Manufacturers are expanding their distribution channels for refrigerators, making major inroads into the rural market, and creating environment-friendly products to enhance their respective market shares as well as increase the market size.
Representing the most convenient and safe means to preserve food, a refrigerator is the most popular household appliance. It is one of the first appliances to be bought once an electricity connection becomes available. The number of refrigerators in developing and emerging economies is projected to double to just under 2 billion in the next 15 years.
Indian Market Dynamics
The Indian refrigerators market in 2017-18 is estimated at 11.95 lakh units, valued at `21,000 crore. LG and Samsung have a combined market share of 55 percent. Whirlpool and Godrej are the other aggressive brands. Videocon did not fare well this year. Other popular brands include Haier, Hitachi, Kelvinator, Gem, and Intex. Bosch has recently announced entry in this segment.
The refrigerators market in India is a highly underpenetrated one. Currently only 27 percent of households in India own a refrigerator, as compared to 51 percent for color televisions. The refrigerators segment is expected to post a 10 percent CAGR in volume terms over the next 5 years. Rising household income, improving living standards, rapid urbanization, increasing number of nuclear families, a large untapped market and environmental changes are the key drivers. Advanced features, energy star rating, warranty, space, price points, easy cleaning functionality, and styling are the major factors considered while making a purchase.
The demand for refrigerators in India is mainly from urban areas; with the southern region contributing maximum to demand, and the eastern region has the lowest market share. Emerging rural areas have a great potential, as the penetration rate is still very low when compared to other emerging markets. People prefer to consume fresh food, and resist from refrigerating it and consuming it later. Whilst this is changing in urban areas, rural areas do not yet see refrigeration appliances as a necessity.
Competitive pricing has a strong influence on the relative positioning of brands. Consumers in India are price-sensitive and opt for economical products. Players are fine-tuning their prices and launching new models with advanced features and new designs. They are expanding their distribution channels, making major inroads into the rural market and improving their reach in tier-II and tier-III cities. New models with environment-friendly and flexible features and innovative designs are being regularly launched. Some of the latest features introduced include increased cooling retention, and an increase in storage space in models with in-the-door ice and water dispensers.
The savvy retailers are launching stock-keeping units (SKU) offering consumers a wide range of options at lower price points, while the international brands are importing top-of-the-line models for the discerning customer. Easy finance options are offered. This is expected to make owning a refrigerator more affordable and convenient. Sales through large organized retailers account for 40–45 percent of total sales, while mom-and-pop (typically family-owned, not franchised and open for business from a single location) stores account for 55–58 percent
sales. Refrigerator sales through online retailers are low currently. However, e-commerce channels have increased consumer access to many brands in India, both indigenous and international, thereby making e-commerce an important channel for higher brand reach and visibility.
The household refrigerators and freezers market share is poised to reach USD 78.22 billion by 2025. Shifting trends toward the energy efficient as well as eco-friendly products will drive the household market over the coming 8 years. Gradually changing lifestyle in the rural areas along with increasing disposable income of the consumers will build a lucrative roadmap for household refrigerators and freezers industry trends.
The latest energy efficiency standard demands the new models of refrigerators and freezers to cut their energy consumption by 20–25 percent, which is pushing the manufacturers to spend heavily in R&D to develop the high-efficiency refrigerators meeting the energy standards. The active partaking of the manufacturers along with the high demand from the consumers for the advanced refrigerators will enhance the household refrigerators and freezers industry’s outlook over the coming timeframe. The implementation of the new generation features such as smartphone connectivity and automated temperature adjustability in the refrigerators and freezers will surge the product demand. Additionally, compressor-less refrigerators and freezers are one of the notable technological innovations, which will become a significant growth factor. An average refrigerator consumes 13.7 percent of the home energy which is the second highest usage rate after air conditioners. Newly launched products having energy star label are being incorporated at a rapid rate worldwide.
Top-mounted freezer, French door bottom freezer, bottom-mounted, and side-by-side are the prominent products of the household market. French door bottom freezers lead the household refrigerators and freezers product landscape. Side-by-side the household refrigerators and freezers market will register a CAGR of 4 percent over the coming 8 years, driven by the rising consumption of frozen and fast foods across the urban regions. Moreover, enhanced lifestyle, easy financing options, and incorporation of maintenance free compressors will boost the demand for side-by-side refrigerators.
Geographically, the United States of America will grow noticeably over the coming timeframe, owing to the growing demand for eco-friendly products. Europe’s household refrigerators and freezers industry is predicted to exhibit a lucrative growth rate too. The attributing factors toward the market growth are surging need of energy efficient products and rising disposable income. The market players are focusing on technological developments to enhance the product portfolio in terms of better efficiency, as it is a major value addition for the consumers leveraging a decent energy and cost saving for them.
Smart Refrigerators – A Market in Infancy
Life with Alexa, Siri, and Google Assistant always listening seems too futuristic and strange for many people. Companies lead the way in developing fully connected wi-fi home systems centered on the refrigerator. Smart or internet refrigerators are programmed to sense the type of products being stored inside it and keep a track of the stock through barcode or RFID scanning. The refrigerator is often equipped to determine itself whenever a food item needs to be replenished. A smart refrigerator offers remote monitoring of the appliance and in case of trouble it sends an instant update to service persons immediately.
These refrigerators allow creating a shopping list and ordering items after installing suitable applications, can be monitored from any remote location, and controlled when there is an unauthorized access. It has an LCD panel for information display, and interaction. Users can monitor the contents of their refrigerator remotely using a connected phone or device, see the contents on a screen built into the door, view recipes on-screen based on ingredients they have on hand (even by ingredient expiration date), and watch their favorite shows streamed from a connected smart TV or stream music to the built-in speakers.
The smart refrigerators market is expected to reach over USD 2 billion by 2023 and expand at a CAGR of 15.5 percent over the next 5 years. Disruptive technology and increasing customer personalization and customization are expected to drive the market. Technological advancement in the electronics and communication sector and the growing need for energy efficiency are projected to impel the growth. Additionally, purchasing power and improving lifestyles would also foster the demand for smart refrigerators, globally. Quick developments in information technology infrastructure and topology of wireless communication are the major factors lifting the integration of smart refrigerators with mobile devices such as laptops, smartphones, and tablets. Wireless communication plays a vital role in monitoring and controlling refrigerators from remote locations, to reduce electricity consumption.
However, the higher cost of smart refrigerators is likely to dampen global growth. Lack of awareness related to benefits as well as proper utilization of technologies are major factors which are expected to hamper the growth of the market in the next few years.
By region, the North American market is presently dominating in the smart refrigerators market with 35 percent of the market share, owing to favorable market conditions and adequate awareness among the customers regarding smart refrigerators. Europe is the second leading region, where consumer behavior varies across the continent, with Southern Europe being sensitive to price, while the west and the north focus more on design and added services of a product. Asia-Pacific excluding Japan is expected to have a robust growth, owing to rise in the demand of smart refrigerators in China and India. Rising personal disposable income along with increasing purchasing power of people in these countries is anticipated to expand the growth of the market in the Asia-Pacific region. Japan is also expected to possess maximum potential. The markets in Latin America, Middle East, and Africa are also projected to witness positive growth.
Refrigerator and freezer manufacturers continue to improve on a critical piece of hardware that is ubiquitous in nearly every American home. Water dispensers have been a widespread built-in option on refrigerator doors for decades, but the desire of manufacturers to create new and exciting ways to utilize this feature has yet to freeze over. Beginning with a simple water line connected to the kitchen tap, the refrigerator water dispenser has taken on an identity of its own in recent years.
Some refrigerators now include an optional feature making them capable of dispensing a specific amount of water – ice cold or piping hot. Taking this feature a step further, some models have the option of detecting if a pitcher or glass is nearly full and stopping automatically, or making use of a built-in pod coffeemaker – allowing the user to combine this feature with wi-fi connectivity and brew coffee or tea from the comfort of a warm bed. Innovations like these prod consumers to replace their appliances more frequently and to buy more expensive models featuring all the bells and whistles.
Scope of Energy Efficiency
Smart, economic, and friendly are the characteristics of the most virtuous refrigerators: it is no longer sufficient to conserve at best but it is necessary to consume little energy, to be silent, and to keep food properties unchanged. The introduction on the energy label has been the essential step to inform consumers about the energy used by household appliances, to allow their more rational use, and to favor energy saving and the reduction of atmospheric pollution.
Most refrigerators use polyurethane (PU) foam insulation (which contains a gas), and the vast majority use a compressor and refrigerant gas to create cooling. A very small percentage of refrigerators use absorption technology to create the cooling effect; these are much less energy-efficient but run silently and so are often used, for example, as hotel room refrigerators. Significant scope remains for further improvement of refrigerator efficiency both in developed and in developing countries. Improvements can be achieved through many separate measures, but the main are:
Insulation. The most important energy-saving technology is improved insulation. 60 percent of the heat leakage into a refrigerator comes in through the walls and door.
Compressors. Compressors with much improved efficiency compared with those of 10 years ago are available globally, with little cost impact.
Controls. Improved controls, especially for appliances with two or more compartments and for variable speed drive (invertor) controls for compressors.
Many other aspects can contribute to efficiency. Improved door gaskets, reduced heat transfer at the edge of panels (which account for nearly 30 percent of heat transfer), better fans and slightly larger heat exchangers, better and thicker insulation, variable speed drives for compressors, and the choice of refrigerant are examples. Vacuum insulated panel (VIP) technology appears in some premium products. Such panels offer effective insulation at less than one-fifth the thickness of PU foam. Use of VIP is limited because it is significantly more expensive than PU foams. Most of these technologies are available to developing country markets in imported refrigerators and, in some economies, as locally manufactured options.
Ozone-damaging refrigerants were successfully phased out of manufacture in all economies in 2008. The F-gases replacing them had zero ODP, but often had high GWP. The use of high GWP refrigerants in refrigerators is forbidden in some major economies such as the EU. A transition to alternative refrigerants, such as HCs, with both zero ODP and GWP as low as is practicable, is complete in European countries and underway in China as well as some other industrialized countries. Authoritative advice and assistance supporting developing countries in this transition are available. The focus is on dealing responsibly with the risks of managing the bulk quantities of flammable HC refrigerants in factories.
Foam Blowing Agents
The insulating foam for the majority of refrigerators is made by aerating a plastic PU resin with a gas. PU itself is harmless in terms of ozone depletion and climate change, but the gas used for foaming can be problematic if it has a high GWP and/or any ODP. Technologies for recovering foam-blowing agents when recycling appliances are important. Crushing foam in a sealed chamber and collecting the gas is an example of such a technology. In developing countries, HCFCs (which are ODS) are still used in insulation foams. This can continue up until 2030. The majority of new refrigerators use cyclopentane, which is a HC gas with GWP of 11, and is of little environmental or waste disposal concern, thus making its disposal simpler compared to when F-gases are present. Care is needed for the use of HCs in manufacturing foam because of their flammability.
Refrigerators are one of the first appliances sought by households as electricity becomes available to them. Ownership levels rise almost as fast as the electrical grid connections. The population of refrigerators across India, Brazil, and Indonesia is due to double from 1 billion to nearly 2 billion units by 2030. The Indian government’s plan to electrify 100 percent of the country will provide the requisite impetus, with most of the additional refrigerators going into homes that have never had a refrigerator.