Consumer Durables News

Indians are becoming more energy conscious in their choice for home appliances


Indian consumers are increasingly opting for pricier but more energy efficient home appliances in a clear shift in shopping behavior with energy cost saving becoming the main purchasing decision maker, as per companies and market researchers.

Energy efficient technologies like inverter compressors used in air-conditioners and refrigerators now account for over 85% of category sales for AC and 40% for refrigerators as compared to 60% and 20% three years back, as per industry data.

Even the share of more energy efficient models like 5 and 4 star has gone up in the last three years for AC which even a few years back had a minor share due to higher price. In refrigerators, 3-star plus models are considered energy efficient whose share is growing.

Market researcher GfK India managing director Nikhil Mathur said the rising popularity of energy-efficient appliances in India can be attributed to a combination of factors, including increased environmental awareness, government initiatives, and improved accessibility. “Consumers are willing to pay a premium for more efficient options in order to benefit from long-term cost savings and contribute to sustainability efforts,” he said.

For LG India, 5 and 4-star air-conditioner models now account for 65% of total sales as compared to 35% in 2019. Tata-owned AC maker Voltas saw its share of 4 and 5 star model contribution going up from 13% to 28% in the same period.

For Godrej Appliances, 3-star plus refrigerators now account for 37% of total sales as compared to around 30% three years back. Four and 5-star AC models contribute 40% of total sales for Haier as compared to 5% in the same period.

Kulbhushan Bhardwaj, business head (AC) at LG India, said running cost is a concern for air conditioner customers. “There are better promotional offers in higher star rating AC like cash back and EMI offers. There is also increased awareness among sections of consumers for higher energy efficient appliances,” he said.

Godrej Appliances business head Kamal Nandi said 5-star AC is expected to become more than 30% of total category by next year from around 25% now with consumers seeing payback on the premium paid in two years.

As per data by researcher GfK India, the contribution of 4-star air conditioners grew to 10% in the first half of calendar 2022 as compared to 1% in second half of calendar 2019. Similarly, 5-star air conditioners accounted for 25% of total category sales in the same period increasing from 18%. Among 4 and 5-star rating ACs, inverter technology models accounted for over 90% of sales, GfK data shows.

Similarly, 4 and 5-star refrigerators accounted for 12% of the total category sales growing from 8% in the same period, as per GfK. The inverter technology refrigerators again saw a surge – inverter models accounted for 95% of overall sales for 5-star refrigerators up from 53% in the period under review, while for 4-star refrigerators the contribution has increased from 68% to 87%.

In the Indian energy ratings scale, five star is the most energy efficient and it progressively reduces for each star level below with one star being the least energy efficient. Each higher energy rated model is at least 8-10% costlier than its preceding one – for instance a 5-star AC will be over 10% costlier than a 4-star one and 20% than a 3 star one.

As per GfK, over half of surveyed urban Indian consumers consider environmental protection when making purchases and strive to conserve energy at home. The government’s Bureau of Energy Efficiency (BEE) under the power ministry revises the energy rating norms every 3-4 years to make products more energy efficient. Such revisions also push up the product prices by 5-8% due to higher cost of production.

The BEE energy rating norms are currently mandatory for air-conditioners, refrigerators, water heaters, televisions, ceiling fans and LED lamps and is voluntary for several products like computers, washing machine, domestic gas stove and microwave oven.


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