Consumer durable firms expect 25% sales boost this summer

The country’s leading appliance makers are expecting at least a 20%-35% increase in sales of refrigerators and air conditioners (ACs) this summer season. After having witnessed sluggish demand in the last two years, industry leaders told FE that they are hopeful of a hotter summer to boost sales this year. According to the India Meteorological Department (IMD, “the summer months of March to May are likely to be hotter than usual across most of the country”. It has predicted El Nino conditions to persist for most of this period, which could in turn result in a higher number of heatwave days.

Godrej Appliances is expecting at least a 20% growth in sales of ACs and refrigerators. The company has grown 100% in the AC segment in the last year. With a positive outlook this season, Kamal Nandi, executive vice president, Godrej Appliances, said, “Even amid the inflationary trends, this segment will not be impacted as it remains urban-led consumption; moreover, the penetration level for ACs is the lowest today amongst all the categories— it is only about 10%- 11% vis-a-vis refrigerators at 40% and washing machines at 21% to 22%”.  Boosting its distribution might, the company has added 3,000 new outlets this year and is planning to add another 3,000 to 4,000 new outlets next fiscal and has an annual capacity for 3.6 million refrigerators and one million ACs.

Looking at about 35% to 40% growth in ACs, NS Satish, president, Haier Appliances India, noted, “If the El Nino effect comes into effect, the season will become erratic and one has to be very agile as a company to move the inventory”. Taking learning from last year’s unprecedented temperature rise and supply and distribution challenges, the company has introduced heavy-duty and super heavy-duty ACs series to make the cooling much more efficient and effective. Last year, the company announced an additional investment of around Rs 800 crore in the expansion of its manufacturing capabilities. “We now have enough manufacturing capacity to drive growth in the next two years. The focus is on localisation and improving the efficiencies of the plants,” he said.


The company currently can produce nine million units in a year and is looking at closing the current fiscal with a revenue of Rs 8,500 crore.

Summer sales contribute nearly a third to the Rs 1.5 trillion consumer electronics and appliance industry, driven by ACs and refrigerators. Optimistic of a surge in demand for the cooling category in the upcoming summer season particularly from tier-2 and 3 cities, BSH Home Appliances is reassessing its manufacturing landscape to stay abreast of seasonal demand fluctuations. Saif Khan, MD & CEO, BSH Home Appliances, said that in light of the anticipated heatwave and India’s water-stressed context, the focus is on energy-efficient appliances. The company has introduced new products in the value segment including a range of single-door refrigerators and top freezers, as it aims for deeper market penetration and is poised for double-digit growth this year.

Premiumisation driving growth

Players including Godrej Appliances and Lloyd remain bullish on the premium segment, whereas others such as Haier are betting equally on entry-level products to drive the demand in smaller geographies.

While the premium segment is the growth engine for Haier and that’s where the product line-up has been increased for the company, Satish said, “We are introducing more value-for-money products and have increased the range of single-star ACs. We are also introducing more options in the economy category for rural customers or customers from smaller towns and have tied up with a lot many consumer finance companies”.

According to Nandi, while the mass segment continues to drive up to 70% of the volume in the appliances sector, premiumisation is driving its growth. “The mass segment remains under pressure and I expect another couple of quarters before it starts coming or taking speed along with the premium segment,” he said. About 45% of the company’s revenue at present is coming from the premium portfolio across categories, which it plans to expand to 55%, in the next two years. Having recently launched its ‘Eon Vogue Edition’ series in the premium segment, it anticipates the segment to increase sales turnover by as much as 20% in the next fiscal.

“Premiumisation has gained significant traction in India owing to the surge in urbanization, increased disposable income, exposure to global trends, and a growing base of discerning consumers. There’s a heightened interest among consumers in enhancing their living spaces and investing in real estate, driving up the demand for premium and luxury appliances,” added Khan.

Following suit, Lloyd (consumer durables brand from Havells India) have recently launched the designer Stellar and Stylus AC range, alongside refrigerators equipped with rapid cool technology in the mass premium segment, which presently contributes around 30% to its growth. Acknowledging the subdued demand last year, Yogesh Kumar Gupta, Executive Director, Havells India, said, “This year we are expecting that the summer will be good and therefore we expect good growth.” He added that the company has already started seeing some demand in southern states.