Shortage of supply: increase in pent-up demand: consumer and catering companies see summer supplies drying up

Consumers are facing an unprecedented shortage of summer products – from soft drinks to beer, ice cream and even air conditioners – amid rising demand, resumption of travel, holidays , offices, schools and restaurants, and an intense heat wave over much of the country.

Executives said companies had underestimated the surge in pent-up demand after the pandemic-induced two-year gap and were caught off guard as demand outstripped supply. For categories such as air conditioners, the shortfall is also due to supply disruptions.

“Demand is exceeding supply this summer due to pent-up demand and the return of mobility and travel,” said Ravi Jaipuria, president of

, PepsiCo’s largest bottler in South Asia. “We are adding manufacturing capabilities but it takes time and the new capabilities can only be operational next season.”

Coca-Cola said in its March quarter earnings release that its India unit added an additional 500 million transactions, up nearly 20% year-on-year in the quarter. An executive from one of Coca-Cola’s franchise bottling companies said: “We are operating at 100% capacity and still not able to meet real-time demand.”

A scorching summer and a rapid increase in dining out at restaurants and bars drove beer sales up month-on-month in demand, but a variety of factors stifled supply.

Beer Cafe founder Rahul Singh said the early start to summer has led to increased demand. “No significant investment has been made in terms of improving brewer capacity due to the pandemic, and there is a brewing schedule that cannot be reduced,” he said.

“Volumes above 2019 levels”

“On top of that, two important states of Delhi and Haryana have changed their excise year from April to June which means there is even more disruption as the additional annual label approval process delays bringing alcoholic beverage products to market,” Singh mentioned.

West Bengal recently started rationing beer at retail outlets, with demand doubling over the past summer.

Most states have seen a recovery in volume and are looking to surpass pre-pandemic levels, said

Pardal, CEO of , India’s largest brewer.

“Due to peak summer demand, few states have also introduced local regulations on the movement of goods between states, which may impact meeting demand in some markets,” Pardal said. “We are well prepared to serve the market.”

Beer maker Kingfisher posted record volume growth in the March quarter, despite shrinking gross margins due to inflationary pressures.

The Gujarat Cooperative Milk Marketing Federation (GCMMF), the maker of Amul dairy products, has been unable to meet demand for ice cream this season despite the return of carts to city streets, the chief executive says RS Sodhi.

“Supply constraints are especially true for impulsive and out-of-home packs,” he said. “Demand is at levels 40% higher than 2019.”

Sold out popular models

Appliance makers said there was a shortage of popular AC models such as one-tonne and 5-star units as well as chest freezers, with the Covid lockdown in China causing component squeeze which forced companies to reduce their production capacity by 20 to 30% despite everything. period of high demand, with sales up more than 50% this summer compared to 2019.

“Shortage of inventory due to China’s lockdown has created supply issues with several high-selling AC models nearly sold out,” said Kamal Nandi, head of Godrej Appliances business. “AC production fell to 70% despite continued demand in the north due to component supply issues.”

LG Electronics is unable to meet high demand despite 100% production, said Deepak Bansal, Indian vice president, home appliances and AC. “There have been unprecedented sales for both the heatwave and pent-up demand from the past two summers lost due to shutdowns,” he said.

Stock filling

Retailers said some in-demand products have been out of stock for about three weeks now.

“We have limited supplies and stocks are not replenished as quickly in line with peak demand,” said a senior executive at a major supermarket chain.

Those looking for diet drinks have often been frustrated. “Stocks of low-sugar soft drinks, for example, are also not sufficient,” he said.

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