Edible oil consumers buy cheaper, smaller packs post demonetisation

Consumer behaviour shifts to price consciousness after note-ban

Edible oil consumers are becoming increasingly price conscious post demonetisation, say players like Adani Wilmar, Vimal Oils and others.

Not only are consumers increasingly shifting from one oil type to another on the basis of price movement, thereby opting cheaper products, but also preferring to buy oils in smaller packs of one or two litre, as against 5-15 litres pack previously.

The trend of shift among edible oil consumers from one oil type to another on the basis of price has risen sharply, say players. For instance, if two years ago two out of 10 consumers used to follow the price trend, the same has doubled to 4-5 buyers following price movements. However, for now, the trend is prominent in urban areas.

This is also because consumers are looking to avoid spending cash, post note ban. "It has been observed that people are avoiding spending cash for edible oil after the government banned Rs 500 and Rs 1,000 notes. Consumers prefer cheaper cooking oils and in smaller packs now. Two years ago if most of the consumers bought edible oils in the 15-litre pack, now they are buying only one or two-litre pack," said Angshu Mallick, chief operating officer of Adani Wilmar Limited.

Mallick also mentioned that post demonetisation demand has marginally declined by two per cent during November and December for edible oil players.

Similarly, according to Jayesh Patel, chairman and managing director of Vimal Oil and foods Limited, "Consumers are now more looking into prices of edible oils than brands and this consciousness has increased switching ration in India. Post demonetisation, demand for cooking oils has decreased due to a cash shortage. We expect that the situation will be normal by end of March this year."

India's edible oil consumption is about 22 million tonnes and the country imports about 65-70 per cent of its requirements. Out of total consumption of cooking oils in India, institutions/enterprise sales from 30 per cent share while domestic consumers from 70 per cent share.

However, edible oil producers are hoping for an improvement in demand in next couple of months. Domestic availability of oilseeds has increased this year due to bumper production in soyabean and groundnut. Solvent Extractors' Association of India (SEA) has estimated 17.82 million tonnes Kharif oilseeds production for the year 2016-17, higher by 41.46 per cent from 12.60 million tonnes in 2015-16.

B V Mehta, executive director of SEA said, "Monsoon was relatively good this year which increased production of oilseeds in the country. We are expecting vegetable oil availability to be around 6.13 million tonnes as against 3.45 million tonnes, up by 78 per cent. This is due to a huge jump in domestic oilseeds production, mainly in groundnut and soyabean."

During November and December 2016, total import of vegetable oils (Edible and Non-Edible) decreased to 2.38 million tonnes as against 2.75 million tonnes in the corresponding period of 2015. Total import for the year 2015-16 was 14.74 million tonnes as against 14.61 million tonnes in 2014-15.