An Inflection Point For Room AC Market

It is an exciting time for Blue Star India, revelling in an uptick in its overall business, on the back of the weather forecast, IPL, overall economy outlook and positive consumer sentiment.

Its Rs 8,000 crore revenue in 2023 and its 10,000 retail outlets across the country further signal the brand's unwavering spirit and strong foothold in the market. "We are aiming for 15 per cent market share by FY26 in the room air conditioner segment," informs B Thiagarajan, Managing Director, Blue Star.

On Growing Demand
While the residential air conditioning market was largely dominated by China, India is swiftly making its way and aiming for an 8 per cent increase in household penetration. "We are 15 years behind China. By 2040-2050, we aim to overtake China," Thiagarajansays he believes.

The market for room ACs, in particular, is witnessing significant demand, owing to burgeoning middle-class consumers with higher disposable incomes who now perceive the category as a luxury. Blue Star is also experiencing demand from first-time buyers, especially in the Tier II, III and IV markets, as well as the replacement market. "Close to 90 per cent are first-time buyers, and about 65 per cent of our sales come through Tier-3, Tier-4 and Tier-5  markets. Additionally, 50 per cent of the AC sales are happening through consumer finance," attests Thiagarajan.
Thiagarajan asserts that the market for room ACs is at an inflexion point and poised to grow exponentially over the next few years. He expects up to 25 per cent growth in sales of residential AC in the June quarter, the period that accounts for the highest number of sales due to the temperature rise and heatwave.

On Marketing Plans
Blue Star's longstanding association with Virat Kohli has been bearing fruit and it intends to continue having him endorse their room ACs. Kohli has significantly helped in building brand awareness and equity, Thiagarajan acknowledges. Overall, the brand is essentially targeting the youth, the new decision-makers in India. "To be relevant to the new-age consumers, we are playing in large, mid and small spaces. Hence, Virat was the right fit for us, given he plays in all formats of cricket, just like us," Thiagarajan explains.

Congruent with its business numbers, the brand has also moved up its ad budget from 40 crore to 60 crore for this summer season.

Overall, the brand will be trading in positive territory in 2024 and will remain unbothered by the elections. With prices being maintained, running costs going down significantly and heat levels on the rise, Thiagarajan is confident that consumers will invest in the consumer durables industry this time around.