Bumper Summer:Cooling solutions sector expects spends to exceed last year’s Rs 22,800 bn

As the summer temperatures reach record levels, the demand for cooling solutions such as air conditioning systems, air coolers, and refrigerators skyrockets, becoming essential for both households and businesses. The long summer season in India, which does get much relief even with the monsoon season, has seen a staggering 156% increase in related search terms since January 2024. In 2023, Indian consumers spent a whopping Rs 22,800 billion during the summer season, as per a study by VDO.AI.

Indian household spending is projected to surpass Rs 240 trillion by 2027, driven by a robust 14.6% annual growth in disposable income. It is anticipated that 25.8% of Indian households will have an annual disposable income exceeding Rs 8 lakh by 2027.

Similarly, the consumer electronics industry is preparing for a lucrative summer season with increased advertising expenditures. For instance, consumer electronics brand Blue Star has doubled its advertising spending to capitalize on upcoming summer season, expecting a 25% surge in AC revenue. The company has recently launched a comprehensive new range of energy-efficient and eco-friendly deep freezers, catering to diverse customer segments with capacities ranging from 60 to 600 liters. Besides deep freezers, the company aims to expand its Commercial Refrigeration business to seize rising opportunities in the country.

Technological innovations: A game changer for Electronic Appliances

Technological advancements are truly revolutionizing the consumer appliance industry, particularly for cooling products. Presently, amidst rising temperatures, the demand for efficient, intelligent, and premium-quality appliances is on the rise.

Sanjay Chitkara, Senior VP and Business Head, LG Electronics, said, “To address consumer need for more energy-efficient AC solutions, we made a bold move by introducing the Inverter compressor technology, which has been met with resounding success. Additionally, our decision to make our ACs convertible has resonated well with consumers, enabling us to cater to diverse needs within the market. By taking a consumer-centric approach and addressing pain points such as running costs and electricity bills, we've revolutionized the way ACs are perceived and utilized. Moreover, we’ve recently launched an impressive lineup of 77 new AC models, each incorporating cutting-edge features such as enhanced power efficiency and aesthetic appeal.”

Recognizing the evolving preferences of consumers, Haier India has been at the forefront of innovation, introducing India-first technologies such as supersonic cooling technology, informed NS Satish, President, Haier Appliances India. This innovation delivers a cooling experience that is 20 times faster than conventional air conditioners, meeting the urgent need for faster cooling. Additionally, we've introduced industry-first 2-door and 3-door side-by-side smart convertible refrigerators, elevating everyday living to new heights of intelligence, convenience, and comfort. Both these breakthroughs integrate cutting-edge cooling technology catering to the diverse requirements of modern Indian households.

Swati Rathi, Head of Marketing, Godrej Appliances, said, “With the heat on, cooling categories are seeing significant traction. And since durables last long, technological innovations – for example one of its kind Anti Leak ACs from Godrej, or the wooden finish aesthetically unique Vogue ACs or 20% extra cooling Turbo Cool ACs – in short products with a unique proposition are seeing high acceptance. Not just in cooling categories but across categories, premium products and differentiated propositions are finding more takers.”

Deba Ghoshal, Vice President & Head of Marketing, Voltas, added here, “As the India Meteorological Department (IMD) forecasts extreme heat across the country from April to June, particularly impacting central and western regions, consumers are increasingly mindful of their cooling needs. They are seeking products that not only provide effective cooling but also prioritize energy efficiency to sustain long hours of usage without substantially increasing electricity bills. Sustainability has also become a key consideration, with consumers preferring eco-friendly cooling options that minimize environmental impact. Additionally, connectivity features such as smart controls, IoT and remote monitoring capabilities are gaining popularity as they offer convenience and flexibility in managing cooling systems, especially in times of rising temperatures and unpredictable weather patterns.”

Pooja Baid, Chief Marketing Officer, Philips Versuni, noted, “This year is expected to witness a lot of innovative launches across categories by brands. There is expectation of higher use of new technologies like AI, as well as a lot of focus is expected to be on the design aspect of the product. Philips for instance, has already introduced Signature Series Air-fryer with Smart Sensing technology and Series 5000 Home Safety cameras that have won design awards internationally apart from being the only camera in India with offline recording feature.”

Sustainability and Energy Efficiency in Electronic Appliances

With the growing use of different cooling solutions, there are also increasing concerns regarding energy consumption. Appliances such as air conditioners and refrigerators, equipped with energy-efficient compressors, advanced insulation materials, and intelligent cooling systems, play a crucial role in alleviating these concerns by significantly reducing overall energy usage. Moreover, the environmental impact of these appliances extends beyond energy consumption alone. With a growing global consciousness about climate change and environmental sustainability, manufacturers are increasingly prioritizing the development of eco-friendly refrigerants and materials. Transitioning towards ozone-friendly refrigerants and embracing sustainable manufacturing practices, the refrigeration industry is taking significant strides towards mitigating environmental degradation and safeguarding natural resources for future generations.

Haier India’s NS Satish emphasised, “We are committed to fostering energy-efficient appliances across all our product lines. From refrigerators to air conditioners, each Haier product integrates sustainability into its design, leveraging advanced technologies to minimize energy consumption while maximizing performance.”

Haier’s marketing campaigns actively educate consumers about the benefits of choosing energy-efficient products, such as their recent digital video campaigns aired during the Indian Premier League, highlighting the energy-saving capabilities of Haier Super Heavy Duty air conditioners equipped with Hexa Triple inverter technology.

Swati Rathi of Godrej Appliances asserted, “Sustainability is ingrained in our business ethos, and we continuously offer efficient and eco-friendly products across every category.” Godrej’s marketing efforts focus on digital and in-store promotions, aligning with the trend of premiumization and showcasing their differentiated offerings.

LG Electronics, with its motto of ‘Higher energy efficiency, lower carbon impact’, has been lauded for its sustainable and low-energy-consuming appliances. In their ‘2023 ESG Report’, LG reaffirms its commitment to achieving “Net Zero” carbon emissions by 2050 through a roadmap aimed at significant reductions in greenhouse gas emissions by 2030 and 2040. Sanjay Chitkara highlighted LG’s range of air conditioners, saying, “The new range of LG air conditioners is available in both split and window configurations, boasting energy efficiency ratings between 3 stars and 5 stars.”

Deba Ghoshal added here, “Voltas, deeply rooted in impacting lives positively, adopts a hybrid marketing model to enhance both physical and digital customer experiences in real-time, reflecting their commitment to meeting customer expectations while adapting to industry dynamics.”

Pooja Baid from Philips emphasized, “Our marketing campaigns at Philips have always focused on the consumer & the value that we are able to add to consumer lives. We are known to tell real, powerful stories of how our products simplify home to amplify life and we will continue on the same path this year as well. Sustainability & Energy efficiency is part of our DNA & you will see that reflected more & more across all new introductions.”

These concerted efforts from industry leaders underscore a collective commitment towards sustainability, energy efficiency, and environmental responsibility in the electronic appliance sector.

Enhancing the aesthetics of electronic appliances

The dictum, “Jo dikhta hai wahi bikta hai” (what is seen, sells) holds sway across the industry. Once merely functional, electronic appliances now must also please the eye, as consumers increasingly prioritise aesthetics alongside utility in their homes.

Regarding the need for aesthetics in products, Sanjay Chitkara of LG Electronics, shared his personal experience, when he was renovating his home and could not find a single air condition which could go well with his interiors. He said, “Our focus on innovation extends beyond functionality to encompass aesthetics, as evidenced by our beautifully designed ACs. Unlike traditional cooling boxes, our ACs now serve as stylish additions to any home, blending seamlessly with modern decor. Looking ahead, we anticipate further trends in the electronics industry, such as increased emphasis on sustainability and smart home integration. As pioneers in the industry, LG remains committed to pushing the boundaries of innovation, setting new standards for excellence in consumer electronics.”

Godrej’s Swati Rathi emphasized, “Our philosophy is ‘Soch Ke Banaya Hai’ (crafted with thought). Each of our products is meticulously designed to strike the perfect balance between convenience, comfort, energy efficiency, usability, durability, and aesthetics. Winning three India Design Marks recently – across ACs, Air Coolers, and InsuliCool – we’re proud to introduce the Eon Vogue Edition, a unique line of wood-finish home appliances that exemplify our commitment to aesthetics without compromising functionality.”

Pooja Baid of Philips echoed this sentiment, stating, “Design is at the very core of what we do. For us, design is as much about better, more intuitive functionality as it is about beautiful looks. Our design team is one of the best in the world & they work to monitor closely trends across a wide variety of industries before coming up with the next evolution for our design language.”

Deba Ghoshal, from Voltas, underscored the importance of seamlessly blending appliances with home aesthetics, saying, “As consumers increasingly prioritize design and style in their living spaces, the focus on creating visually appealing products has become paramount At Voltas, we prioritize both design and functionality, creating products that enhance homes visually and perform efficiently.”

NS Satish of Haier India added here, “Our focus on smart functionality and aesthetics is evident in our dark edition air conditioners and colorful glass-finish refrigerators, seamlessly blending into contemporary homes. Efficiency is paramount, with energy-saving features ensuring top performance and environmental responsibility. Anticipating the future, we embrace smart home integration and sustainability, with AI poised to redefine functionality and user experiences. We're dedicated to leading innovation, surpassing customer expectations with every technologically advanced solution.”

The COVID-19 factor

The COVID-19 pandemic undeniably reshaped consumer behaviour and preferences, particularly in the realm of home appliances and electronics. As individuals found themselves confined to their homes, the demand for comfort and convenience surged, leading to a notable boon for the industry.

Pooja Baid of Philips Versuni noted, “A lot of consumers upgraded their existing appliances or bought into new categories during Covid as everyone was at home & comfort at home was paramount. There has been softening ever since in some of the high penetration core categories of the market. However, India is a market where households are still rapidly multiplying & over the medium – long term, we expect the growth momentum to be back to pre-Covid levels.”

Voltas’ Deba Ghoshal added here, “The COVID-19 pandemic has been a challenging time for individuals and communities worldwide, and our focus at Voltas has always been on ensuring the well-being and comfort of our customers. During this period, we observed a shift in consumer preferences and needs. With people spending more time indoors, there was an increased demand for products that enhanced comfort, such as air conditioners, air coolers, and other home appliances. As a result, the electronics industry, including Voltas, experienced a surge in demand for these products. During the pandemic, businesses faced significant disruptions and challenges. But we introduced innovative products like the Voltas PureAir AC, which effectively kills viruses and bacteria.”

Sanjay Chitkara of LG Electronics noted, “The onset of the pandemic brought about a significant shift in consumer behavior, with increased reliance on home appliances such as fans and ACs. Recognizing this trend, we adapted our strategies to meet rising demand, particularly during periods of lockdown when individuals spent more time indoors. Despite the challenges posed by the pandemic, we remained steadfast in our commitment to innovation, investing in research and development to introduce features such as antivirus and antibacterial capabilities in our products. Additionally, we provided free medical insurance to our consumers, demonstrating our commitment to their well-being during these unprecedented times.”

NS Satish of Haier India added here, “During the pandemic, when people were confined to their homes, there was a noticeable surge in demand for smart appliances aimed at enhancing everyday comfort and convenience. This trend persists post-pandemic, particularly with the prevalence of hybrid work culture. With a deep understanding of consumer needs, Haier India remains committed to providing technologically advanced products that ensure smart, convenient, and comfortable living. Over the years, we have significantly expanded our product range from 5 to 11 categories, encompassing TVs, washing machines, refrigerators, LED panels, and water heaters, to meet the rising demand for smart home appliances.”

Swati Rathi of Godrej succinctly captured the multifaceted impact of the COVID-19 pandemic on the home appliances industry, saying that the pandemic underscored the essential role of home appliances, with new categories like dishwashers gaining traction as people sought solutions for managing their homes amidst shifting dynamics. The transition to remote work further fueled the demand for air conditioners, while the absence of household help emphasized the importance of appliances for maintaining household hygiene and health.

She also added the not-so-positive impact of the pandemic, saying, “We also need to understand that the market went through heavy disruption with stores being closed in peak months, people staying in and avoiding stores, logistics and supply chain were challenged so while there was higher acceptance and traction especially for certain segments, other segments faced significant challenges as well.”

Cooling appliances industry forecast for 2024

As the cooling appliance industry in India braces for a season of heightened demand and promising growth in 2024, major players like Blue Star, Godrej, LG Electronics, Voltas, and Haier share their expectations and forecasts for the year ahead.

Sanjay Chitkara: “LG Electronics India anticipates a significant surge in Room Air Conditioner (RAC) demand, especially in regions like Kerala, Tamil Nadu, West Bengal, Bengaluru, and Pune. With AC installations growing at an impressive 18 to 20% CAGR, and India's AC penetration rate expected to rise, we project a healthy growth trajectory for the industry. . I'm pleased to announce that we've achieved a remarkable milestone of 1 million orders within just 100 days since the start of the year. With such positive indicators and a consumer base showing increased interest, the AC industry is poised for a promising year ahead.”

NS Satish: “Based on past trends and consumer behaviour, we foresee a strong demand for cooling appliances in 2024. We project a 35%-40% growth in ACs and 30% in refrigerators. Our goal is to become the second-largest brand in India within the next five years, with a targeted 35% year-over-year growth in CAGR.”

Swati Rathi: “At Godrej, we are aligning our focus with consumer demand by enhancing our premium range contribution from 45% to 55%. With a robust summer product portfolio and strong demand, we anticipate a substantial 25-30% growth in cooling categories.”

Deba Ghoshal: “As IMD forecasts an early and intense summer in 2024, cooling solutions become imperative. With the introduction of ‘Voltas SmartAir AC’, we aim to meet evolving customer needs. We expect significant growth this season, with increased demand across offline and online channels, especially from Tier 2 and Tier 3 markets. We are building our presence across the remotest parts of the country by establishing brand shops in all tiers, to allow customers get access to our products throughout the year. As a part of our consumer-centric marketing strategy, we have now over 320 EBOs in the country to create increased access to our products.”

Building on the momentum of the previous year, Blue Star performed exceedingly well in FY24 in terms of both revenue and profitability. In FY24, total income rises 21.4% to Rs 9685.36 crore. Vir S Advani, Chairman & Managing Director, Blue Star Ltd, said, “This year was momentous for Blue Star as it marked 80 years of our existence. While the milestone placed us in the elite league of Indian companies that have achieved this feat, we are now focusing on accelerating our growth.”