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There has been a surge in consumer preference for branded and packed edible oil, as compared to the traditional loose-sold variety. In 2012-13, sales of the former category in the country overall rose 30 per cent. And, the share of branded and packed oil in the overall cooking oil segment shot up to 60 per cent from 45 per cent in the previous year.
The packed/branded category has a strong presence among regional companies. The share of national brands continue to remain between 10 and 12 per cent. Consumer awareness of the benefits of using packaged oil from a known brand and the ability to afford the higher price for this (termed 'increased financial scalability' in trade jargon) appears to be the reasons for the shift. Also, the difference in prices has narrowed.
“The attraction towards branded and packed products is increasing rapidly. Branded and packed edible oil has replaced the loose commodity in urban areas,” said Siraj Choudhary, chairman of Cargill India, producer of edible oil brands, such as Gemini and Sweekar and the Indian arm of the US commodity giant, Cargill International.
Manufacturers have also started retailing the commodity with value additions, such as promises of various health benefits over the loose ones.
Ruchi Soya Industries, the biggest in the branded category, with Sunrich, Nutrela and Mahakosh as leading brands, has posted 17.4 per cent growth in branded edible oil sales, at Rs 5,413 crore in 2012-13. In the fourth quarter, it registered 10.75 per cent growth in branded edible oil sales at 2.1 million tonnes (mt) as compared to 1.9 mt in the corresponding quarter of the previous year. Says Dinesh Shahra, managing director, “We witnessed a staggering growth in branded sales in the last two quarters. Our focus on the growth of these has helped in achieving better margins.”
A recent paper presented by Dorab Mistry, director, Godrej International, estimates India's edible oil consumption at 17.6 mt in the oil year of November 2012-October 2013, as against 16.6 mt in the previous year. He forecasts per capita edible oil consumption at 13.9 kg in 2012-13, up from 13.4 kg in the previous year.
“Shifting is happening very rapidly from loose to branded and packed edible oil, which can be attributed to a combination of factors, including growing prosperity of the middle class and narrowing of the premium over loose products,” said Atul Chaturvedi, chief executive officer of Adani Wilmar, producer of the ‘Fortune’ brand.
The premium for branded and packed products has been narrowing in recent years, with the difference between packed and loose varieties now Rs 10-15 a kg and Rs 15-20 a kg between the loose and branded ones. Branded edible oil was earlier Rs 30 - 40 a kg costlier.
