The Hindu Business Line : Refrigerator sector looks at double-digit growth

THE last few years have seen stiff competition for leadership in the Indian refrigerator market, especially among Whirlpool, Electrolux Kelvinator Ltd (EKL), Godrej, LG and Samsung. After experiencing marginal growth for some years now, the segment is looking at a double-digit growth this year.

"The segment saw a growth of 7-8 per cent in 2003 and this year the industry is hopeful of clocking a growth of 12-15 per cent," a Consumer Electronics and TV Manufacturers Association (CETMA) official said.

The market size, as per CETMA, is estimated at 4.1 million units in 2004.

Compared to the installed manufacturing capacity of the players at approximately seven million units per annum, the refrigerator market in India is still small.

This has led to too many major manufacturers operating at lower capacity, resulting in significantly higher overheads, according to ICRA's Sector Analysis, April 2004. The total industry size during 2003 was 3.4 million units, consisting of 2.8 million direct cool (DC) units and 0.6 million frost-free (FF) units, as per ICRA.

The past three years has seen a partial demand shift towards frost-free units.

"Though the FF category has seen a growth, almost 80 per cent of the sales in India is from the DC category," a CETMA official told Business Line.

In the FF segment, the major players are Whirlpool, LG, Godrej, BPL and Samsung. A look at the overall market share of the major players by ICRA reveals that Godrej lost its leadership position in 1998-99 to Whirlpool. Meanwhile, Whirlpool's market share has declined from 27.3 per cent in 2000 calendar year to 26.7 per cent in the 2003-04. After Whirlpool and Godrej, the brands owned by EKL occupy the third position.

However, EKL's share has also seen a dip from 23.6 per cent in 1999 calendar year to 16.3 per cent in 2003-04.

In the past few years, the refrigerators market has seen the influx of Korean companies, who have managed to capture a sizeable portion of the market from established players using innovative product lines and aggressive promotion campaigns.

Among the Korean players, while the market share of LG increased to 14.5 per cent in 2003-04 (from 5.4 per cent in the 1999 calendar year), the share of Samsung increased to 5.9 per cent (from 3.3 per cent) over the same period.

LG and Samsung have increased their market share at the cost of older players like BPL and Videocon in the DC category.

The erstwhile market leader in FF segment, BPL, and one of the older players in the category, Godrej, have witnessed a decline in share in the last three years.

LG is now the leader in the FF segment, having displaced Whirlpool in 2003-04.

Its market share increased to 31.7 per cent from 20 per cent the previous fiscal. Whirlpool is the second largest player with a share of 25.7 per cent during 2003-04.

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