So far this has been the worst summer period sales since 2017 excluding the Covid-19 lockdown period, industry officials said. They are still hopeful that a likely spike in temperatures in some markets this month could help them liquidate piled-up inventory.
“It has been the worst summer in several years due to erratic weather in most parts and cooler North,” said Godrej Appliances business head Kamal Nandi. “The industry was running peak production, hoping demand would pick up, but now companies will have to adjust piled-up inventory by cutting production by about 30%,” he said. Companies are still hopeful of a pick-up in demand.
“While the industry has witnessed a difficult summer with double-digit degrowth, we have been able to achieve a single-digit growth,” said Pradeep Bakshi, managing director of leading air-condition maker Voltas. “We expect the rest of the summer to open up, in specific parts of the country, and are fully geared up for the opportunity,” he added.
Sales of beverages fell 25% year on year between March and May with both fruit beverages and carbonated drinks seeing a drop in demand, according to retail intelligence platform Bizom that tracks sales data in kiranas.
Ice cream sales slipped 38% on year during the same period while soap sales declined 8.3%, it said.
In summer appliances, air-conditioner sales declined over 35% on year in May, industry executives said. AC sales had fallen 15% on year during March and April, they said.
For refrigerators, they estimate the sales decline to be around 20% between March and May, with mass segment single-door models which accounts for over 70% of category sales declining by a steeper 25%. Air-cooler sales fell 6.5% during the same period.
Stores have reduced stocking of summer products due to slower demand, said Akshay D’Souza, chief of growth and insights at Mobisy Technologies that owns Bizom.
“As per Indian Meteorological Department (IMD) data, almost two-thirds of districts across India have reported large and excess rainfall between March and May,” he said. “It will definitely be challenging for the companies in the summer categories to cover for the drop in sales during the rest of the year.”
As per IMD bulletin released on Thursday, rainfall is likely to continue over Northwest India while heatwave conditions prevail in parts of Bihar, West Bengal, Vidarbha and Chhattisgarh.
Heatwave in the East in April had helped the industry somewhat, but lack of extreme temperature in the North has taken a toll since this region accounts for 60%-65% of national sales for most summer products.
As a result, most companies have missed their sales targets.
For categories like AC, beverages, ice cream and talcum powder, the summer period accounts for over 50%-60% of their annual sales.
Emami vice-chairman Mohan Goenka told analysts last week that while momentum has picked up in rural markets and for most of the products, summer has been a damper and that every company having a summer portfolio is suffering.
Jayen Mehta, managing director of Gujarat Cooperative Milk Marketing Federation that owns Amul, said its ice-cream business rose by 25% and beverages segment grew in single digit.
