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“Consumption growing at 5%; Market price-sensitive”
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Monday, 22 September, 2014, 08 : 00 AM [IST]
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fiogf49gjkf0d Bulk of the edible oil growth is coming from imports and India imports nearly 60% of its total oil needs which includes both B2B and B2C consumption. In an email interaction with Anurag More, Aseem Soni, director, consumer pack vertical, Cargill India, spoke about the Indian edible oil industry, his company’s product offerings and more. Excerpts:
What is your take on the edible oil industry in India? Do you see any shift? The Indian edible oils & fats industry was pegged at a market size of 17.5 million tonne in 2013 and valued at approximately Rs 1,000 billion. Bulk of the edible oil growth is met through higher dependence on imports; India imports nearly 60% of its total oil needs which includes both B2B and B2C consumption.
India’s consumption is growing at 5% per annum. Within the industry, 40% of oils & fats are sold in packaged form and this segment is growing at 20-25% pa. With this pace, the industry will get 75-80% packaged by 2015.
Market is highly price-sensitive. The cheapest oils buy the maximum demand (palm oils being the cheapest address this category). For the educated & relatively affluent largely urban population, preference is skewed towards refined oils like soybean, sunflower, safflower and newer oils like rice bran and olive.
Olive oil is a rapidly growing segment gaining much popularity as a healthy cooking option. According to the Indian Olive Association, olive oil market in India has grown rapidly in the last decade from 1,000 tonne in 2003 to 12,000 tonne in 2013. This is primarily on account of an increased health orientation and also higher exposure to multiple cuisines.
Brief us about your healthy oil product offerings in India. Cargill India processes, refines and markets a wide range of both indigenous and imported edible oils, fats and blends to the food industry and also serves household consumers with branded and vitamin-fortified edible oils. It offers quality food ingredients to the growing needs of food manufacturers and the food service industry.
Cargill operates across a wide array of oil categories – spanning olive oil in the premium segment to sunflower / soyabean in mid-market, and palmolein at the lower end. It also deals in groundnut and mustard oil, which are largely non-refined oils. Sunflower and soyabean oils together constitute 70% of the Cargill’s business.
In terms of brands, Cargill enjoys a national presence through its brands Leonardo, Gemini, NatureFresh, Sweekar, Rath and Sunflower Vanaspati (hydrogenated fat). Gemini is Maharashtra’s leading sunflower brand, suitably vitamin-fortified.
NatureFresh is positioned as light oil with a verified reduced fat intake. Sweekar Advanced is high-oleic sunflower oil, while Leonardo Olive Oil comes in all variants, from Olive Pomace Oil, relevant for Indian cooking, to Extra Virgin, suitable as a salad dressing.
Brief us about your expansion plans for the Indian market. Currently we reach out to nearly 200,000 outlets in India through a network of 2,000 distributors. We service around 2,500 stores in modern trade as well. Given that our gross margins are low, the supply chain needs to be really efficient. The trade typically enjoys a margin of around 8-10% depending on the strength of the brand. Other than the routine distribution expansion, we intend to do a lot more of cross-selling and getting a wider range of products available at stores where we are present.
How much will you be investing for the expansion? Cargill has adequate focus on brand building to drive its objectives. Brand investment depends on the internal objectives and competitive environment year on year.
Any plans to launch new products in coming years? Cargill is a leading name in refined oils and food ingredients with consumer brands for edible oils such as NatureFresh, Gemini, Sweekar and Rath and Sunflower brand of hydrogenated fats in India. We have further expanded our product portfolio by acquiring the Leonardo olive oil business. We do see value in becoming a multi-product, multi-channel business capable of leveraging the existing value chain and extending the brand to new categories and geographies. We have always endeavoured to make investments that bring us closer to our customers, with a view to build responsible supply chains, deliver value and create innovative solutions. With this objective, we will continue to explore opportunities for further acquisitions and investments.
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