Manufacturers are looking forward to a hot summer, with no surprises in the form of intermittent rains to tide them over the next six months.
There has been a price aggression among brands over the last six months. Diwali saw flat refrigerator sales across almost all segments and the delayed summer added to the pile-up of inventory, forcing companies to drop prices. Plenty of discounts and consumer-promotional schemes are being offered in the market. With increased interest from Tier-III and Tier-IV cities, commodity prices and currency exchange rates being favorable for the time being, the refrigerator makers are looking for better results this year.
2018. The Indian refrigerators market in 2017-18 is estimated at 11.95 lakh units, valued at Rs 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 the maximum to demand, and the eastern region having 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 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 (SKUs), 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 of 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 eight 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.
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 them 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.
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 five 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 and proper utilization of technologies are major factors that 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 for 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.
Scope of energy efficiency
Smart, economical, 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 of 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 uses 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.
Many other aspects can contribute to efficiency. Improved door gaskets, reduced heat transfer at the edge of panels (which accounts 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 too.
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 is underway in China as well as in 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.
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.
Based on market research conducted by TV Veopar Journal in May 2018.