Year-Ender 2023- Consumer durable cos betting on 2024 for double-digit growth led by premium, value added products

Year-Ender 2023: Consumer durable cos betting on 2024 for double-digit growth led by premium, value added products

The consumer durable and electronics industry is betting on 2024 to drive a double-digit revenue growth with most of the headwinds, including unseasonal rains in the peak summer months, weak consumer sentiment due to the inflationary environment, and delayed liquidation of non-rated fan inventory, now appearing to be behind. Brands are expecting growth to come from across markets with premium, value added, feature-led products to remain key drivers in 2024. NS Satish, President, Haier Appliance India, said, “In 2024, Haier India is gearing up to introduce more innovatively ground-breaking products spanning across air conditioning, LED TVs, refrigerators, washing machines, water heaters, and kitchen appliances portfolios. We are aiming for a 35 per cent growth for the company in 2024, and our strategic focus will revolve around customer-centricity, unparalleled innovation, and sustainable growth.”

Meanwhile, HDFC Securities said that it believed that the consumer durable companies enjoy GDP multiplier benefits and offer medium to long-term growth opportunities, given (1) resilient housing/home improvement theme, (2) under penetration of most product categories, and (3) product basket diversification opportunities. The easing commodity basket could lead to a return of price-elastic demand and enable better operating performance in FY24, it said.

Ravi Saxena, MD and Founder, Wonderchef, added, “We are confident of a 30 per cent growth in 2024, which will take our brand sales to Rs 700 crore, and we are planning a subsequent growth of 20 per cent in the following year.” In the coming year, the brand is also planning on strengthening its retail presence. “We aim to open 50 exclusive brand outlets by 2025, complemented by an extensive network of 25,000 multi-brand outlets and over 3,500 modern trade outlets. Additionally, our international footprint is expanding across the US, UK, UAE, Saudi Arabia, Bahrain, the Maldives, Mauritius and Australia,” said Ravi Saxena.

Fumiyasu Fujimori, Managing Director, Panasonic Marketing India, PLSIND, said, “Panasonic in India’s total revenue for the financial year 2022-23 (ending March 31st, 2022) increased by 15 per cent compared to last year. We continue to see a rise in demand for value-proposition appliances from both rural and urban markets.”

Stay premium and sustainable

In terms of key growth drivers, the industry leaders and experts opined that premium, feature-led products, with cutting edge technology and sustainability as central themes, will remain key growth drivers in the year 2024. Consumers are also showing an inclination towards products manufactured locally and brands are working towards fulfilling the demands in this ‘competitive’ industry.

Saif Khan, MD & CEO, BSH Home Appliances India, said, “Bosch’s success in India is firmly grounded in three core pillars: innovation, sustainability, and customer-centricity, and we are relentlessly driven to develop cutting-edge technology. Sustainability is deeply woven into our DNA, guiding us towards creating energy-efficient products that minimize environmental impact. While cautiously optimistic about the industry’s projected 7-9 per cent growth in 2024, we are actively strengthening our localization efforts through ‘Make For India’ initiatives. Our goal is aimed at achieving close to 70-75 per cent localization (from 60 per cent currently) by 2025, significantly deepening our presence in the Indian market.”

Consumers, today, are focusing on upgrading to a more premium lifestyle and are looking for products that combine technology, an ultra-modern look and cutting-edge features. Further, concerns about health and hygiene have risen over the past few years, which has given a further boost to manufacturers of products like air purifiers, water purifiers and water heaters, etc. Parag Kulkarni, Senior Vice President – International and President, A. O. Smith India, said, “We are anticipating good growth next year and expect premium products to continue leading demand as consumers seek out products that add value to their lifestyles. The long-term demand and consumption is likely to stay steady because of improving construction activity and strong demand in the housing sector, which we expect to continue in 2024. Looking ahead to 2024, we are feeling very upbeat about what is ahead for our organization.”

Kaleeswaran Arunachalam, CFO, Crompton Greaves Consumer Electricals Ltd, said, “We have embarked on our next phase of growth through Crompton 2.0, transforming the company to deliver higher top line growth and absolute profits growth which will lead to strong total shareholder returns. With Crompton 2.0, we have frontloaded our investments into brand building, innovation and people capabilities and our focus continues to be on manufacturing, supply chain and GTM excellence with digital being an important enabler across the value chain.”

Mahesh Gupta, Chairman, Kent RO Systems Ltd, said, “Anticipating 2024, the consumer durables sector in India is poised for sustained growth, propelled by technological innovations, evolving consumer dynamics, and increased awareness of durable, energy-efficient appliances. Manufacturers are primed to meet dynamic consumer demands, ensuring durable goods align not only with current expectations but also anticipate emerging trends. This exciting era for the industry fuels optimism for positive developments shaping the consumer durables market in India in 2024.”

Further, according to a CRISIL report, the consumer durable sector is expected to to witness a revenue growth of 8-10 per cent this fiscal, cupported by premiumisation and steady growth in urban demand. Operating profitability will also improve this fiscal due to softening of raw material prices, reversing two years of contraction, it said. “Demand for premium appliances is expected to gain traction this fiscal. This will play out in three ways: one, rising demand for appliances with smart technologies that integrate seamlessly with other home appliances; two, up-trading to higher capacity/sizes at limited incremental cost; and three, efficient appliances that lower the operating costs. Appliances such as air conditioners and television (TV) sets will benefit more due to this trend,” said Mohit Makhija, Senior Director, CRISIL Ratings.

Also, demand is expected to be fuelled by a near 67 per cent growth in residential real estate area sold in the top six cities over the past two years, it added.

How did 2023 perform for the consumer durable industry?

While 2024 looks like a promising year for the industry, the segment witnessed consumers returning to normalcy with significant rise in demand for premium appliances such as large-screen LEDs, smart inverter ACs, large-capacity refrigerators, and top-load Washing Machines (WM) to name a few. Value proposition appliances that offer connectivity, convenience, comfort and energy efficiency too continued to grow. “2023 has been a remarkable year for Haier Appliances India. We have achieved a remarkable 30 per cent revenue growth, reaching an overall revenue of Rs 7000 crore,” said NS Satish from Haier Appliance India.

Further, besides festive season adding to the sales and revenue growth, the World Cup and IPL too supported the segment.

Ravi Saxena from Wonderchef, said, “Looking back on 2023, our emphasis on consumer-centric innovation and building reach helped us achieve a record 54 per cent YoY growth in festive brand sales, reaching Rs 290 crore in the 4 festive months. With a robust omnichannel distribution and a portfolio of 400 SKUs across varied price points, we have strategically tapped into tier-II and tier-III cities.”

Fumiyasu Fujimori from Panasonic Marketing India, concluded, “Market sentiments continued to be upbeat during the festive season. Premium appliances were the key driver for growth. For instance, in the case of LEDs for the festive period, there has been a volume growth of around 5 per cent (festive growth as compared to last year). The 55-inch and above 4K LEDs witnessed an upward trajectory and registered a volume growth of 13 per cent during the festive period. Similarly, the AC category registered 15-20 per cent volume growth during the festive period (compared to last year).”