Intermittent rains during the current summer season have negatively affected sales of products such as air conditioners (ACs), refrigerators and beverages, top companies have told FE.
The problem is particularly acute in the north, a region responsible for 35% of total summer sales, where unusual rainfall in key markets such as Delhi-NCR in April-May disrupted business, resulting in a sharp drop in sales. sale.
“At an industry level, total sales of air conditioning and refrigerators this summer are down about 30-40% compared to last year. The market in the north has been bad because of the rains in April and May,” said Kamal Nandi, business head and executive vice president, Godrej Appliances. “This is definitely a cause for concern because the summer season is important for manufacturers of refrigeration products,” he said.
While the hot weather in the west, east and south of the country has helped appliance and beverage makers to some extent, the north has been a clear damper, top executives said. The west, south and east contribute 27%, 23% and 15% of total summer sales, industry experts say. Sales growth in these regions was close to 10-15% year-on-year as temperatures remained high in key markets such as Mumbai.
Beverage sales, on the other hand, were down about 10-15% year-on-year in the North, an important market for businesses.
“While there has been a dip in sales in the north due to bad weather, the other regions have compensated for this drop,” said Ravi Jaipuria, president of Varun Beverages, owned by RJ Corp, PepsiCo’s bottling partner.
“If the summer season continues into June and temperatures start to rise in the north, it could help to recoup sales in the region,” said Jaipuria, adding that the weak summer performance will not improve the overall growth picture for the market. cloud.
Kanwaljeet Jawa, Chairman and Chief Executive Officer of Daikin India, also reiterated a similar point, saying that weather uncertainty is a factor that companies cannot control.
“While the months of April and May are likely to see a drop in sales due to unusual rains, the medium to long term outlook for the market remains good. AC penetration in the country is only 7% and there is a lot of work AC companies do to improve sales, from localization to aggressive marketing, pricing and innovation,” Jawa said.
Nandi says stock piling due to weak April-May sales could be liquidated in June, if the summer season is extended.
“Companies don’t hold stock for more than 30-45 days these days. One reason for this is that the summer season tends to get extended. The demand scenario is also dynamic over time, which means that planning in advance may not help. So companies do real-time production planning to account for all these characteristics,” he said.
