Enter the chill-out zone
The AC and refrigerating unit market is soaring regionally as well as globally, with changing customers’ profile and cutting-edge technologies adding value to the products

In the recent past, an apparent boost is seen in the global market in the retailing of air-conditioning and refrigeration products. The phenomenon of global warming plays a decisive role in the reformation of these products into a necessity good, more than a luxury one. Also the extraordinary increase in the consumption of these products in developing economies intensifies the rate of growth to a large extent. As the markets in developed economies are saturated, major brands are focusing on canalizing their efforts on the escalating markets in these developing economies.

Worldwide the market is shifting from unitary to split ACs and energy efficient VRV systems. In 2006 alone, an approximate of 65 million units was established as the total world consumption of air conditioners. China and the US topped the list with more than 20 million and 17.7 million consumers respectively, followed closely by Japan at eight million. Together China, US and Japan make up 3/4 of the world market. Last year, exports of ACs from China to the world market stood at 25 million units. In other words, China has become the world’s AC supply centre and top four manufacturers being Gree, Midea, Chigo and Haier.

During the same period, Middle East single-handedly consumed an approximate of 3 million units. The Middle East market has been a major market for air conditioning products for a very long time, predominantly due to the climatic conditions. The other reasons for these overwhelming figures could vary from improving lifestyle quotient to the materialisation of malls and hypermarkets, which would oblige for commercial air conditioning requirements.

As regards refrigerators, they are a fundamental part of any household. In fact it is seen that in the last few years, refrigerators have now repositioned to the living room from the kitchen, substantiating its necessity even in a business environment. The growth is more rapid in developing countries, especially in China with its vast population and its rising consumption of frozen food. The level of urbanisation is the major basis on which the demand for commercial refrigeration equipment has increased. This is particularly true in developing countries where the urban population has higher income levels than those in rural areas. In the ranking of purchase requirements of consumer durable products refrigerators figure in the top three in any given market. This applies even in Middle East and in Oman.

AC market in Oman
Air-conditioners and refrigerators have been at the front-end within the white goods distribution business in Oman. Both these products account for as much as 65 to 70 per cent of the total business in the entire white goods category and villas and multi-storey buildings contribute to 70 per cent of the market. Oman has been a market for traditional window ACs. However, for the last couple of years there has been a paradigm shift to split and ducted split air-conditioners in line with the global trend. The reason attributed to this is mainly the price erosion of split air-conditioners. It is also observed that the air-conditioner, which was traditionally used to be viewed as a seasonal product, has increasingly been showing decent numbers in off-season as well. This is mainly due to the various ongoing projects in the country fuelling the sales of air-conditioners. As P.V. Rao, senior deputy GM, Genetco says, “The air-conditioning and refrigeration market in Oman is soaring because of the economic boom the Sultanate is going through. The construction and industrial boom in Oman have driven the demand of ACs to a much higher level.”

Further, the local consumers are now fastidious about their preference with parameters ranging from styling, storage space, size and similar other such specifications. The leading brands now concentrate on technological innovations in this field, introducing the microprocessor-based controls to reduce energy use and also implementing the use of insulating materials along with distinctive features like plasma filters and deodorisers. The market within this product has become so definite, that it is seen that families own more than one refrigeration system within the household, owing to preference of small-sized refrigerators.

In 2006, as many as 150,000 units were sold in the Sultanate which itself speaks about the volume of the business air-conditioner and refrigerator contributes. As Gautam Shanbhag, Divisional Manager – Air-conditioning, OTE group, the sole distributor of LG says, “Air-conditioning market in Oman shows a positive outlook of growth riding on a buoyant economy.” Although the domestic market is dominated by Japanese and Korean brands, Saudi-based firms are also trying to make their presence felt in Oman. While American and European origin dominates on chillers, Chinese manufacturers have entered the market and have a share of more than 30,000 split units at lower prices. Varghese Samuel, Deputy GM, Muscat Electronics, explains, “In Oman the expected market size in the current year is 150,000 units of which 100,000 will be split units and remaining unitary products like window and package units.”

In recent years the demand of different air-conditioning solutions has increased manifold in Oman. As Rajendra Nadkarni, Divisional Manager, Project & Engineering Division, Omasco says, “Manufacturers have introduced a large range of air conditioning products to suit the demands that includes windows, splits, cassettes, ducted spilt, package and chillers for various residential and commercial applications.” Companies such as Toshiba, LG, Daikin, Sanyo, Samsung, General, Sharp, Chigo and Panasonic have introduced fresh and new variety in their current production.

Changing consumer preferences
An air-conditioner is no more just for cooling. With the lifestyle, one’s mindset also changes. Consumers are well informed and up-to-date with the type and kind of products available in the market. They only decide on a product after an extensive market research and if the product ensures all his/her aspects of requirements. Consumers have become more health conscious and demands for products that match to their level of need. Now days Air-conditioner is required to control the purity of the air also in addition to cooling & humidity control. The latest technology includes special filters, which are anti virus and anti bacteria facilities. Customers are now considering the brand value, aesthetics and value added features that the products offer, and not just the functionality. Due to this, manufacturers are given the prospect of beating the competition by differentiating their product and offering a USP to the market. However it is seen that the market keeps growing and the differentiation becomes confined and the products tend to get commoditised. Ajay Ganti, GM, SARCO says, “Today air-conditioners are increasingly being viewed as a machine that has more hygiene value. People are picking up air-conditioners that remove bacteria and foul smell from the room apart from cooling it.”

As seen, there is a distinct shift in consumer preferences over the last few years. People are switching over from windows to split air conditioners as they have started realising the advantages of such units. On the one hand, the difference in prices between these two types is increasingly narrowing down, while on the other, split ACs consume less power, lower noise levels, and ease of maintenance and better aesthetics than window ACs. As Rajendra Nadkarni says, “In Oman quality, reliability and after-sales services are the major factors prompting purchase of air-conditioners. The customer’s profile too has changed. Today in an era of information flood, most of the Omanis have access to information and are much more aware of the needs and are able to choose and pick. They know that the available product is no more only for cooling but also has value addition in terms of health.” Varghese Samuel adds, “In Oman, the customers in the interior region look at the price, while in the capital area of Muscat the customers prefer ducted type of ACs.”

Although villas and flat owners who buy air-conditioners for their own use prefer split ACs, those who rent out their apartments still go for window units. The new dwelling units that are coming up in Oman mostly favour the split ACs over the conventional window ones.

Eco friendly technology
Manufacturers are attempting to modify the traditional technologies to have a less impact on the deteriorating environment. They are now investing millions of dollars to upgrade an extensive range of novel refrigeration concepts to that effect. The prospect of using substitute refrigerants like carbon dioxide that do not destroy the ozone layer or trigger global warming, are now being accomplished. Ozone damaging R 22 is likely to be banned shortly by all countries as done by US, Europe and Japan.

Though this refrigerant was preferred during the early 20th century, man-made chemicals later deposed it. Due to the technical enhancements, which comprises of manufacture of extremely thin aluminium tubing called ‘micro channels’; carbon dioxide can now resurface as the refrigerant of preference. Conventional refrigerants, called as hydro fluorocarbons, produce more global warming than the same quantity of carbon dioxide as a global warming gas. The minute amounts of carbon dioxide that would be emitted from air conditioners would be inconsequential, contrary to the large quantities produced from burning fossil fuels for energy and transportation.

Carbon dioxide is encouraged for systems that must be small and lightweight, such as portable air conditioners. High operating pressure required for carbon dioxide systems, enable the refrigerant to flow through small-diameter tubing are the different factors that enable engineers to fabricate more compact air conditioners.

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