Delayed summer hits fridge, AC sales

Confusion regarding prices post-VAT regime affect sentiment

The delayed onset of summer in several parts of the country has resulted in a 30-35 per cent year on year decline in the sales of refrigerators and air-conditioner last month.

"Summer sales usually begin by the middle of February every year. Under normal circumstances, AC and refrigerator companies would have witnessed their first sales peak by this time. This year the offtake has just been around 60 per cent of last year's sales," said Ajay Kapila, vice-president (sales and marketing), Electrolux Kelvinator India.

According to Arvind Mendiratta, head of sales, Whirlpool of India, consumers have been postponing their buying decisions because of the weather.

"The drop in sales has been further aided by the confusion regarding product prices after the implementation of the value-added tax regime," he said.

"Last year we benefited from the delay in the monsoon and winter. Moreover, the consumer sentiment in general remains high and the early dip in sales is not likely to be a dampner for the industry," said Kapila.

The AC market is looking upbeat as players are expecting a 25 per cent growth over last year's sales of nearly 1.1 million units.

Market leader LG is planning to increase sales by 50 per cent, while Electrolux, which entered this category recently, is hoping to corner a 10 per cent share of the market. Whirlpool is expecting to double its volumes.

Last year the AC market had grown by nearly 18 per cent.

According to industry sources, the sales of soft drink companies have also been impacted negatively. But a Coca-Cola spokesperson said the company's sales targets have been met for February and March.

The Rs 8,000 crore soft drink industry is estimated to derive nearly 85 per cent of its sales between February and September.

Gearing up for the summer season, PepsiCo India has announced a new advertising campaign and renewed marketing support for its clear lemon drink 7Up. Coca-Cola, too, has launched a campaign for its lemon drink Limca.

According to senior company officials, the positioning of Limca will undergo an overhaul and its brand communication will now be based on the plank of freshness.

According to Coke, Limca has a 43 per cent share of the non-cola beverages market.

With the demand for non-cola drinks like Limca, Sprite and Mountain Dew growing much faster, soft drink companies have been providing them greater marketing support in the last few years.

According to PepsiCo, Mountain Dew, which was launched in 2003, already has a 10 per cent share of the market, whereas Coke claimed that Limca's sales had doubled in the last three years.