Packaged Edible Oil

Packaged Edible Oils have been the backbone of Indian cooking for more than 80 years now and have come a long way since the launch of first hydrogenated vegetable oil “Dalda” in 1937 by Hindustan Unilever. Traditionally, Indian families relied on two types of non-packaged edible oils “vegetable oil” obtained by crushing local oilseeds in “Kachchi-ghanis” or bullockdriven cold presses and “desi-ghee” prepared from milk. But the shift happened due to the perceived benefits of packaged edible oil i.e. less expensive, lighter,  higher melting and smoke point, and extended shelf-life of cooked products.

Indian edible oil industry is fourth largest in the world after the US, China and Brazil, contributing 10% of world production, with annual output of about 11 million tonne across nine cultivated oilseeds, however the country remains a net importer of vegetable oil (domestic demand of 25 million tonne). India’s per capita oil consumption is 10.6 kg/annum (low compared to say the USA with 48.0 kg/annum) but is projected to grow at industry CAGR of 90% due to higher income levels, urbanisation, and reliance on processed food.

Production pattern: Rapeseed-Mustard is the highest contributor to domestic production (23%), followed by Soyabean (21%) and Groundnut (16%).

Consumption pattern: Overall Palm enjoys leadership position with 40-45%, followed by Soyabean (25%) and Mustard (10%). However, India’s edible oil consumption is very regional divided into 4 consumption zones as follows”

1. North India (Population 24.8%, Consumption 24.5%): Traditionally a mustard oil market but has shifted to Soyabean oil for house hold and Palm oil for out of home consumption.
2. West India (Population 26.1%, Consumption 29.4%): Highly prosperous region having the highest per capita consumption of edible oil. Palm Oil market share improved and has reached 37%. Has the highest soybean oil consumption because of abundance of soybean crop production.
3. East India (Population 28.2%, Consumption 26.1%): Lowest per capita consuming region due to lower income levels. Palm oil enjoys 48% share, the biggest market of Mustard Oil (with 18% share).
4. South India (Population 20.9%, Consumption 20.0%): The highest consumer of Palm Oil in percentage term and the biggest market for sunflower oil.

Indian vegetable oil industry constitutes of over 15,000 oil mills, 600 oil refineries, 250 vanaspati units. Over the years, the focus of the government and industry bodies has been to increase crop-wise area, production yield, minimise imports, maintain balance between market price and import duty, and encourage exports. On a broad scale here is the market snapshot:

National Players: Government-controlled companies aside, Adani group leads the national tally, followed by Emani and Marico. International companies like Cargil and Conagra have strong presence and enjoy leader position in specific segments.

Regional Players: Ruchi Soya leads the regional tally, followed by Kaleesuwari Refinery and Mother Dairy sharing similar market share, followed by M K Agrotech, Patanjali, Vijay Solvex and handful of others.

Top edible oil brands are Fortune, Healthy & Tasty, Ruchi, Saffola, Gold winner, Mahakosh, Gemini, Sundrop, Nature Fresh, Dhara and more.

Olive oil Players: As a sub-category, Olive oil entails special attention due to its different market dynamics. Indian market is dominanted by Italian brands, with Leonardo leading the tally at 15%, followed by Colavita and Borges, Figaro and half a dozen more.

Below are some key statistics of the Indian Packaged Edible Oil story:

1. Market size of approx 125,000 crores (both organised and unorganised)
2. Top 12 players contribute 30% of market
3. Less than a third of palm oil is directly consumed in home
4. Palm oil is predominantly used by Food industry – mithais, namkeens, bread, biscuits, noodles and quick-service restaurants
5. Mass edible oils (less than Rs 100 per litre) are
   • Palm oil (Rs. 52 international)
   • Rice bran (Rs. 70 for domestic)
   • Mustard (Rs. 75 for domestic and Rs 55 for international)
   • Soyabean (Rs. 75 for domestic and Rs 50 for international)
   • Sunflower_Rapeseed_Canola (Rs. 78 for domestic and Rs 50 for international)
   • Groundnut (Rs. 93 same for domestic and international)
6. Premium (more than Rs 100 per litre) are growing steady
   • Coconut (Rs. 120 for domestic)
   • Sesame (Rs 140 for domestic)
   • Pomace olive (Rs. 180 for international)
   • Extra Virgin olive (Rs. 250 for international)
   • Extra refined/fortified varities of Mass edible oils

Edible oil is witnessing fastest growth of all sub-sectors of agriculture and a major driving force on the demand side for vegetable oils has been their use for non-food purposes. Trade deficit in Oilseed complex is likely to widen in India. Thanks to rising health awareness, other edible oils product types such as canola, groundnut, coconut, rice bran and sesame oil are steadily gaining popularity in India. However, tier-2 and tier-3 cities and rural areas, health is not a high priority for most consumers in edible oils purchasing decisions. The olive oil market in India is expanding rapidly and Rajasthan government tied up with an Israeli firm to promote olive farming on 210 hectares in the state. Company are working on plans to start using recyclable packaging materials.

On the consolidation side, Adani Group (Fortune brand) who was leading acquisition of Ruchi Soya Industries opted out and the deal was bagged by Patanjali (the second player in the race). The capacity utilisation of domestic edible oil refineries came down to 40 per cent in 2019 from 60 per cent in the previous year. In a move to support localisation, Indian government imposed restrictions on imports of refined palm oils, by amending the product from “free to restricted” category.

*Brands seen above showcase the industry construct, no brand is a customer of Peri CRM*

*result of informal interviews, field observations and non-statistical surveys*

Peri CRM is looking to partner with regional Indian Edible oil manufacturers, especially those with presence in tier-2, tier-3 cities and rural clusters of the country. Since the industry is traditionally run with low degree of automation, Peri is engaging with them in a unique way, to bring them up the automation curve, clean up their master data, and automate basic FMCG business processes in the sales function. We have mapped the automation needs of these companies very closely by working with their frontliners, field force representatives, managers, senior managers till the leadership. We have created a product which is best-suited to the evolving needs of such organisation and our consultants have gained sufficient expertise through a unique high-involvement implementation methodology. Below are the key differentiators of Peri CRM vis-a-vis the dozen other SFA’s (sales force automation) available in the Indian market: