They like it hot! Some companies have a summer to cheer

This April has been the kindest month in three years for companies that are largely dependent on summer season. The sweltering heat has seen sales of air-conditioners, cold beverages and ice creams soar to high double-digit growth year-on-year.

April sales data from companies showed sales of AC grow 15%, refrigerator 8%, juices and ice creams 15-18% and cold beverages like packaged lassi, milkshake and butter milk by more than 30%.

In contrast, last summer AC sales had grown 2%, refrigerators 5%, while juices, packaged cold beverages and ice-cream saw 10-14% rise in sales.

Companies such as Amul, Dabur, Voltas, Daikin and Godrej Appliances said the rising mercury across the country raised expectation of bullish volume growth for the April-June quarter.

The industry had earlier feared the general elections would impact consumer sentiments.

“There has been no impact of elections on sales as the industry was fearing,” said Japanese AC maker Daikin India MD Kanwaljeet Jawa.

“Sales picked up in March in the South and in April, it has been in the rest of India. The quarter looks positive with 12-15% growth.”

Tata-owned and AC market leader Voltas MD Pradeep Bakshi said the overall market reported unprecedented demand, with south and central India reporting maximum traction. “We witnessed healthy double digit growth in secondary sales which should continue in May,” he said.

Dabur India CFO Lalit Malik said there was a steady revival of demand in April. “Demand has been showing signs of improvement across categories like fruit-based beverages and hair oils. While it is too early to quantify the growth, we expect our full-year volume growth to be in high single digits,” he said.

ITC’s chief executive for food business, Hemant Malik, said sales of packaged juices has been better this summer than last driven by new launches and the heat.

Cola majors have stepped up production of low-sugar carbonated drinks due to high demand this summer with demand outstripping supplies.

Sales of AC and refrigerators was impacted in 2017 by demonetisation, while in 2018 intermittent rains led to cooler nights during summer affecting sales. The FMCG industry reported 10.7% volume growth in 2018 while it was 9% in 2017. In January-March 2019, volume growth was 9.4% according to Nielsen.

“Summer sales has been much better than last year. Ice cream sales is up by 17-18% while that of packaged curd and lassi is up by 30-35%. The extreme heat and stability in prices this year has boosted sales,” said RS Sodhi, managing director at GCMMF, which owns the Amul brand.

Consumers are also buying pricier appliances such as inverter AC with the price gap with the fixed speed AC narrowing, said electronics retailer Great Eastern Retail director Pulkit Baid.

Godrej Appliances business head Kamal Nandi said refrigerator sales has improved compared to last two years but still below expectation.

“There is still liquidity crunch in upcountry markets, while in urban markets consumers are just purchasing AC and postponing refrigerator upgradation,” he said.

Summer this year started late from April but more than compensated for the sales loss in March.

The heat wave is going to continue this month as well till monsoon enters the country. India Meteorological Department has predicted near normal rains this year.

Source:-https://retail.economictimes.indiatimes.com/news/industry/they-like-it-hot-some-companies-have-a-summer-to-cheer/69210334