Summer 2024 is one of the hottest summers India has seen in the last decade. As temperatures in many parts of the country soared to almost 50 degrees centigrade, demand for air-conditioners, air-coolers and refrigerators went up by 35%-40%. The demand has been so high that consumer durable manufacturers this summer have found it difficult to service their consumers.
“None of us anticipated such extreme weather. There wasn’t any geography which escaped the heat, the entire industry saw a stock out,” says Anil Verma, CEO, Godrej & Boyce. Over 40% of air-conditioner shipments of G&B this year have happened directly from the factory to the dealerships. “There is a serious material shortage and we have been facing opportunity losses,” agrees Manish Sharma, chairman, Panasonic Life Solutions India and South Asia.
The month of April itself witnessed a 40% growth in sales of air-conditioners and air-coolers for most consumer durable brands. “We went with a 15% growth objective and we expected the industry to grow by 12%. I am seeing this kind of a summer after many years,” explains Sharma. In fact, April 2023 saw a low off-take due to the delayed arrival of summer.
“There were landslides in Himachal last April, and unexpected rains in many parts of the country delayed the summers. Monsoons got delayed too. When it came, it was uneven in terms of distribution. It impacted the economy, particularly the rural economy. At the end of the day, if there isn’t enough rain, there is no agriculture, crops get impacted, consumers don’t purchase. The industry was adversely impacted last year, and this year we are struggling to cater to demand,” explains Verma of Godrej & Boyce. The consumer durables industry is dependent on imports of compressors and other electronic components. Heightened demand led to shortage, as the lead time between ordering these components to the time they delivered is 6-7 months.
Though the government’s PLI (performance-linked incentive) scheme has led to an increase in manufacturing of AC and refrigerator components locally, it wasn’t enough to meet the heightened demand this year. The food and beverage industry also witnessed a surge in demand this summer, however, ice-cream and cold beverage manufacturers claim they were able to forecast demand and were not stocked out. “Seasonality is an integral part of the ice cream business. We are continuously expanding our manufacturing capacities by adding new plants and increasing existing plants (at an investment of ₹1,000 crore). Apart from this, we also did buffer stocking of ice cream before the season at our plants and branch godowns. This has helped us to cater to peak season demand uninterruptedly even this year when summers were especially oppressive,” says Jayen Mehta, MD, Amul.
The ₹5 packs of Frooti and other beverages have witnessed a 50% growth in sales this summer, while the ₹15 and ₹20 segments grew by 27% for Parle Agro. Nadia Chauhan, joint managing director, Parle Agro, says that the met department had predicted an intense summer. “We planned and engaged in pre-production, ensuring high-demand areas were supported by nearby plants. This allowed us to optimise operations and meet regional demand spikes efficiently. Additionally, anticipating a strong summer season, we strategically built key SKUs into stock, which proved instrumental in driving growth.”
With climate change disruptions a given now, its high time consumer product companies go back to the drawing board and craft strategies which are more resilient.
