Refrigerators are no longer merely storage devices for food, but are devices that families use together. They are a central kitchen appliance, and will soon allow people to communicate and not only store food but even purchase and manage it.
The domestic refrigerator is a common, if not ubiquitous, household device throughout much of the world. It is one of the first assets, after a television that a typical low-income household acquires as its affordability increases. Take-up of refrigerators in developing countries has been related to urbanization. Arguably, without the domestic refrigerator, the modern chilled food cold chain is not possible. They have grown to become the most essential food-storage technique.
Refrigerators are going through a revolution. They are getting connected with the aim to be a family smart home hub; some could be opened even without touch; number of doors is increasing from two- to three-doors, four-doors, and now six-doors; and adoption of (internal and external) cameras. Although consumers are replacing their single-door conventional refrigerators and buying the latest multiple-featured refrigerators, they still maintain their distinct threshold for how much they are willing to spend. However, manufacturers and retailers continue to communicate the potential monetary savings from the purchase of more advanced and more energy-efficient models.
The Indian refrigerator industry is on the cusp of a strong and sustainable long-term growth trajectory driven by factors such as higher GDP growth, rising disposable income, increased urbanization, improving rural electrification as well as rising affordability, and growing necessity of white goods. Even in the near term, over the next two to four quarters, consumer spending is likely to rise as the negative sentiment of demonetization fades away, while positive drivers such as payout of Seventh Central Pay Commission, moderate inflation, and low interest rate regime stimulate consumer demand. Impending rollout of GST is likely to be another positive trigger owing to lowering of the tax rate on white goods (currently at 25–27 percent for manufacturers across product categories) which will be passed on to consumers.
Retail volume sales within refrigeration appliances grew by 12.5 percent in 2016 to reach 13.5 million units, estimated at Rs.21,000 crores. Compared to 2015, monsoon conditions were better in 2016, thus resulting in an increase in consumer spending in rural India and driving demand for refrigeration appliances. Overall, the market share break-up between DC and FF categories is 75:25 in volume terms and 59:41 in value terms.
LG continues to lead the market with a 34 percent market share in volume terms, with Samsung close behind at 26 percent. Whirlpool and Godrej are neck-to-neck with a 13–14 percent share each. Videocon is also aggressive in this segment.
In 2016-17, while Videocon gained momentum with its top-of-the-line Titanium series of frost-free refrigerators, which are equipped with the world’s coldest freezer, offering temperature as low as –30°C, Haier made a statement with the Product of the Year award for its revolutionary new bottom-mounted refrigerator. LG launched its dual fridge, which is capable of 100 percent faster conversion from freezer to fridge in just 3 hours and also announced its newest technology innovation, the new smart inverter compressor that saves energy up to 48 percent by adjusting the cooling power in response to the amount of food loaded into the refrigerator. Hitachi lived up to its marketing mantra Upgrade for Life, signifying addition of upgraded features in each and every product. Godrej R&D teams continued to dazzle the consumer with differentiated products to the consumers and a promise to introduce more exciting products as the season progresses. Whirlpool gained strength from its Intellifresh technology, Samsung emphasized its Smart Convertible 5-in-1 range and Kelvinator additionally strengthened its position with aggressive presence on Flipkart, Snapdeal, and Amazon India.
The year saw a Rs.115 crore manufacturing plant at Jhajjar, Haryana, to locally produce refrigerators set up by Panasonic. Intex Technologies forayed into the refrigerator segment in August 2016, while Bosch Home Appliances announced its decision to enter the mass cooling segment with its double-door refrigerators range.
The refrigerator market globally has been experiencing sustainable growth in recent years owing to increasing demand for consumer goods, rapid economic growth, increasing demand for refrigerated food products, easy consumer finance, growth in urbanization, and import and export activities in food and beverage sector. The global household refrigerator and freezer market is expected to reach USD 37.6 billion by 2025, according to Grand View Research, Inc. High replacement demand and resulting obsolescence of conventional freezers and refrigeration units is expected to have a positive impact on the high-end product segment growth, in line with adoption of smart technologies. Capabilities of pairing smartphones with refrigerators and the advent of compressor-less products contribute toward the key technological advancements witnessed in the industry. Another factor contributing to the expansion of the refrigerators market is the increase in the import of energy-efficient household refrigerators and freezers in developed economies such as the US, Germany, and the UK. Moreover, manufacturers are achieving growth by expanding their profit margins by cutting production and operation costs. Targeting international markets for sale of these products is considered to be one of the major strategies adopted by manufacturers to improve sales figures and increase their geographic footprint.
Rising demand for higher-capacity frost-free devices has also shown a steeper growth in the past few years. Many established players have shifted their focus toward the higher-end spectrum with the introduction of premium products. The high-end refrigerator segment is anticipated to grow at a CAGR of over 7 percent from 2016 to 2025. The premium high-capacity side-by-side refrigerators are gaining popularity among middle and upper-middle class owing to increasing number of double-income families which prefer more storage space. Side-by-side market share is projected to grow at 4 percent CAGR. Growing demand for technically advanced products with comfortable position for opening and closing doors is also driving industry demand. However, low rural penetration and inadequate infrastructure is hindering the market growth.
North America is leading the household refrigerator market owing to increased manufacturing of energy-efficient household refrigerators in the region. The US plays an important role which cannot be ignored. Any changes from the US might affect the development trend of domestic refrigerators. Europe is expected to account for over 21 percent and 24 percent revenue and volume share respectively by 2025. The growth in the region can be attributed to the increased demand for processed and frozen food. In Eastern Europe, Russia has a high penetration of refrigeration equipment as these products are manufactured in the country under license from foreign companies. Western Europe is one of the key regions characterized by pricing pressures owing to the increased global competition and presence of large brands, retailers, and manufacturers. Moreover, features such as automated temperature adjustability, smartphone connectivity, automated food ordering, and desire for having second refrigerator are also forecast to increase demand. The Middle-East and Africa market is expected to grow at a CAGR of over 7.2 percent from 2016 to 2025. The growth in the regional consumer appliances industry is expected to propel the demand for cooling products. Additionally, the Middle-East offers a base for the regional manufacturing sector.
Asia-Pacific is expected to show significant growth in household refrigerator market owing to the presence of a large number of home appliances manufacturers, coupled with the changing consumer preferences. Refrigeration equipment in the region is anticipated to witness significant growth owing to increasing spending power and advancements in the regional home appliance sector. Production of these devices is growing on a large scale in countries such as China and Taiwan.
Manufacturers have introduced many novel advanced features to their refrigerators to improve temperatures and the storage life and quality of foods. Players are coming up with models that have two separate freezer drawers, with the top one located about waist-high so that consumers do not have to bend down as they do with a bottom freezer. Multiple-door refrigerators outperform the double-door refrigerators in terms of design and comfort. They offer multiple compartments, making it easy for consumers to organize their stuff and push less frequently used food items to lower compartments to avoid bending.
There is a change of consumers’ interest in advanced features. According to a 2016 Mintel survey, 25 percent of respondents would pay more for a refrigerator with technology that keeps food fresher for longer. While 21 percent of respondents would consider paying more for refrigerators with antibacterial linings/coatings, 16–17 percent would pay more for odor-control technology and freshness monitors. Most refrigerator manufacturers offer models of refrigerators with one or more of these advanced features.
Technology efforts are focused on improving the inside equipment structure whereas R&D enables their easy operation. Antibacterial linings, incorporating triclosan, and various forms of silver are usually marketed as beneficial for improving the storage life of food and reducing waste. Air filtration systems to eliminate odors and reduce airborne microorganisms have been introduced by many manufacturers. Some have also introduced blue light light-emitting diodes (LEDs) lighting to the salad drawer of some of their refrigerators. This blue light technology is claimed to allow fruits and vegetables to continue to photosynthesize, thus prolonging storage life and even increasing vitamin C content. Most, if not all, refrigerator manufacturers market refrigerator models that have chill compartments. These compartments are intended specifically for storage of highly perishable foodstuffs.
Previously, capacity and storage efficiency were the main competitive factors with regard to refrigerators. Under the new paradigm – centered on IoT – consumers’ needs for smart refrigerators will grow. Refrigerators are more and more often managed in digital manner, also from a distance, remotely, with sophisticated but also necessarily simple technologies, which allow once more customizing the conservation. Key players are focusing on providing more advanced features to consumers with extensive product portfolios to gain competitive edge. Value-added features, such as touch screen, USB, and Internet connectivity, are gaining importance. The upgraded models of refrigerators are meticulously designed with integrated technologies for enhancing utility of appliance and storage of food in specially controlled conditions. For instance, refrigerators with Wi-Fi-enabled touchscreen and embedded apps for cooking, messaging, and music, such as Epicurious for recipes, and Evernote for note-taking, are supporting additional activities along with food storage. Now almost every refrigerator manufacturer has a model protocol ready with large display. Displays with increasingly cutting-edge functions, automated and pre-set temperature controls, stricter dialogue with all device kinds, from handy smartphones to PC, without forgetting tablets. Selling connected refrigerators would be all about content marketing, where companies want to make the most out of the 22-inch and above display which they are putting on.
Refrigerators will no longer remain merely storage devices for food, but will become devices that families use together. They will become a central kitchen appliance, allowing people to communicate and not only store food but even purchase and manage it.
Energy Efficiency Is Essential
Today refrigerator is a household appliance implying a simpler management but hiding a very complex technology, called to excellent performances and results, always protecting the environment and the aware use of resources.
An average refrigerator uses around 13.7 percent of the home’s energy and is classified to be the largest energy user after an air conditioner, which consumes about 16 percent. The growing energy-consumption regulation in order to meet the energy-conservation standards is enabling vendors to manufacture products in line with the new rules and regulations. This has led the manufacturers to undergo significant changes in their production models to comply with regulatory standards. They have increased the refrigerator size by 20 percent and provided user-friendly technological advancements such as through-the-door-ice, water tap on the door, and more buying options for consumers.
The increasing need to conserve energy is not only escalating the cost of electricity for the consumers, but is also enticing them to invest on technologically advanced refrigerators and freezers that are high on energy efficiency. Several governments have regulations to inform the consumer regarding the energy efficiency of electronic products, such as Energy Star label is quickly incrementing the awareness about advanced products.
Manufacturers are investing in R&D to develop household refrigerators and freezers for continued efficiency improvements. These progressive energy-efficiency standards have translated into huge savings for consumers as manufacturers have responded with new innovations.
Although consumers are replacing their single-door conventional refrigerators and buying the latest multiple-featured refrigerators, they still maintain their distinct threshold for how much they are willing to spend. However, manufacturers and retailers continue to communicate the potential monetary savings from the purchase of more advanced and more energy-efficient models. These progressive energy-efficiency standards have translated into huge savings for consumers. According to the United Nations Environment Program (UNEP), a worldwide shift toward energy-efficient equipment and appliances is expected to reduce global electricity consumption by more than 10 percent and reduce carbon dioxide emissions by approximately 1.25 billion tons per year.
Additionally, advances in cooling technology such as the use of propane as a refrigerant are offering cost-effective and energy-efficient alternative to conventional equipment. The US Environmental Protection Agency has approved the use of isobutene, propane, and R-441A as acceptable refrigerants for replacing the ozone-depleting substances in household refrigerators.
The Advent of Inverter Refrigerators
Inverter technology is a significant leap in achieving energy-efficient and low-noise refrigeration systems with longer compressor life. Higher energy-efficiency standards and government support programs like rebates on electricity bills and retail prices of energy-efficient appliances are driving the inverter-technology refrigerator market. They are preferred ovewr conventional refrigerators because of their superior performance, use of variable motor speed drive, efficient inverter-fed AC motor, and linear and scroll compressors. With frequency conversion technology and choice of suitable compressors, the market for inverter-technology refrigerators will witness massive growth.
Owing to the high costs of inverter refrigerators, manufacturers are adding features such as multi-air-flow cooling and stylish design elements. They are differentiating their products with features like smart connect and smart diagnosis, enabled through NFC and Wi-Fi connectivity. Vendors are introducing a broad range of innovative products in terms of design like double-door refrigerator with frost-free freezer compartment, and door-in-door or multi-door formats for optimized storage. For high-end models of inverter-technology refrigerators, manufacturers are integrating functional features such as water dispensers and time pieces.
With the rising competition and constant revision in existing energy standards, vendors are continuously bringing in innovative products in the market. The competition is expected to intensify with the entry of several new players, price wars, and mergers and acquisitions. To sustain themselves in the intensely competitive scenario, manufacturing enterprises are extending their product range, along with the wide frequency range of compressors.
APAC is the largest market for inverter-technology refrigerators and will occupy around 79 percent of the total market share in 2020. As the inverter technology has been largely standardized for use in refrigerators with capacities ranging from 190 to 600 liter, APAC is the largest market for these refrigerators.
Performances, efficiency, perfect space management, and more man-machine interaction – this is, in short, what characterizes today the big kitchen appliance for excellence, the refrigerator. The refrigerator is a real concentrate of technology and diversified functions, coupled with essential aesthetics and contemporaneous design, implemented with high-tech materials and sophisticated finishes, making it perfectly suitable for all environments. Innovation, energy efficiency, and incentives are the main ingredients of robust growth that is characterizing the domestic refrigerator market and laying encouraging foundation for 2017. Competition in the market has escalated from price war to technology war, with focus of competition shifting toward the medium- to high-end market. In order to make breakthroughs, many manufacturers have devoted a lot of efforts to R&D. Players in the industry are now investing a certain percentage of sales on R&D, and are designing products of different models and functions. They are focusing on product transition owing to favorable component pricing coupled with continuous efficiency in the manufacturing process and are focusing on providing more advanced features to consumers. They are expanding their product portfolio beyond their core competencies by enhancing their product and service offerings in order to strengthen their market position. Industry consolidation, mergers, and acquisitions form a major strategic initiative adopted by the industry players. Fluctuating consumer preferences from traditional to technologically advanced equipment are enabling them to offer ground-breaking cooling equipment. Thus, the development prospects for high-efficiency products are promising.