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Mild summer makes FMCG, durables majors sweat

19-May-2005
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Mild summer makes FMCG, durables majors sweat

Usually, the blazing summer heat translates in peak sales of a host of durables and FMCG products. But this time round, mild temperatures are making soft drink, air-conditioner and ice-cream manufacturers sweat.

Two-and-a-half months into the season, the companies have had to not only rework their sales targets, but are keeping their fingers crossed that the rest of the season will make up for the loss.

Take the case of air-conditioners. According to Mr K.J. Jawa, Vice-President (Operations) at Voltas Ltd, "Air- conditioner sales did not look good till about May 15, mainly on account of intermittent rains. In fact, sales have been flat even in the first half of May. Similarly, sales grew by only 10 per cent in April."

The slow offtake in the last two months may force the air-conditioner industry to lower the 25 per cent growth target it had set for this summer.

Carbonated soft drinks too are feeling the heat. A senior industry official said sales projections have gone haywire. "We did not increase prices this season, despite a continued increase in input costs. Even then, sales are down 10 per cent between March and mid-May compared with the same period last year, mainly on account of mild weather," he said. The soft drink industry bled last summer due to the affordability strategy of lowered price points, hence this summer is even more crucial for the bottomlines of Coca-Cola and PepsiCo in India.

Ice-cream manufacturers are also a worried lot. The Jaipuria Group company, Universal Dairy Products Pvt Ltd, that has a technical tie-up with French dairy major Sodiaal for the Cream Bell brand of ice-creams in India, admits to a sales slowdown.

In the beginning of this year, the company had set itself a target of 25 per cent growth in sales volume over last year. But till now, this appears to be an ambitious target. Its CEO, Mr M.S. Parikh, said, "March and April were very bad for us, sales have started picking up only in May".

He said besides facing mild weather, ice-cream sales have also been affected by sustained pricing action by competitors such as Amul.

For soft drinks, ice-creams, other beverages and milk-based products, the period between March and October accounts for as much as 85 per cent of annual sales. Analysts said sustained input cost increase and the simultaneous pressure to maintain maximum retail price is putting added strain on these companies to maintain targets, and the next three months would be crucial in determining whether this would be a summer of content.

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