year.

With much of India reeling under a heat wave in April and May with temperatures crossing the 40-degree-mark in most places, experts say it was just what makers of products dependent on the summer wanted.

Saurabh Baisakhiya, business head, air conditioners, LG India, says, "The weather was certainly a huge contributor to pushing up sales this summer. We grew at about 20 to 25% during the summer months."

Voltas and LG are the top two AC makers in India, according to industry estimates. The other key AC manufacturers are Samsung, Hitachi, Daikin and Panasonic.

Suresh Kumar Bandi, divisional deputy managing director, Panasonic, says: "Certainly, there was a spike in sales this year in comparision to the last two seasons thanks to the weather."

Pradeep Bakshi, chief operating officer, unitary products (which includes room air conditioners), Voltas Limited, said his company saw a nearly 30% sales growth this summer. Daikin's MD Kanwal Jeet Jawa says sales growth this summer for his company was in excess of 20%.

On the other hand, smaller players like Haier and Carrier Midea have said that they have grown much faster than the industry, though on a smaller base.

The 3.4-million unit AC market in India was flat last year and fell about 15% the year before. The one-million-unit organised air cooler market, on the other hand, was flat over the last two years. This year, however, trade sources peg growth of the air cooler market at about 20 to 25% in the months of April and May. Individual brands such as Symphony, the market leader in the air cooler category with a 45% share, say experts, grew ahead of the industry on the back of a range of products priced between Rs 6,000 and Rs 15,000.

"We grew at 35% in the summer months this year," Vinayak Sukthankar, chief executive officer, Symphony Ltd, said.

Brands such as Kenstar and Bajaj, other key players in the air cooler market also saw brisk sales this summer, say trade sources. While refrigerators, pegged at 8.5-million-units in size, saw 10% growth this summer, trade sources say it was still better than the last two years when there was hardly any growth at all.

Shantanu Dasgupta, vice-president, corporate affairs & strategy (south Asia), Whirlpool, says that the offtake of single-door or direct-cool refrigerators was better than double-door or frost-free refrigerators this summer thanks in part to its affordibility factor. While home appliance makers attempted to maintain price lines this summer to avoid driving away consumers, the average ticket size for a direct-cool refrigerator stood at Rs 10,000 to Rs 11,000 at the entry level in comparision to Rs 15,000 for an entry-level frost-free refrigerator.

"The pick-up in sales for refrigerators this summer was in non-metro towns since the penetration of this category is high in metros," an executive at Mumbai-based consumer durables retailer Vijay Sales said.