COVID-19 Lockdown : Sale of summer products worst hit; Companies to face ₹30K Cr Loss

Stock-market

KOLKATA: Indian consumers usually buy a bulk of products, like air conditioners, refrigerators, soft drinks and ice creams, during the season of summer, ever year. But this year our country is going through a 40-day nationwide lock-down to curb the spread of coronavirus. Consequentially, the stagnation of all economic activities have led companies to estimate a total wipe-out of the business potential from summer sales, amounting to almost ₹30,000 Crore.

To put things in perspective, sales during summer accounts for almost half of the annual sales of this group of products.

The Consumer Electronic and Appliances Manufacturers Association (CEAMA) has estimated a loss of sales worth around ₹22,000 Crore during the 3-month period between March and May. The Association president Kamal Nandi has said that the bulk of this loss comes from the lack of AC and Refrigerator sales.

Companies have estimated that the organized ice cream is set to loose over ₹2,500 Crore. in case of soft drinks, however, the total loss figures are hovering around ₹5,000 Crore. Companies like PepsiCo and Coca-Cola are facing severe challenges even though industry executives are assuring that the momentum os sales is beginning to pick up because of in-home consumption.

These types of businesses generally reach their peak in sales from Mid-March before plateauing till May. But now companies fear that consumers might not leave their homes even after the lock-down is lifted on May 4th, making these estimates a best case scenario.

RS Sodhi, MD of Amul, India’s largest diary brand, acknowledged the fact that the months from March to May account for over 60% of their annual sales.

Furthermore, he added, “Our ice cream sale is currently down by 85% over same period last year. The season is gone and even if the lockdown is lifted in May, we fear there may be restrictions on movement, which would continue to impact sales.”

However, a spokesperson for Coca-Cola, India’s leading beverages firm, stated that even as the industry is going through unprecedented times, the company is starting to see their sales improve momentum.

Additionally, the spokesperson reassured, “We continue to do our best, in compliance to all regulations and requirements of the Central and State Governments and cater to the hydration needs of consumers. We have also witnessed an improvement in both consumer sentiments and consumption resulting in with improved business momentum from the time the lockdown first began.”

The sales of products from these categories had faster growth rates last year due to the scorching heat during summer. AC Sales grew by 20% YoY, for instance.

Kanwal Jeet Jawa, MD of AC maker Daikin admitted the challenging times, companies are facing in these uncertain times. “If the lockdown is lifted in May, there could be some recovery. But again, rains start in South by mid-May. Right from factories to warehouse and logistics, everything is in a complete mess now,”he said.

The Meteorological Department of India has already forecasted a normal monsoon this year along with a prediction that it will hit Kerala by 1st of June. This has effectively shut out all possibilities of any resurgence in sales, for these product categories, later in this year. Market tracker Nielsen has said that consumers will cut down any discretionary spending this year ever after lockdown is lifted as disposable cash, in consumers’ hands, will be at a all-time low.

LEAVE A REPLY

Please enter your comment!
Please enter your name here