After years of sluggish growth, the refrigerators market is set on a recovery course, with double-digit growth predicted for the year 2004-05, according to a Francis Kanoi report. Sales are likely to cross four million units, and record a growth of as high as 15 per cent, says the report. The category has been seeing average growth of around five per cent since 1999, but this year sales are projected to touch 4.1 to 4.2 million units, from the projected 3.65 million units in 2003-2004.
The forecast says that it is the slack created due to depressed sales during the peak season last year, together with the extended underperformance of the market over the previous five years, that is likely to propel the market to a double-digit growth in 2004-2005. If the economic environment continues to be positive after the next monsoon, the growth, in fact, may touch 15 per cent. The last time, a 15 per cent growth was achieved by refrigerators was in 1995-96.
On the brands front, the report says the battle for supremacy between LG and Whirlpool in refrigerators category was set for the peak season in the first quarter of 2004-2005. A double-digit growth in sales in 2004-2005 will diffuse considerably the pressure on the market leader, Whirlpool, in withstanding the onslaught of LG. Whirlpool happens to be the last brand standing in the way of total domination of the Consumer Electronics and Appliances field in the country by LG. If Whirlpool loses its top position to LG, it will only be a question of time before it yields to Samsung as well, says the report. On the competitive status, momentum and image of fridge brands, the Francis Kanoi study finds that Kelvinator, promoted as the coolest one, is still among the top four brands in the refrigerators field, despite neglect over the last two years. In that context, the decision of Electrolux to abruptly discontinue promoting its Kelvinator brand will be especially be damaging, as the company is at its weakest because of the turmoil that it has faced over the last two years. "Together with Godrej, Kelvinator has defined the market for refrigerators in the country for decades now. There are several million households owning Kelvinator refrigerators, supporting its purchases, even today," says the company.
In the intensely competitive market, the void created by the absence of Kelvinator will be a major opportunity for competitors to convert Kelvinator loyalists to their own brands. Whatever loyalty Electrolux commands among the dealers is due to the legacy and the consumer pull that the Kelvinator brand commands.
Therefore, it is almost certain that Electrolux will lose a sizeable chunk of even its diminished sales to the competing brands, easing the pain of competition to them considerably. The principal beneficiary will be Whirlpool, which has been its arch rival for years.