Drinks sales up sharply

With the country in the grip of a severe heat wave, sales of carbonated soft drinks, packaged water, beer and ice-creams have increased sharply.

Sales of soft drinks in May grew by over 50 per from the month last year, and sales of packaged water increased 45 per cent.

Ice-cream figures were up 30 per cent. Beer companies are also reporting their highest monthly sales in May.

The price cuts announced by soft-drink companies could not have come at a more opportune time. The Chhota Coke (Rs 5 for 200 ml) strategy of Coca-Cola saw a spurt in demand in villages and cities as well as increased penetration.

It forced rival Pepsi to bring down prices of its 300 ml packs. Volumes in rural markets grew as much as 100 per cent, and overall figures stood at 45 per cent.

"Several states have touched 10 million cases in the month of May alone. This has never happened before," Shashi K Kalathil, executive director (marketing) of Pepsi Foods, said.

Despite the controversy over the presence of pesticides in packaged water, leading brands saw brisk business in May. Companies reported up to 80 per cent growth in sales.

Sanjiv Gupta, deputy president of Coca-Cola India, said: "Our packaged water facilities are running at full capacity."

The firm B M Vyas, managing director of Gujarat Co-operative Milk and Marketing Federation, which owns the Amul brand of ice-creams, said growth in the segment was around 30 per cent in the past month.

Beer firms refused to divulge exact growth rates. Vinod Giri, sales and marketing head of SABMiller India, said the month of May recorded the highest growth rates in most regions.

However, sales of air-conditioners and refrigerators did not increase from the May 2002 figures.

According to an industry source, sales of room air-conditioners stood at 115,000 units in May, against 125,000 units in the month last year.

An LG executive said sales might have grown barely 5 per cent in May. "The month of May usually registers a 30-35 per cent growth every year. If last month's sales are any indication, we may have to end the year with a sales growth of around 10 per cent against last year's 25 per cent," Salil Kapoor, head of air-conditioner sales at LG Electronics India, said.

The months of April and May together contribute around 30 per cent of annual refrigerator sales.

"However, total industry sales in the two months stood at 450,000 units each this year, which is similar to the volumes registered in the two months last year," Rajeev Karwal, managing director and CEO of Electrolux Kelvinator India, pointed out.

The decline in volume growth of air-conditioners and refrigerators comes at a time when competition and tax advantages have prompted manufacturers to reduce prices. It was expected that the price cuts would boost demand.