Isn’t seeking comfort considered a universal pursuit? When the scorching summer sun approaches, a glass of cool water and turning on the air conditioner (AC) can probably give the ultimate pleasure. Just like other things in life, this pleasure seems to come at a price. Yet, the quintessential Indian consumers whose spending capacity has increased over the years, are now more than ready to pay for such pleasure. This in turn has opened up opportunities for home appliance companies like Blue Star. “We aim to capture a 20% increase in sales of room air conditioner business by the end of FY25. With this, we will exceed the expected market growth of 15%. Our strategy remains flexible and responsive to market conditions. The ongoing summer season has been favourable, and we are optimistic about maintaining this momentum. If the market grows by ‘X’, our goal is to achieve growth of ‘X’ plus five. We are encouraged by the current market trends and aim to capitalise on this positive momentum moving forward,” Girish Hingorani, head of marketing, Blue Star, said. The company claims to sell ACs under three different segments including commercial, corporate, and residential. According to Hingorani, around home appliances segment accounts for one-third of the company’s revenue that is, Rs 2,659.1067 crore. The company claimed to have sold 5,000 units of smart ACs in the last fiscal and expects to sell 100,000 units by the end of FY25. It further claimed to have sold a total of 1.1 million units of ACs in FY24. The company aims to capture a market share of 15% by FY26 in the room air conditioners segment and currently, it has a 13.75% market share.
The company’s revenue from operations rose 31.55% to Rs 7,977.32 crore in FY23 from Rs 6,064.08 crore in FY22 as per its officially listed data on National Stock Exchange (NSE). The company’s profit after tax (PAT) widened 1.4 times to Rs 400.69 crore in FY23 from Rs 168 crore in FY22. The data further revealed that it has remained profitable for the last three fiscals.
A report from TechSci Research valued the Indian AC market at $4.4 billion in 2023 and anticipated robust growth with a CAGR of 6.3% through 2029.
Chill vibes for every tribe!
While ACs have largely been a metro phenomenon, it claimed that first-time buyers are its largest growing base of consumers. These buyers belong to tier-2,3,4 and smaller cities. To capitalise on this market, Blue Star has launched a varied range of products which start at Rs 29,999 being the most affordable range and going up to as much as Rs 70,000 and above. “First-time buyers tend to be very price-sensitive which is why the company has focused on the affordability aspect. Also, many consumers perceive us as a premium brand because they’ve seen us in malls and multiplexes, assuming our products are unaffordable. Our strategy is to focus on affordability and accessibility, launching products that are price-sensitive without compromising on cooling performance,” he explained.
The company claims to sell its products via its distribution network which includes e-commerce, offline stores – multi-brand retail outlets besides its own 10,000 company retail outlets. “We plan to add 15,000 outlets by the end of this fiscal,” he noted.
Mindspace = Walletspace
Interestingly, the home appliances market which has a deluge of players including the likes of Voltas, Samsung, LG, and advertising plays a crucial role, for brands for a high recall purpose. “Our brand ambassador is Virat Kohli, primarily due to his mass appeal and being the highest Instagram follower in the country. Signing with him helps create mass appeal among this target group,” Hingorani added.
The company claims to have spent Rs 35 crore last fiscal. It further stated that in FY25 it plans to increase its ad spend by 71.4% to Rs 60 crore. Of this, Rs 40 crore will be spent during the peak season of sales which is summer besides the ongoing Indian Premier League (IPL) and the remaining Rs 20 crore will be spent on advertising throughout the year. “We heavily invest in advertising during the IPL, which is the largest television viewership property and coincides with our summer season launch. We have been advertising on this property since the very first season, that is 2008. Given that this is an election year, we plan to be present on various Hindi news channels, targeting the large Hindi-speaking segment to expand our penetration and customer base,” Hingorani said.
In terms of ad spending, the company claimed to have allocated about 40% which is Rs 24 crore of its total advertising budget to digital and e-commerce channels – Amazon and Flipkart. “We use Instagram, Google Display Networks channels, Amazon and Flipkart for performance marketing, platforms such as YouTube, and Facebook are used to enhance recall for its television ads,” he explained.
It further plans to advertise on key out-of-home (OOH) properties across various cities, besides print. It also stated that by the third week of April, a series of digital display ads will be rolled out via banners on news websites.