At a time when many set out for cooler climes to take their annual break from work, people like Ravinder Zutshi, Deputy Managing Director, Samsung India, are slugging it out to make the most of the blazing sun: Samsung has unleashed 18 models of split air-conditioners (ACs) and seven window ACs, and is aiming for a 50 per cent growth over last summer’s figures. Then, Samsung also has refrigerators: nearly 71 new models this year, increasing its range to 96. Not to be left behind, Moon B. Shin, Managing Director, LG Electronics India, the other Korean major in India, has launched 43 models of split ACs, 19 window AC models and 17 refrigerator models.
Summer sales shares ACs 60%
Colas 50%
Ice creams 45%
Refrigerators 40% Figures are % of annual sales in the months of April, May and June |
What slowdown? And Samsung and LG are not the only ones trying to make the most of the hot Indian summer, even though not all are bigticket items like ACs and refrigerators. Tall glasses of thick lassis up north and salty buttermilk down south, branded ice creams, colas, prickly heat powders… anything and everything to do with summer seems to be doing well.
Ice cream players are looking at 20 per cent growth and have lined up plenty of launches this season, even though sales are no longer bunched in the summer. “…About 45 per cent consumption tends to happen in summers; the rest is spread through the year. So, it’s no longer a category that peaks only in summers,” says Paul Thachil, CEO (Dairy & Food), Mother Dairy Fruit & Vegetable.
If ice creams nowadays are also lapped up in winter, the Rs 7,500-crore cola category continues to be particularly sensitive to summer, during which nearly 50 per cent of annual sales happen. Summer also brings forth a rash of new campaigns and products, like the Nimbooz lemonade from PepsiCo this season. Since 2007, the cola category has been growing at 20 per cent, summer on summer.
Options galore to beat the heat
The durables category, on the other hand, can be more sensitive to temperature changes. “There was a slight blip last year due to early rains,” says an industry observer. The rains dampened growth to marginal levels: ACs sale added up to 1.9 million units in 2008, against 1.7 million the previous year. Refrigerators grew to 4.6 million from 4.3 million in 2007.
“Nearly 40 per cent of sale for direct cool refrigerators happens in summers, while for ACs, it is anywhere around 55-60 per cent,” says Zutshi. Behind all the media campaigns and hype, the media spend numbers tell a different story: that summers are not the peak season for spends by brands across categories for their promotion activities or even new launches, except when it comes to kids television channels.
For ice creams, summer is the time for launches even though sales happen all year
“An analysis of spends by brands through the year shows that the tempo remains the same through the year, except for a dip in January and February and a huge upsurge in September-October,” says Sudha Natrajan, President & CEO (North & South), Lintas Media Group. In fact, the durable players confirm this: While its true that nearly 90 per cent of the budgeted spends for ACs happen in the summers (starting from February up to July), for refrigerators it is only around 30-40 per cent: “We find a huge spike for refrigerators in the wedding season (which also merges with the festive season around September to December),” says Zutshi.
Refrigerators witness big offtake in summers and during the wedding season around Oct.
So, barring ACs, colas and talcum powders, not too much is particularly loaded for the summers. But then what could change all this is the Indian Premier League googly. The big spenders in 2008 and 2009 are not your typical summer coolers, but others such as Vodafone, Bharti Airtel and Hyundai Motors. “Net net, the summer season seems to have changed into an IPL season. While the general seasonal categories like prickly heat powders, fairness (sun protection) creams, colas and ice creams do advertise more, or only during this season, the IPL spends of brands have been so high that these category spends have got overshadowed,” says Natrajan.
For all the twists and turns, the final verdict on the shop-floors is that of growth: “We are selling about 600 units of ACs and 400 units of refrigerators across all our stores every day,” says Manoj Kumar, CEO, ezone, the Future Group’s consumer durable and electronic store chain.
The durables segment is expecting AC sales to touch 2.4 million and refrigerators to reach 5 million. Meanwhile, the ice cream and cola players are also looking at a 20 per cent growth, even as other categories are expected to maintain their sales charts.
That certainly makes for hot news.
