Sporadic rains hurt sales of summer products, firms counting on June

Sporadic rainfall during the ongoing summer months has hurt the business of summer products such as air conditioners, refrigerators, and beverages, among others, reported Financial Express (FE) citing senior officials linked to the industry.

The challenge is particularly painful in North India, which accounts for 35 per cent of total summer sales. However, the untimely episodes of rainfall have prevented the rise in temperatures in North India which usually experiences hot weather during the months of April and May.

This has resulted in a disruption in the business of summer products, affecting sales negatively, the report said.

Business head and executive vice president of Godrej Appliance, Kamal Nandi was quoted in the report as saying, “At the industry level, the overall AC and refrigerator sales this summer have fallen by around 30-40 per cent versus last year. The north market has been bad on account of rain spells through April and May."

While the sales in North India have remained low, the business in the west, east, and south of the country is doing better. The west, south, and east each contribute 27, 23, and 15 per cent of total summer sales respectively, the report said. These regions have registered a 10-15 per cent year-on-year (YoY) growth in sales, thanks to the high temperatures in key markets like Mumbai.

Beverage manufacturers have also been hurt by a dip in sales in the north. A decline of about 10-15 per cent has been registered in the segment, FE reported.

Industry officials are hopeful that the return of summer in June may help regain the lost momentum in sales. Ravi Jaipuria of Varun Beverages said that a dip in the summer sales should not affect the overall growth picture for the market, the report added.

Chairman and managing director of Daikin India, Kanwaljeet Jawa was quoted in the report as saying, “While the months of April and May are likely to see a dip in sales because of unseasonal rains, in the medium to long term, prospects for the market remain bright. AC penetration in the country is only 7 per cent and there is a lot of work that AC firms are doing to improve sales, from localisation to aggressive marketing, pricing and innovation.”

Companies are counting on the month of June to clear the inventory pile-up due to weak sales in April and May.