When summer sizzles, can beverage, AC sales be far behind?

Amul expects it beverages and ice-creams portfolio to grow 30-40% this year compared to the year-ago period. (Photo: Mint)
Amul expects it beverages and ice-creams portfolio to grow 30-40% this year compared to the year-ago period. (Photo: Mint)

Summary

  • Companies gear up as IMD’s warmer summer prediction drives demand for cooling essentials

New Delhi: Forecasts of a warm summer this year bode well for beverage, ice cream, and cooling appliance manufacturers. Following last summer’s demand disruptions due to unexpected rains, companies are now increasing capacity and distribution network to meet the anticipated surge in demand, buoyed by the positive outlook.

“While the summer is just about setting in, it may be too early to predict the extent of growth," said Mohit Khattar, chief executive officer at Graviss Foods Pvt. Ltd, which operates Baskin Robbins India. “It is clear is that the initial signs are looking good and, in general, we expect the market, and Baskin Robbins to continue their upward growth trajectory."

However, Khattar cautioned against high input costs, with cocoa breaching record prices globally. “Fortunately, dairy ingredient prices have been reasonably stable. Our call, therefore, is to hold prices for now and absorb fluctuations at least for the next couple of months, before we reassess the situation based on the prevailing ground realities then. We have built additional capacity over the last couple of years," he said. The firm runs nearly 1,000 ice cream parlours in India.

During the summer months of 2023, beverage and soft drink companies faced challenges as demand remained subdued due to unseasonal rains and a mild summer, following a robust performance in 2022. Consequently, several companies reported muted results for the June quarter.

Dairy cooperative Gujarat Cooperative Milk Marketing Federation , which markets dairy products under the Amul brand, said the summer has started well after tepid demand for ice creams during the previous year.

“We are already seeing very strong demand for our beverage portfolio," said Jayen Mehta, managing director. “We have been expanding our range as well as ramping up capacity." Mehta said the upcoming general election, coupled with a strong summer, will lead to increasing demand for low-price beverages, such as shakes, lassi, and even ice creams.

Likewise, Havmor ice-cream expects to grow 20-25% year-on-year during the summer months. “To cater to the growing demand, we have increased production capacity in existing factories and will be ready to service more demand through our upcoming factory in Pune starting July-August, Komal Anand managing director Havmor Ice Cream, said.

Typically, summer sees a surge in demand for both cold drinks and ice creams. However, erratic rainfall in parts of North India last year, coupled with an early monsoon onset, dampened demand for such products. The India Meteorological Department, earlier this month, said India is likely to witness warmer start to the summer season this year, and predicted above normal maximum temperatures for most parts of the country.

Amul expects it beverages and ice-creams portfolio to grow 30-40% this year compared to the year-ago period.

Consumer electronics manufacturer Thompson recently announced a 75 crore investment in an air cooler manufacturing plant, prioritizing the segment amid stiff competition in air conditioners and subdued demand.

Thompson, which has built enough inventory, plans to expand its capacity next year to further capitalize on the air coolers segment.

“All three segments, including coolers, air conditioners and refrigerators, are growing because penetration of the appliances is still less," Avneet Singh Marwah, chief executive, Super Plastronics Pvt. Ltd, the brand licensee of Thompson in India, said.

“For air cooler models that have just been launched, we expect to see strong growth while air conditioners are likely to grow 10-15% over last summer. If we see no disruption with unseasonal rains we should have a good season. We feel the consumer durables market, especially low-priced electronics, is coming back," he added.

Packaged consumer goods maker Godrej Consumer Products Ltd said the forecasts of a normal summer will have positive impact on categories like soaps and deodorants. “With the summer season forecasted to be normal, we anticipate steady improvement in consumption in the relevant categories," said Aasif Malbari, chief financial officer, of the company. “We anticipate strong pick up in discretionary spending on brands such as KamaSutra and Park Avenue deodorants. Additionally, the warm weather in summer is likely to drive higher demand for household insecticides."

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