“We don’t want to take any chances by running out of stock. So, we have pre-stocked much earlier this year than we normally do. We have safeguarded ourselves,” Ravi Jaipuria, chairman of RJ Corp-owned Varun Beverages, PepsiCo‘s exclusive bottling partner, said at the company’s post-earnings call last week.
Varun Beverages, which has a distribution reach of about 3 million outlets, is looking at about 10%-15% increase in the number of outlets its products reach this year, Jaipuria said. “We will try and reach anywhere close to 3.5 million outlets, with the expansion of distribution, trucks, visi coolers – they are being added proportionately to what it is.” Peak summer, from March to June, contributes close to half of annual sales of summer-centric products, though the companies have been working to deseasonalise the categories with distribution push, marketing campaigns and promotions through the year.
Arnab Roy, vice-president, marketing at Coca-Cola India and South West Asia, said investments on marketing would be far higher this summer than before. “What is happening is that growth is outstripping the ability for us to produce and supply…that is happening across brands right now,” Roy said.
The maker of Thums Up and Sprite soft drinks and Maaza mango drink leads the packaged soft drinks category in India. It will accelerate spending on last-mile distribution in rural markets to recruit more consumers as well as on rapidly growing channels like quick commerce, he said.
Companies manufacturing summer appliances such as ACs, air-coolers and refrigerators said the rise in day temperatures leading to the early onset of summer has already started to improve sales over pre-Covid period, with brands building up higher inventory. AC maker Blue Star‘s managing director B Thiagarajan told analysts in the company’s recently held December quarter earnings call that the industry was going to hold 20-25% more inventory than the previous year in anticipation of market growth. “March will be a very big month …I am of the view in value terms, the (AC) industry will grow by a minimum 15%,” he said.
The industry is expecting that the mellowing down of inflation will help boost demand further, including in up-country and rural markets. Multiple companies have estimated consumer demand to improve by June quarter, which will coincide with the peak of summer sales. Godrej Appliances business head Kamal Nandi said there were already signs of improvement in demand by volume or number of units sold. He said refrigerator volume sales were up 7-8% in February till now over the same period of 2020 (pre-Covid), while ACs were up 20%. “There are some signs of improvement in mass segment demand,” he said. Komal Anand, MD at Havmor ice-cream, a subsidiary of South Korea’s Lotte Confectionery, said in a recent interview that the company was pushing distribution across regions to gear up for an extended summer.
