The Hindu Business Line : Study says fridge market may grow 15 pc next year

THE market for refrigerators, which has been struggling with an average growth of around 5 per cent since 1999, is likely to get a boost in 2004-2005 with projected sales of 4.1 - 4.2 million units, from the expected 3.65 million units in 2003-2004, according to a forecast made by Francis Kanoi Marketing Research.

The study by the research agency on the market for durables in India, says that the refrigerators segment missed a substantial part of the impact of the economic rebound in 2003-2004. This was because the rebound, consequent to a good monsoon rains, happened in the third quarter of the financial year and the peak sales months for refrigerators, especially in the North, is during the summer months. In fact, the study emphasises, refrigerators suffered the brunt of the impact of widespread drought during the previous year, in the peak sales months of '03-04. Only the robust sales during the festival season led to the overall 7 per cent growth during the year.

The study covered sample sizes ranging from two lakh to 3.5 lakh households and tracks the purchase of durables among households since 1988.

The forecast uses highly evolved models to track, over the years, the relationship between customer purchases and the market dynamics and the macro-economic environment.

The current 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, forecasts the study. The last time a 15 per cent growth rate was achieved by the refrigerators field was in 1995-96.

The study says that a two-digit growth in sales in the next financial year will diffuse considerably the pressure on the market leader, Whirlpool, to withstand 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 Mr Francis Xavier of the research agency.

He says that if the purchases during this period exceed expectations as predicted, then the battle will be postponed as market growth will allow sales targets to be achieved by each company.

Another major development, which will diffuse tension in the market place in '04-05, says the study, is the decision of Electrolux to abruptly discontinue promoting the Kelvinator brand. Kelvinator, promoted as the coolest one, is among the top four refrigerator brands. In an 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, emphasises the study. Dealers, other than those most loyal to Electrolux, will also see this as a major opportunity to increase their sales of other brands and consolidate their own positions with the other companies.

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