Competition heating up in microwave

Price war on with market leaders LG and Samsung rolling out a slew of new ovens.

The domestic microwave ovens market, one of the fastest growing segments in the entire consumer durables industry, is all set to witness intense competition in the coming months.

Both the market leader LG Electronics and the second-rung Samsung, which together account for nearly 60 per cent of the total market, have unveiled a slew of new models in the past few weeks with the hope of riding the festive wave to till the year-end.

To kick-start the new drive, Samsung launched four new models to take the total strength of its product portfolio to 10, followed by LG, which has the lion's share of the microwave oven pie at 40 per cent, rolling out some never-seen-before premium models last week.

The price tag on one of the new LG models is nearly double the costliest item on offer by its closest competitor Samsung. And the reason behind the 'model war' is not difficult to seek.

According to the ORG GFK figures, the first eight months of this year saw the number of such ovens grow up a whopping 98.3 per cent to 2.17 lakh units, and the growth was led by the premium, 'convection', segment that zoomed around 128 per cent.

While the medium-range, 'combination', microwaves maintained their status as the bestsellers registering nearly 45 per cent of the volumes, the entry-level segment witnessed the slowest growth pace.

"We think the microwave market in India is going to double in the next two to three years, and we aim to capture at least 50 per cent of it," said Dae-Hyun Song, vice-president - appliances division, LG Electronics, Korea, during his trip to India to launch the new models.

The company, which has sold close to 1 lakh ovens this year, expects the figure to touch 2.5 lakh by the end of the year and 4 lakh by 2007. Despite a projection of doubling the volumes, total turnover of the sector is expected to rise only around 65 per cent to a little above Rs 300 crore this year. this growth will make the sector worth around 2 per cent of the entire consumer durables market.

The average price of microwave ovens has come down from the Rs 9,000 level last year to around Rs 7,000 this year, and this has resulted in a situation where revenues are not being able to keep pace with the galloping volumes.