Indeed this is the first time in close to two years that the consumer goods giants are ramping up production across the board
The early onset of warm weather across most of India may signal tough times for citizens but bodes happy tidings for the fast moving consumer goods (FMCG) companies. Several of these enterprises have ramped up production anticipating a demand spike for what they describe as summer products and includes refrigeration equipment, soft drinks and such.
In fact, market analysts claim that these summer products business had witnessed lower than anticipated growth over the past 18 months with production remaining stable at best. Now, it seems these companies are pushing the envelope in anticipation of larger demand as India braces for a sustained hot spell.
Capacity doubled but is that enough?
Some manufacturers have actually doubled their capacity around specific summer products such as their cooling lines of air conditioners, refrigerators, coolers and freezers after having initially upped it once by 60% earlier this year. Most of northern and western India are already seeing summer temperatures, says an executive with a Mumbai-based FMCG company.
Meanwhile, a report published in the ET quotes Godrej Appliances business head Kamal Nandi to state that both the FMCG companies and those manufacturing beer are sprucing up their manufacturing line and hitting the full-steam ahead levers. Plans are running at full capacity and utilization of shifts are at full throttle too with sales also increasing by 20% in March.
In fact, the report said United Breweries was pumping in an additional Rs.300 to Rs.400 crore from April to prepare for the summer season, which accounts for more than two-fifth of the company’s beer sales each year. In addition, the company is also getting contract brewers to share excess capacity to make the most of the expected demand spike.
Heat wave for some; profits for the others
With the Met Office predicting a harsh summer between March and May this year, most of these companies are hoping to get their production capacities at peak in order to meet the demand over the next two months. The weatherman said India recorded its highest average maximum temperatures during February since 1901.
Most consumer goods manufacturers have reported higher sales during February as demand for these summer products grew rather early this season. While the hot weather may spell bad news for the people, the FMCG industry is perceiving it as a good time to recover from the demand slump they experienced since the Diwali of 2021, when many cut down production.
There have been multiple reports from bottled drink manufacturers of creating higher inventories in anticipation of the demand. In recent times both PepsiCo and Coca-Cola have highlighted the increase in demand from India and the number of refrigeration lines being sought from the country by suppliers.
Another area of high demand is in the suppliers of cold chains across the country. This time the demand has also spiked from the smaller cities as against most years when it goes up astronomically in the big cities only. Looks like frozen foods are becoming popular across smaller cities and towns too.