Luggage makers pin hopes on the festive, wedding seasons to drive growth

New Delhi, Oct. 19 -- Luggage makers are hoping that a longer festival and wedding season will help lift sales after a difficult first half marked by high raw material costs and slower travel demand.

The October-December quarter, which typically accounts for about 30% of annual sales, is expected to benefit from holiday travel, wedding shopping, and corporate gifting. Companies are also seeing some relief as prices of key inputs such as polypropylene and polycarbonate ease from their recent highs.

The optimism follows months of pressure on profitability. Prices of crude-linked raw materials surged after the outbreak of the US-Iran war, while slower travel growth and inflation-hit consumers further weighed on demand.

Still, the industry's recovery is expected to be gradual. Rating agency Crisil, in a 16 October report, estimates luggage volumes will grow only 2-3% this fiscal year, suggesting that a stronger second half may not be enough to fully offset the weakness seen earlier in the year.

"Premiumization and the higher branded segment, that's what is going to add value to the overall industry growth," said Rahul Guha, senior director at credit rating agency Crisil Ratings. "Overall, this year could have a 150-200 bps (basis points) hit on the margin, and volumes are not going to be great," Guha said.

Analysts estimate that raw material prices rose about 40% year-on-year (y-o-y) immediately after the outbreak of the war. Companies say that this was the first time in almost a decade when raw material prices increased at such a rapid pace.

Major listed players had a tough period following the rise in raw material prices. Consolidated net profit for Q1 FY27 for Safari Industries declined 5.4% to Rs.47.8 crore, due to a 32.9% y-o-y increase in material costs in the period. VIP Industries reported a consolidated revenue from operations of Rs.436.23 crore for Q4 FY26, down 11.7% from a year ago, due to demand headwinds in key retail channels.

The Indian luggage industry is projected to grow at a healthy compound annual growth rate (CAGR) of 12% to reach Rs.267 billion by 2028, up from an estimated Rs.170 billion in 2024, according to a report by Motilal Oswal Financial Services.

Companies now say that raw material prices have cooled down from these high levels and are about 20% higher than at the same time last year.

The festive and wedding season is longer than previous years, which is expected to help the sector recover in the quarter. "Travel is recovering, and like after covid we saw revenge travel happen. We're actually seeing revenge consumption happen," said Anuj Swahney, chief executive officer of Swiss Military Consumer Goods Ltd.

"The corporate gifting parameter, especially for a brand like Swiss Military, is adding another dimension to demand in an exponential way," he said.

Individual and corporate travel is the biggest source of revenue for the luggage sector. Weddings are the second largest contributor, followed by education. Destination weddings are estimated to lift premium luggage sales by 10-15% annually, according to brokerage Motilal Oswal.

Swiss Military mitigated cost pressures internally using process optimization, and waste minimization. The company also renegotiated terms with suppliers and utilizing in-house warehousing facilities to avoid third-party storage and freight overheads.

Companies are generally not raising prices to ensure demand remains steady during the peak season. "Since costs have increased on a decent level, I think rather than giving discounts we're not increasing the price, and that could be treated as a discount being given," said Mohit Garg, co-founder and chief executive officer Assembly Luggage.

Companies have gradually phased out discounting in the sector.

"Last year this time we were pretty much out of stock for most of the products because we're a new brand," said Naina Parekh, co-founder and director of EUME. Thus, the company increased production for this festive season. "This year we have almost doubled our sales," Parekh said.

Parekh said that EUME did not hike or lower prices during the year and does not encourage 'too much discounting'.

Rather than relying on margin-diluting discount wars, festival strategy for brands like Swiss Military and EUME focuses on smart product bundling (such as offering a free flask with a backpack purchase) to drive value without compromising brand perception.

Shares of Safari Industries are down more than 39%, and VIP Industries are down over 29% from January on the National Stock Exchange.