CHENNAI/BENGALURU, April 15 (Reuters) - Indian consumer
goods companies such as makers of cooling systems, beer and ice
cream are attempting to capitalise on a hotter-than-usual summer
season by cranking up output, launching new products and ramping
up spending on marketing.
The world's most populous nation expects 10 to 20 heatwave
days, which it describes as temperatures hitting at least 40
degree Celsius in the plains, from April through June this year,
versus the normal four to eight days. Already temperatures have
crossed 40 degrees in a few cities in the western Maharashtra
and Gujarat states.
The searing heat is why appliances maker Blue Star
has launched dozens of new home airconditioner products as it
targets a 25% jump in revenue from that business this summer
versus just a 5% increase last year, according to its Managing
Director B. Thiagarajan.
And U.S.-based ice cream brand Baskin Robbins has launched
20 new products in India ahead of the summer season.
"An unusually hot year will significantly impact the sector
and uplift consumer discretionary companies' demand for selling
airconditioners, fans, fridges, etc," said Akshay Mokashe,
senior research analyst at Axis Securities, adding that they
will report robust growth numbers for the first quarter of the
current fiscal year.
Cooling systems providers are one of the main beneficiaries
of summer, with the season contributing up to 60% of their
annual revenue.
While the industry has previously estimated that less than
10% of Indian households have airconditioners, the hotter summer
season and new product launches from companies such as
appliances maker Voltas and Johnson Controls-Hitachi
Air Conditioning India are expected to lift that
number.
"People generally plan for airconditioner purchases a couple
of months in advance. But harsher summer expectations have
triggered fence-sitters also into buying," said Deepak Jasani,
head of retail research at HDFC Securities.
Roughly nine in 10 customers this year are first-time buyers
as they long for airconditioners after getting used to
temperature-controlled spaces in offices, banks and theaters,
Blue Star's Thiagarajan told Reuters.
G. Hariharan is one of them.
The software engineer from Thiruvananthapuram city in the
southern state of Kerala bought his family of four their first
airconditioner last month.
"We have always muscled through the hot January-May months,
but this year, it is too hot, and it has become too difficult to
sleep," Hariharan said. "Even two fans are not enough."
Ceiling fans are India's go-to during summer, while
airconditioners are still considered a luxury for its majority.
Companies are stretching their production and distribution
capabilities to meet the increase in demand.
Graviss Foods, which runs Baskin Robbins stores in India,
is ensuring its "factory is running at full throttle" after
opening more distribution centres to reach retailers and
distributors faster, said CEO Mohit Khattar.
Advertising budgets are also up this summer, partly because
slots on the popular Indian Premier League cricket games have
become more expensive as they coincide with India's massive
general elections.
Blue Star is nearly tripling its summer advertising budget
to 400 million rupees, while Baskin Robbins' marketing budget is
being raised by up to a quarter as it aims to reach twice the
number of people through TV and online advertising.
SUMMER BUMP
It is not just manufacturers that are cashing in on the
summer, but delivery and other services companies too.
Grocery delivery app Zepto shows a banner on its home page
to highlight "hydration heroes" with images of tender coconut,
watermelon, and muskmelon, while rivals Swiggy and Zomato's
Blinkit are doubling down on fruits, beverages, and
ice creams.
Swiggy has seen a 28% surge in demand for cold drinks and
juices, along with a 43% increase in orders for ice cream since
the summer began, according to its spokesperson, while orders
for instant drink mixes and ice cubes have shot up.
Demand for beer is likely to go up as well.
"With the arrival of summer, beer consumption naturally
increases, necessitating careful planning in production and
distribution ... as brewery capacities are stretched to their
limits," Carlsberg India Managing Director Nilesh Patel said.
The harsher weather is expected to increase the prices of
vegetables, which could eat into discretionary budgets, and
curtail outdoor spending. Some analysts, nevertheless, expected
consumers to find ways to spend on the small joys.
"Drinking beverages or eating ice cream gives some sort of a
satisfaction, although temporary, to people," HDFC Securities'
Jasani said.
(Reporting by Praveen Paramasivam in Chennai and Ashna Teresa
Britto in Bengaluru; Editing by Dhanya Skariachan and
Muralikumar Anantharaman)