Cooler April cools sales: ACs, fridges see sharp drop as summer falters in south, east

After a buoyant start in March, fear has gripped summer product companies with sales of air-conditioners and refrigerators declining sharply in April in some geographies like the South and East pushing down overall growth rates. Beverages makers said sales have been marginally impacted in select markets where April has seen lower temperatures, but added that at a national level, demand is growing in double digits.

Sales of air-conditioners fell by over 20% year-on-year nationally in April, while refrigerator demand is down by 10%, as per industry estimates. For beverages, sales are down by 10-15% y-o-y in the East, Northeast and some Southern markets like Karnataka, the executives said.

Industry executives said lower number of heatwave days in peak summer period of April as compared to last year, moderate temperatures in South, East and Northeast, and intermittent rains slowed down offtake in these markets.


“AC sales have been down in most geographies in April including parts of North India which were cooler till about 8-10 days,” said Pradeep Bakshi, managing director at Tata-owned Voltas Ltd.

“Retailers are fully prepared with stock, waiting for peak summer demand to pick up,” he said. Bakshi, however, declined to share sales numbers of Voltas due to the silent period before announcement of last quarter results.

As a result, most companies are now postponing the planned 3-4% price hike of ACs from May to ensure the sales buoyancy is not impacted.

Kamal Nandi, head of appliance business at Godrej Enterprises, said even refrigerator sales are down by about 8-10% in April yoy due to poor demand in the South. “For AC, only North is firing right now which is 40% of the national market. Rest are down pulling down overall growth rates,” he said.

While the North is the largest market for most summer products, the contribution of other regions has gone up in the last two years due to prolonged heat waves. Last year, most AC brands were facing a stock out situation by now due to intense demand across the country with sales jumping by a huge 50-55%. This high base effect is also pulling down growth rates this year.

Even beverage companies are impacted despite the price war in the segment driven by Reliance's Campa cola.

A senior executive at one of India’s largest beverage bottling companies said April has been a disappointment in markets like Karnataka, East and North East because of lower temperatures. This is despite sales being ahead of expectations in February and March, he said.

“However, sales in the North have held through this month. With forecasts of a heatwave nationally in May and June, we expect the overall quarter to be much better than last year. We are prepared to meet the expected surge in demand,” he said.

April-June is the most crucial period for companies selling summer products as this quarter accounts for 40-70% of their annual sales, varying from category to category. Sales of AC and refrigerators in the South declined by 40-50% in April over last year, while East and West were down by about 5%.

Havells India managing director Anil Rai Gupta told analysts last week that there is a slow growth in the summer products like AC and fans due to delay in onset of peak summer in North and South. “Hopefully, it should pan out well in the next 75 days of the quarter, but it's still to pan out,” he said.

However, Jayen Mehta, managing director of dairy brand Amul, said the company is continuing with a double digit pace of growth for ice cream, curd, buttermilk and beverages this summer. “February, March and April have been consistently good months and we expect the same trend for May-July too,” he said.