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Will demand for cooling equipment rise even in the face of inflation and unseasonal rains?

 Due to unseasonal rains and cool weather, the summer season has set in late this year. Heading towards hotter months, the consumer durable companies have started seeing a surge in sales of air coolers and air conditioners (ACs), however, the growth of the category will depend on how hot and humid this season will be.

Sharing insights on how the demand has changed this season, major consumer appliances firms expressed that they are bullish that the demand for cooling appliances is going to increase this summer .

According to Achal Bakeri, CMD at Symphony, “Our channel partners and we are quite optimistic about the business this summer.”

AdvtHigher the temperature, greater is the demand for cooling products. “If the current temperature continues, we will observe comparatively good sales,” he said.

With a similar thought about the demand for the air conditioning and cooling solutions, a Voltas spokesperson said, “We have already seen a rise in traction amongst channel partners and end-users to purchase products like air-conditioners, air coolers and refrigerators. There is a strong demand for cooling products with superior hygiene features and we have expanded our product portfolio keeping the same in mind across our AC, air coolers and refrigerators range.”

Cooling appliances now have become an imperative part of modern households.

Kamal Nandi, business head and executive vice president at Godrej Appliances said, “We are expecting a severe and prolonged summer this year and as a result demand for the cooling categories will be high.” The firm is targeting a growth of 40 per cent this summer over the last year from the entire set of cooling appliances like air conditioners, refrigerators, air coolers and deep freezers.

Resonating the same thoughts as other industry players, Sandip Somany, chairman and managing director at Hindware Home Innovation said there is a positive uptick in demand for air coolers and ceiling fans compared to last year owing to the anticipated heat waves this season across the country.

AdvtPreviously, Somany also shared that the company is expecting a 45 per cent growth in the air-cooling segment this season.

Consumer sentiment

The overall sentiment this year remains positive for Indian consumers. There is certainly none of gloom and doom that is heard about in the West, Bakeri said.

The consumer durable and electronics industry is betting on premium, feature-led products to drive growth. When compared to the mass segment, the premium segment across geographies and channels has witnessed growth.

For Godrej Appliances, Nandi said the premium segment has grown over 50 per cent in comparison to last year, this growth rate is at par with the industry trend. “We have been witnessing more traction for appliances delivering higher convenience, larger capacities, and health-first innovative features with latest technologies,” he added.

Impact on prices due to inflation and other factors

Owing to external factors such as increase in input cost, the depreciating value of the Indian Rupee against the US Dollar and other geo-political issues, all consumer appliances companies have undertaken price hikes over the past few quarters.

Price fluctuations and instability are currently an industry-wide challenge, which we are confident of overcoming over the next few quarters, said Somany.

Going forward, he said there will be an industry wide price hike in ceiling fans due to the mandatory BEE star rating policy requirement. Additionally, kitchen appliances will also see a price hike in the coming months, considering the increase in customs duty announced recently.

While comparing price changes with the previous year, Voltas’ spokesperson shared that the global supply chain disruptions and logistic challenges last year had impacted the consumer appliances industry significantly, but there is an overall improvement this year. Hence, there is no major surge in the prices this year.

“At Voltas, we try to minimize the impact of any price revisions. We will continue to monitor the situation closely and take necessary steps as and when required,” the company’s spokesperson added.

On the impact of inflation, Bakeri said, “Unfortunately inflation is proving to be very sticky and is not easing as it should have till now. Though input costs have dropped from the peak, but still remain significantly higher than pre-Covid levels.” Further, the company said it has been continuously increasing prices of its products in small increments ever since Covid but that has not been enough to cover the increase in costs, as a consequence of which Symphony’s margins have been under pressure.

Further, Voltas’ spokesperson said, the cooling and white goods category has not witnessed any inflationary headwinds so far. These are need based categories and thrive on comfort and convenience of the household. And to reduce the entry barriers, if any, we are continuously providing innovative consumer finance schemes to make early adoption as easy as possible for the potential customer.

Nandi from Godrej Appliances shared, “We are closely monitoring commodity and currency level to understand its impact on input cost and will decide on any price hike after this summer season in Q2.”

Opinionating on the revival of white goods industry, Nandi said that it is back to pre-pandemic levels and gaining recovery from the mass segments as well. Complete revival can happen once a mass segment starts demonstrating similar levels of growth. Severe and prolonged summer could fuel demand in the mass segment when cooling categories become a necessity and finance offers can become an enabler to overcome inflation pressures.

Region-wise demand for cooling appliances

The Indian market is split into 6 zones out of which Northern India remains the key market for us as it significantly contributes to the business, said Somany. About 47 per cent of Hindware’s consumer appliances business and 37 per cent of the kitchen appliances sales come from Northern India, followed by the Southern region.

For Godrej Appliances,demand is constantly increasing in the north followed by the west. Further, the demand for mass products has started to pick up from this month, and we expect demand from rural markets also to increase during peak summers.

Nandi said, the demand for AC as a category is generally higher in metros and tier I cities as compared to tier II and beyond. With the increasing number of urban cities and towns in India, improving affordability and accessibility, connectivity, coupled with rising temperatures year-on-year will drive demand for AC in tier II and beyond as well. Hybrid work life in cities is also going to increase the adoption of AC. In rural markets, we expect the adoption of refrigerators to grow first.

Sharing about the consumers’ traction, the Voltas’ spokesperson said, “We anticipate sizable business coming in from tier II and III markets due to our higher distribution reach, integrated marketing efforts, more inclusive after-sales-service support and energy-efficient products. To address this growing demand, Voltas has taken some key steps like shifting stock focus to high demand SKUs, penetration in more semi-urban regions and increasing the manufacturing capacities.”



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