Early rains throw a wet blanket over FMCG, air conditioner, beauty sales

Weather gods have thrown the strategies of fast-moving consumer goods, air conditioner (AC) and cosmetic makers — who were relying on an early onset of summer to shore up their sales — into a tizzy.

 

Typically, the summer season from April to June sees peak sales of cold beverages, including carbonated drinks, ice creams, ACs, and other edible and non-edible cooling products. This year, however, the early arrival of monsoon showers in the south and western disturbances in the north have dampened sales projections.

 

“With the early summer, we saw a spike in AC sales volumes from February to April, but the rains put the brakes on that. The south, east, and west have together reported a 20-25 per cent decline in sales, likely due to the first 15 days of May,” said Kamal Nandi, business head and executive vice-president, Godrej Appliances.

 

He added that high temperatures last week caused AC installations to rise again. “Our AC installation data clearly shows demand is recovering, with 15-20 per cent growth in May compared to last year,” he said, observing that the company had adjusted production levels to avoid inventory buildup.

 

For Blue Star, the unsettled weather may result in a contraction this quarter. “We had 51 per cent growth in the first quarter last year and were expecting a 20-25 per cent increase on that base, but now there are nearly 2 million excess ACs in the market because dealers overbought, anticipating shortages. Inventory has piled up, and we expect a 25-30 per cent drop this quarter,” said Blue Star Managing Director B Thiagarajan.

 

According to the India Meteorological Department, the southwest monsoon is likely to reach Kerala by May 27, ahead of its usual June 1 arrival. Any date earlier than May 27 would mark one of the earliest monsoon onsets since 2009. Pre-monsoon showers have already hit Chennai, Bengaluru, and Mumbai this week, causing flooding in several low-lying areas, damaging civic infrastructure, and disrupting daily life.

 

At Modern Bazaar — a supermarket chain in Delhi-National Capital Region (NCR) and Chandigarh — sales of carbonated beverages, energy drinks, and bottled water dropped nearly 15-20 per cent in the past month, as untimely, intermittent rains pushed temperatures down.

 

“The first quarter was excellent because of early summer, with sales picking up from February. But early summers usually give way to an early monsoon, so stock demand has dropped since the last week of April, when unexpected rains started in the northern region,” a carbonated soft drink bottler told Business Standard.

 

The bottler has since cut production by about 10 per cent. “We have shut down multiple production lines, which is unusual for May. While we expect some growth, since it is an impulse product at a low price point, it won’t reach the levels we forecast at the start. We projected 20 per cent growth for the month, but it may only be in the low single digits,” the executive added.

 

Ice cream and dairy products like milkshakes and buttermilk are also seeing a sudden sales slowdown.

 

“Though the month is not over, we expect sales to fall 10 per cent short of projections. For a strong season, we usually need consistent 40-degrees-plus temperatures, which did not happen this month. While some hot days remain, the rains have been a dampener,” said Manish Bandlish, managing director, Mother Dairy Fruit & Vegetable.

 

Baskin-Robbins has also felt the impact. “May has been tough, and it feels more like monsoon season, not only in Delhi-NCR but also elsewhere. This affects both consumers and trade. Growth looks challenging,” said Mohit Khattar, chief executive officer, Graviss Foods, master franchisee for the brand Baskin-Robbins in India and the Saarc (South Asian Association for Regional Cooperation) region.

 

This shift in weather has altered production plans, with the company focusing on stock-keeping units performing better. “Individual packs are still selling well through quick commerce (qcom), so we are adjusting production to support that channel,” Khattar added.

 

Sunscreen makers report stalled sales as well. “People assume if it is cloudy, they do not need sun protection, leading to a sharp drop in sales, especially via qcom. Cancelled holiday plans in the north may be adding to the decline,” said an executive at a cosmetic firm. 

Under the weather

  Godrej appliances: 20-25% drop in AC sales

  Bluestar: Expects 25% degrowth due to low AC sales

  CSD bottlers: Reducing production by 10%

  Baskin Robbins: Pressing pedal on qcom SKUs to drive growth

  Sunscreens see sharp drop