Products such as air conditioners, coolers, and beverages could see particularly strong sales because of above-normal temperatures, providing relief for consumer-focused companies amid the ongoing slowdown in India’s urban consumption.
“In the past, many companies, across (consumer-focused) categories, have gained from a good summer,” said Anand Ramanathan, partner and consumer industry leader at Deloitte India.
Kantar Worldpanel data shows that fast-moving consumer goods (FMCG) such as talcum powder, ready-to-make beverages, and bottled soft drinks witness significantly higher household penetration during March-July than in other months. That holds true also for big-ticket white goods such as refrigerators and air conditioners.
“The consumer durables segment shows particular promise, with a clear trend of premiumization emerging as consumers move beyond entry-level products, thanks to accessible financing options like EMI plans,” Ramanathan said.
Market intelligence firm Bizom’s analysis of sales of cooling products such as coolers and fans over the previous three years shows a 40-60% volume increase in March relative to February.
Summer lifeline
As India braces for a hotter-than-usual summer, consumer goods companies could see opportunity in the rising mercury levels following a string of subdued quarters. FMCG companies have recorded single-digit quarterly net sales growth for nearly two years, and outperformed the overall universe of listed companies only two times out of eight, Mint’s analysis shows.
“Historically, Q4 and Q1 (January-June) have been the peak season for summer products, accounting for over 70% of annual sales, a trend that has remained consistent,” said Vijayaraghavan Swaminathan, head of equity research at Avendus Spark Institutional Equities. “While firms have made efforts to extend their presence beyond the peak summer months, brand salience tends to weaken after June.”
Swaminathan added in addition to the intensity of summers, the season’s timing and duration are also critical for efficient inventory management across the supply chain.
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Consumer durables companies that sell items such as air conditioners, refrigerators, coolers, and fans have already performed well on sales growth in recent quarters, Capitaline data show.
Additionally, price dynamics will remain a key challenge during this significant sales period.
“Discounts and EMI options are effective tactics to attract price-sensitive consumers during summer, while e-commerce platforms often feature older inventory at reduced prices,” said Madan Sabnavis, chief economist at Bank of Baroda. “FMCG companies face particular challenges as they compete with non-premium brands that offer products at lower price points.”
Rural resilience
Rural India faces a greater challenge during intense summers as this market’s reliance on agriculture makes it particularly vulnerable to the impact of heatwaves.
This is concerning for India’s overall consumption narrative as rural regions, which account for about 30% of overall consumption, have been doing the heavylifting for the economy amid an urban slowdown.
“The rural sector would witness severe backlash in spending as they are much more vulnerable to heat waves in terms of livelihoods and crop yields,” said Debopam Chaudhuri, chief economist at Piramal Group. “Northwestern states, which are major rural economy spenders, would feel the majority of the brunt from heatwaves because rabi crop is largely wheat, and wheat is largely northwest.” Rabi crop are sown during winter and harvested in spring.
While there are concerns about the potential impact of above-normal summer temperatures hurting rural consumption, experts say the intensity and duration of the heatwaves will be a determining factor.
“This year, we are expecting only a moderate impact of heat on the wheat side, which is the most critical crop in the rabi season,” said Pushan Sharma, director of research at Crisil Intelligence. “In case there’s no severe heat wave, rural consumption should remain strong going forward. This trend is also reflected in agricultural growth, which has been stronger than manufacturing GDP growth.”
Sharma added that reservoir levels across India are good thanks to surplus rainfall last year, in another sign of optimism for wheat production. “The key factor to monitor will be the number of heatwave days and its severity over the next three weeks (as wheat harvest begins),” he said.
