Bunge takes to sachet route for growth

Bunge India, maker of Dalda vanaspati brand, is making use of the 1990s sachet phenomenon to boost consumption of the friendly household brand.

Videh Jaipuriar, vice-president, foods business, says "We expect to clock a turnover of Rs 1,100 crore this calender year and achieve 50 per cent growth for the Dalda brand."

Crucial to its growth plan is its innovation in the blended oil segment, where it has introduced sachets priced at Rs 5 and 10. These sachets would be primarily aimed at converting loosely sold edible oil consumption to branded oil consumption.

Dalda reaches out to 3 lakh outlets in India and has a distributor base of 1,500. In order to improve share in rural markets, the company would focus on increasing its wholesale distribution.

The percentage of loosely sold oil is highest in Northern states like Bihar and Uttar Pradesh and, hence, the company would be rolling out the sachets in there first. The sachets will be sourced from its Jaipur facility.

Even though the edible oil market in India is estimated at Rs 75,000 crore, branded oils only constitute only 30 per cent of the whole pie.

Experts say that the consumption of oil is unorganised to the extent that retailers sell branded oils below the market retail price except for a small number of outlets in metros.

Bunge's decision to role out sachets is based on the finding that 85 per cent of the consumers in the unorganised market bought oil in loose packs. Out of these, 60 per cent bought them in quantity of less than 250ml.

This includes people in tier-II towns and rural areas where people bought oil on daily basis. The company, hence, decided to roll out sachets and fixed a price, in which the only the packaging cost was added.

Bunge, which has a market share of only three per cent, way behind market leaders Adani Wilmar, maker of Fortune brand of edible oil at 25 per cent, Ruchi Soya at 13 per cent and ITC Agrotech of brand Sunflower at 8 per cent, wants to become a market leader in the blended oils segment.

The Fortune brand is strong in the soya edible oil segment and Sunflower in sunflower oils. However, there are only two big players, Agrotech and Amrit, in the blended oil segment. Bunge has identified this segment as the gap which it can fill and aims to become the most preferred brand in the segment.

The company is a market leader in vanaspati which, as a category, is growing at only four per cent as compared with 20 per cent growth in branded edible oil market.

"Seeing this potential for growth, it is important for Dalda to evolve with the times and become a bigger player in this market."

Bunge India bought the Dalda brand from Hindustan Unilever in 2003 for Rs 90 crore. Bunge India is a 100 per cent subsidiary of New York-based $24 billion Bunge. The company is also thinking about a manufacturing facility in the South to cut transportation costs.