The recent readings by the Indian Meteorological Department (IMD) on a sweltering summer have stirred most parts of India. This follows a year (CY23) when the country experienced its second warmest year in 122 years. With above-normal temperatures and an above-normal number of heatwave days, the government as well as the public in general, are exercising precaution to abate the extreme impacts of the season.
While areas like agricultural productivity and animal husbandry are facing the brunt of this scorching heat, certain sectors are witnessing fired-up growth numbers, effortlessly breaking all past records. Among these, consumer durables, FMCG, retail, quick commerce and power sectors anticipate a rise in demand, along with tourism, airlines, and amusement parks expecting a surge in activity.
Emphasising that the consumer outlook will be a critical factor in shaping summer demand in the country this year, Amit Adarkar, CEO, Ipsos India says, “Urban consumption is holding its ground, with premium products showing good growth. Rural consumption, which was under pressure last year (mainly because of patchy and non-seasonal monsoon), is now showing good growth signs.” Ipsos’ research also shows that urban consumer sentiment has stayed high, with India being the most optimistic country amongst large economies. To that extent, the underlying consumer sentiment remains conducive to a good summer growth story.
Consumer Durables
With the rise in temperature, consumer durable brands are relishing a golden time for their business. Increased demand for air conditioners, fans, refrigerators and cooling appliances signals a sectoral recovery after having seen sluggish growth in the past two years. Most consumer durable brands like Voltas, Blue Star, Havells, Daikin, etc., are expecting a 15-35 per cent increase in their sales, especially in the June quarter.
Apart from the season’s advantage, the positive consumer sentiment is acting as a tailwind to the increasing demand. While people generally plan to buy an air conditioner a couple of months in advance, the harsher summer expectations have triggered fence-sitters also into buying, all ready to shell out extra to survive this scorching heat. This trend has also convinced the first-time buyers as well as consumer in Tier-2, Tier-3 and Tier-4 markets towards making a purchase. Along with this, the inflationary trends are staying clear as the segment is mostly urban-led.
Commenting on this rise in AC installations, Amit Agarwal, CEO and Co-founder, NoBroker states, "This reflects the evolving climate patterns and the growing need for climate control solutions in traditionally torrid regions like Delhi-NCR. In Bangalore too, summers have been rather hot this year, although the weather is much better now. We observed a 76 per cent surge in AC installation service this year. But Bangalore is thankfully back in character now."
Undeniably, the summer sales for these brands are very crucial as they set the tone for the annual growth expectations, also generating monies for the companies involved in the production and distribution of these products. Most brands took notes from last year’s unprecedented temperature rise and the supply and distribution challenges, and have rolled out heavy-duty and super heavy-duty ACs series to make the cooling much more efficient and effective. With this, there are arduous efforts in their expanding their manufacturing capabilities where localisation and improving efficiencies remain the core pillars. However, a recent industry report suggests a shortage of products or models in the industry, due to unprecedented demand amid the heatwave conditions prevailing for the past month and a half.
Interestingly, summer sales contribute nearly a third to the Rs 1.5 trillion consumer electronics and appliance industry, driven by ACs and refrigerators. The category will witness a few of the players bullish on the premium segment, while the others will bet equally on entry-level products to drive the demand in smaller geographies.
FMCG
The summer season holds extreme importance for the FMCG brands as consumers show an increased proclivity for soft drinks, ice creams and other cold beverages. Industry experts suggest that this season typically contributes to 20-25 per cent of their annual sales.
Non-alcoholic beverages: The sector is experiencing a period of revitalisation. There is a dual trend emerging: an escalating emphasis on health-conscious, low or zero-sugar beverages, and a surge in innovative, differentiated, and premium offerings. Contemporary Indian consumers are displaying a readiness to explore diverse beverage varieties beyond traditional juices and carbonated sodas. “This growth is fuelled by several factors, including a young demographic profile, rapid urbanisation, increasing disposable incomes, elevated household expenditure, advancements in rural infrastructure and improved electrification,” explains Anand Ramanathan, Partner and Consumer Products and Retail Leader, Deloitte India.
Parle Agro, a brand that dominates the sparkling fruit drink category with Appy Fizz with an over 90 per cent market share, follows an assiduous approach to make the most of the summer season. Its marketing efforts are deeply rooted in consumer preferences and patterns. Giving us an outline of its marketing efforts, Parle Agro’s Head of Marketing & International Business, Ankit Kapoor shares, "For us, the summer season is about becoming the top choice for consumers seeking delicious refreshment in the heat. OOH is a critical medium for us in driving memorability and reinforcing the distinctive worlds of our brands. By placing our media assets at strategic locations, we ensure our brands are not just seen but remembered. Moreover, our focus on dynamic content and celebrity endorsements adds an extra layer of engagement, enhancing the effectiveness of our campaigns. With these visually captivating campaigns, we aim to maximise brand visibility, impact and consideration across our top-performing markets nationwide.”
In terms of the cola wars, the market is poised for a competitive showdown among the triumvirate of Coca-Cola, Pepsi, and Campa. While Campa may have been underprepared in previous encounters, this summer it is anticipated to leverage the robust distribution network of Reliance Retail to its fullest extent. It remains to be seen whether Indian consumers will be enticed to explore the new entrant in the carbonated soft drink (CSD) category or if the established players will maintain their dominance.
The alco-bev sector: The alco-bev sector enjoys strong sales throughout the year, where beer consumption stands as a pivotal contributor overall. The past years have seen brands necessitating careful planning in production and distribution, as brewery capacities stretch to their limits this time around. According to an ICRA estimate, domestic alcohol beverage companies are projected to have a revenue rise of 8–10 per cent in FY2025, whereas beer companies' revenues are expected to grow by 9-11 per cent YoY. Indian-made foreign liquor (IMFL) companies are expected to see 11-13 per cent revenue expansion supported by a preference towards premium products amid volume growth of 3-5 per cent on a high base of FY2024.
Cocktail premixes and ready-to-drink options, which gained popularity during the pandemic, have become a staple in the evolving alcohol market. Brands will be seen capitalising on this trend by offering ready-to-drink (RTD) or premixed offerings tailored to consumers' nostalgic preferences.
Ice-cream business: The Indian ice cream industry is forecast to achieve a growth rate exceeding 10 per cent over the next five years. Coupled with increased consumer affordability and the expanding quick commerce network offering doorstep service, there will be a rise in in-home consumption, particularly in the single-serve segment. The growing popularity of Indian flavours, varied textures and premium offerings will continue to drive the market share of artisanal ice creams, along with an increasing demand for healthier alternatives, leading to a rise in sugar-free, low-fat, and dairy-free ice creams.
Quick Commerce
The quick commerce market in India experienced a remarkable tenfold expansion from 2021 to 2023, driven by the industry's capacity to meet the unique demands of urban consumers looking for convenience for impulsive, low-value transactions. However, quick commerce has barely taken up 7 per cent of the total addressable market (TAM), which is projected to be worth USD 45 billion and is larger than the food delivery industry, despite its rapid rise, according to JM Financial.
The industry is expected to largely benefit from a heatwave-induced jump in sales. On Swiggy Instamart, for example, demand for cold beverages such as soft drinks, juices, fruit and energy drinks as well as for ice creams grew twofold in April compared with a year earlier. Interestingly, Swiggy Mall and Blinkit are also selling products like air conditioners, however, these transactions are still in their nascent stage.
Fashion And Retail
Projections indicate a substantial growth trajectory for the fashion and retail market, with revenues expected to surge to USD 14.68 billion in 2024, maintaining a robust annual growth rate of 10.65 per cent through 2029, reaching a staggering USD 24.35 billion.
The average revenue per user (ARPU) is forecast to stand at USD 77.22, showcasing promising prospects for revenue generation in the fashion industry. Leaders in the Indian fashion landscape, such as Tata CLiQ, Flipkart Fashion, and Amazon Fashion, are already witnessing strong demand for summer apparel. As consumer preferences evolve, fuelled by a blend of style, functionality and self-care, India’s fashion industry continues to innovate, adapt and cater to the diverse needs of millions of consumers nationwide.
In terms of consumer sentiment in non-metros, the Myntra Trend Index reveals that eight out of the top ten consumers originate from non-metro locales, spotlighting the expanding influence of e-commerce beyond urban landscapes.
Overall, businesses are likely to see a good summer demand. However, the only word of caution remains the too-early and too-heavy monsoon, as they can cut off the demand tail.
