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India consumer firms gear up to cash in on a sizzling summer
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India consumer firms gear up to cash in on a sizzling summer
Apr 15, 2024 1:16 AM

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)

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