Air coolers market is still unpenetrated

Air coolers market is still unpenetrated

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Air conditioning imposes particular strains on the electricity grid, beyond the additional demand for power. It tends to increase load on the system at peak times, because hot weather means households all want to run their units at the same time. It also creates particular problems for solar power, when temperatures stay warm and there is a demand for air-conditioning even after the sun has set

According to some leading dealers in consumer durable sector, there is huge potential in domestic air coolers market which has mostly remained unpenetrated so far. According to some experts, nearly 60% of the households in the country can go far air coolers. In other words, potential market size for air coolers is about 14 crore households in India. Against this only 2.7 crore households own an air cooler in India. In other words, this industry can give 10-15% CAGR in the coming years as the air cooler industry is more driven by the severity of summers rather than the prevailing economic cycle.

Air cooler industry is dominated by unorganised sector. Current industry volumes are in the region of 8m units pa, with a market size of around Rs3500 crore. Out of this, the organised market is estimated to be Rs1400 crore, with volumes of 1.6-2m units pa. As in any other market, price is the main differentiator between organised and unorganised sector. While price of air coolers manufactured by organised players ranges over Rs 4,000-12,000, unorganised players have offerings even at the Rs 2,500-3,000 level.

In the last three years, organised players have increased their volume market share, from 10-15% to 20-25%. In value terms, their share is even more at 35-40%. This shift in market share is partly due to introduction of GST and partly due to increasing quality consciousness among Indian consumers.

According to some players in organised sector competing with local unorganised players in metal-body coolers is not a feasible business proposition as unorganised players use low-quality, sub-standard raw materials.

Some experts are of the opinion that air coolers can be advantageously used in areas with dry climate where humidity is less. Air coolers have the advantage of lesser initial cost (nearly 80% less than AC cost) and also consume 1/5th of electricity as compared to ACs. Its also a Green product as its operation doesn’t involve gas emissions and it doesn’t need special insulations. However, air coolers are not suited to coastal areas and also not advisable where outside air is highly polluted.