Summer sales catch a cold, brands cut production

Time of India

20-05-2025

Companies are cutting production of summer consumer products such as air-conditioners, beverages and talcum powders by up to 25% to adjust inventory following tepid sales in April and the first fortnight of May.
This marks an unexpected reversal of fortunes for these companies who were preparing for a robust summer after the India Meteorological Department's forecast of intense heatwaves. Temperatures in most parts of the country are still expected to rise sharply and there have also been instances of intermittent rains, while India Meteorological Department has now forecasted early arrival of monsoon this year.
Company executives noted that production cuts are required due to large unsold stocks as most companies and retailers had bought excess stock by March following IMD's early forecast, and to prepare themselves after the 2024 experience, where they were caught unawares when heatwaves led to record demand.
"We have cut production of ACs by about 20% to reduce the overall stock in the market," said Kamal Nandi, head of appliance business at Godrej Enterprises.
He said the South, East and West reported 25-30% drop in sales in April and May compared to last year. "These markets account for 60% of overall AC sales and hence the 10% growth in North is not sufficient to compensate for the loss. Overall sales in April-May have declined by 10-15% over last year," he said.
A senior executive at a leading franchise bottler of a multinational beverage company said production lines-which run in double shifts in May and June-have been staggered to a single shift across most regions in the South and East. "Beverage demand has been particularly impacted in out-of-home channels (kirana stores), since soft drinks remain a largely impulse purchase," the person said.
To be sure, there was an early pick up of summer products this February and March due to a weak winter but sales during the peak June quarter is crucial for the companies. The three months through June contributes 40-50% of annual sales for summer-centric products.
Last year's high growth of 40-60% of summer products due to an intense nationwide heatwave further impacted growth rates due to a huge base effect.
An executive at an aerated soft drink maker said, "Each day of rain in the April-May-June quarter translates to some loss of sales for the category. This drastic change in weather has been least expected and we are looking at a subdued quarter."
AC maker
Blue Star
managing director B Thiagarajan told analysts earlier this month that while the industry was expecting 20-25% growth this summer, in April, the industry sales declined by 15-20%. He said the inventory can be quickly corrected by adjusting production.
"First problem was in March itself when material was lifted (by trade) in significant quantities, which resulted in more than four million units in the market. In my view, it was anywhere between 1.5 to 2 million more than what should have been there. Then there were sporadic rains across the country," Thiagarajan said.
Companies making summer-centric daily-need products said they are curtailing inventories at retail stores and mapping offtake on a real-time basis to hedge risks of excess inventories.
Emami
, which makes Dermicool and Golden Beauty Talc, said in a management commentary late last week that for 1QFY26, summer was "slightly impacted by sudden rainfalls, and that Southern and Eastern regions were more impacted." The company called out the impact particularly on its talcum powder offtake in April. The absence of an intense heatwave in April and May in many states is in complete contrast to earlier expectations which had led summer-focused companies to accelerate stocking as well as advertising.