Rain is becoming bad for business. Aside from farmers, there’s hardly a single manager in Romania that is happy about the rainy season extending through the summer. It’s not only clouds that are looming ahead, but also lower sales, reduced by tens of millions of dollars in the soft drinks, mineral water, beer, air conditioning and hotel industries.
These markets are subject to the most pronounced seasonal fluctuations in consumption because of the low purchasing power and consumption habits in Romania. A year’s performance can be solely down to the outside temperatures during the summer.
Temperatures have been much lower than expected during the last month and the effects can already be put into figures. If the rainy season lasts longer, brewers will see $30 million lower sales; the same goes for mineral water bottlers. Home appliance stores are already thinking about discounts for air conditioners.
Low temperatures can also induce significant cuts in the massive advertising spending budgeted by companies.
Part of the estimated losses have in fact already been registered, considering that consumption should already have picked up in May.
Mineral water bottlers usually see revenues increase with the mercury level in thermometers, with a hot summer resulting in sales that are twice as high as average, according to market sources.
“The rainy weather has caused this month to be much slower in terms of sales compared with last year. Our mineral water sales were 40% lower,” says Radu Preda, chief executive of Bibco Biborteni mineral water bottler.
Mineral water consumption in Romania amounts to about 900 million litres a year, or 250 million euros. Sales are seasonal, so that two thirds of the total volume is sold between May and September.
“Five degrees (Celsius) are much better for us than any commercial. The cold rainy weather harms both our mineral water sales, and the soft drinks and beer business,” says Ioan Micula, European Drinks Group chairman.
A rainy season is also significantly detrimental to the beer market, where an absence of excessive heat during summer months can cut annual brewing sales by over $30 million. Because of the strong seasonality and consumption habits, 50% of the total annual beer sales are made in only four months, from May to August. A rainy summer can therefore upset brewers’ plans.
“The prolonged rainy weather is already showing. Sales in the last month are 15% below our initial estimates. I don’t know how the overall market is doing, but sales in rainy months are usually 10% lower than those in hot months,” says Octavian Buzoianu, corporate affairs director of SAB Miller Romania, the second leading player on the beer market.
Electronics and home appliance sales in their turn are highly seasonal. The most seasonal product of all is the air conditioner. Sales normally begin in April or May, only to pick up in June and July when they reach their peak. The natural order of things was upset this year.
“Analysing the sales and demand on the market, it clearly seems that 2004 has been seriously affected by the poor weather; here we are in the third week of June and we haven’t even had one hot week this year. As expected under the circumstances, demand for air conditioners has been very low,” says Marius Ghenea, chief executive of the Flanco retail chain.
laurentiu.ispir@zf.ro