Branded oils feed on rural consumers' fancy

Riding on the back of newly acquired brand consciousness of rural consumers, the branded edible oil industry is witnessing robust growth.

According to the Processed Food and Agribusiness - Report by KPMG and Ficci, packaged products are preferred in the edible oil segment as consumers are increasingly becoming health conscious as well as brand-aware.

The annual consumption of edible oil in the country is currently about 110 lakh tonnes, 40 per cent of which is branded. While edible oil's growth, in terms of consumption, is about 8 per cent, packaged oil is growing at 22 per cent.

The demand for edible oil in the year 2015 is expected to go upto 21.3 million tonnes.

According to industry experts, the relative proportion of edible oil sold in packaged or branded form has been rising steadily on account of increasing awareness about health and hygiene, and the introduction of small packages by major players.

"If we look at a daily wage earner in a rural set-up, we need to provide him the right quantity for his daily needs. Hence, we provide smaller packaging options esspecially for our rural consumers," said Pranav Adani, managing director, Adani Wilmar, makers of Fortune brand of oils.

Fortune Vanaspati is being sold in smaller packages of 100 ml, 500 ml and 750 ml, in order to address the needs of consumers in tier-II and III cities. Ruchi Soya's Ruchi Gold brand is available in packs of 200 ml and 500 ml.

Bunge India, the owners of Dalda vanaspati, has also joined the small packaging bandwagon by taking to sachets for its Dalda edible oils, offering more affordable packs of Rs 5 (70 ml) and Rs 10 (145 ml).

"The marketing cost in rural India is relatively high, but with the growth opportunity it has to offer, we are looking at rural management and more base point set-ups," added Adani.

With the rural fast moving consumer goods (FMCG) market growing at a fast pace, companies are moving towards completing the packaged options range.

Ruchi Soya Industries intends to fully convert its oil sales to packaged form. According to Amrita Shahra, head - business development, Ruchi Soya Industries, "Since the packaged segment has been growing at 25-30 per cent, we are looking at turning our entire product portfolio, barring bulk export of soya meal, into the wholly packaged form. We already have a brand, Ruchi Gold palmolien oil, which caters to the rural consumer. It is priced marginally higher than loose oil so that the rural consumer, who is becoming more educated and conscious, can migrate to the brand without feeling the price pinch."

According to Narayanan Ramaswamy, executive director, KPMG Advisory Services, "The domestic packaged edible oil industry is poised to continue its high growth path due to low per capita consumption of oil, increasing disposable income from buoyant economic conditions, growing health and hygiene awareness promoting demand for packaged products and a boom in organised retail fueling the demand for branded products."

The companies are also planning to provide packaging options on the basis of regional preferences for edible oil. Consumers in eastern India prefer mustard oil, while those in the western parts of the country prefer groundnut oil. The northern region is dominated by sunflower and vanaspati oil, while sesame and sunflower oil are popular in the south.