Summer demand hots up for home appliances
Godrej, Panasonic, Whirlpool, Voltas, and LG reported strong double-digit growth in air-conditioner (AC) sales compared to 2019 level
Mumbai: Though escalating prices have had some impact on demand, the extreme heat wave witnessed across the country during the summer this year countered the dent in demand to some extent in case of home appliances.
Companies, such as Godrej, Panasonic, Whirlpool, Voltas, and LG, reported strong double-digit growth in air-conditioner (AC) sales compared to the levels seen in 2019 prior to the pandemic.
Talking to Bizz Buzz, Kamal Nandi, Business Head and Executive Vice-President at Godrej Appliances, a part of Godrej & Boyce, says: "We also saw pent-up demand in cooling categories and owing to the pandemic induced lockdown witnessed in past two summers.
Apart from refrigerators and air conditioners, categories like deep freezers and air coolers did very well too."
This summer, between March and May, cooling categories of home appliances grew by 12-15 per cent over pre pandemic 2019, while showing 82 per cent growth over 2021. Due to intermittent showers in May and the onset of monsoon in June, we are now witnessing drop in demand for cooling categories, whereas other categories such as fully automatic washing machine, microwave, chest freezers, frost-free refrigerators continue to witness growth in June. Looking at the overall appliances business, in Q1 FY23, we expect over 150 per cent growth than 2021, he said.
Moving further, we estimate second half of the year to be better than first half as we are projecting inflation to be controlled and commodity to soften. Overall, we are expecting over 80 per cent growth in FY23 over FY22, and over 20 per cent growth compared to pre-pandemic period, he added.
Across categories, the inflationary trend has impacted the mass segments more, while premium segments continue to drive greater growth. Premium segment mix in business has improved by more than 50 per cent compared to FY20. This has come at the back of successful launches across premium frost-free refrigerators, washing machines and ACs. More new product launches are lined up in coming quarters.
Commodity inflation started in December 2020 and since then till now, the increase in commodity prices has been 35 per cent, from which five per cent increase was in this quarter itself; and with the trend of depreciating rupee, it is expected to harden further. Industry has tried to absorb this cost as much as possible and passed on only 17-18 per cent to consumers until now by increasing its product price, say industry insiders.
Last year, Godrej Appliances implemented price increases to a total of 12 per cent- 3 per cent per quarter across all categories due to commodity price going up and supply challenges. This year, it has seen around 10 per cent increase in commodity prices at industry level. In comparison, it has increased prices by only upto five per cent in phases between Jan- June keeping the consumer demand in mind.
With the rupee depreciating further and depending on the demand-supply situation, another round of price hike is likely in the coming months-possibly 2-3 per cent increase in price each quarter. However, there are projections that commodity prices might soften in the later part of the year.
Voltas, a leading player in home appliances which witnessed a record-breaking growth in April, saw another high growth in May with the room air conditioner (RAC) business growing in triple digits.
Pradeep Bakshi, Managing Director & CEO, Voltas says: "Overall for the peak combined months of April and May, the room AC business grew by over 245 per cent reinforcing our leadership position in the segment, yet again. Moreover, our commercial refrigeration business grew by 235 per cent, the air cooler business grew by 75 per cent, and the home appliances business by over 100 per cent."
The overall volumes, he went on, have touched pre-Covid levels during this period. "We are optimistic that this momentum will continue for the rest of the year, helping us achieve our business targets for FY23. Our wide-spread presence, focus on the emerging channels, excellent distribution network, strongest brand equity, and attractive consumer offers, have helped the brand stay ahead of the industry and maintain our leadership position," added Bakshi.
Overall for the peak combined months of April and May, the room AC business grew by over 245% reinforcing our leadership position in the segment, yet again. Moreover, our commercial refrigeration business grew by 235%, the air cooler business up by 75%, and the home appliances business by over 100%
- Pradeep Bakshi, MD& CEO, Voltas