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Cooking OilCooking Oil

an overview

Indian Edible Oil IndustryIndian Edible Oil Industry

India is the 4th largest edible oil market after USA, China and BrazilThe domestic edible oil market is estimated at USD 25 billion (Rs.120,000 Crores)India is expected to import 10 million tonnes of edible oil in 2011/12; Palm and soy oils constitute more than 95% of total edible oil imports

Increasing trend of consumer shifting towards Increasing trend of consumer shifting towards branded/packaged oil branded/packaged oil Branded oil segment in India is annually growing at the rate of 20%, with sunflower and soy oils leading the market

Indian Edible Oil IndustryIndian Edible Oil Industry

Major Players

The total edible oil consumption in India is around 18 million tons pa

National Dairy Dev BoardITC Agro-Tech (Sec’bad)Marico Industries (Mumbai)Ahmed Mills (Mumbai)Adani Wilmar (Mundra)

Hindustan Lever (Mumbai)Wipro (Bangalore)Rasoi (Kolkotta)Avi Industries (Mumbai)Kaleesuwari Refinery (Chennai)

Indian Edible Oil IndustryIndian Edible Oil IndustryPer capita ConsumptionExtreme Variation: Top 10% consume 20Kg per capita; Bottom 30% consume 5Kg per capita

Average Per capita consumption is 16Kg

Strong regional preference for “first press” oils with natural flavours – mustard, groundnut, coconut oils

Market SegmentationMarket SegmentationIncome

High: highly health conscious – premium brands, olive oil, PUFA (Poly Unsaturated Fatty Acid) Oils

Medium: safety – refined sunflower, soya oil

Low: utility – loose oil manufactured by local players

RegionNorth – Mustard, RapeEast - Mustard, RapeWest - GroundnutSouth – Groundnut, Coconut

Market SegmentationMarket Segmentation

Consumer ClassesConsumer Classes 20072007 20112011

 Rich (Rs. 1Crore + p.a.)  3Lac  5Lac

HNI (Rs.36Lacs + p.a.) 59Lac 65Lac

Consuming (Rs.6Lacs - Rs.36Lacs)  90Lac 95Lac

Climbers (Rs.2Lac -Rs.6Lacs) 74Lac 82Lac

Aspirants (Rs.30,000 - Rs.2Lac) 15Lac 13Lac

Destitute (< Rs.30,000 p.a.) 13Lac 12Lac

  Total HomesTotal Homes 254Lac254Lac 272Lac 272Lac

Market Size of Cooking OilsMarket Size of Cooking Oils

Coconut Oil: Rs. 1,600 Crores (Rs.750Crores branded)Olive Oil: Rs. 1,500 Crores (30,000 Tons)Safflower Oil: Rs. 610 Crores (77,500 Tons)Ricebran Oil: Rs. 2,150 Crores (0.5 Million Tons)Sesame Oil: Rs. 1,200 Crores (0.2 Million Tons)Soya Oil: Rs. 7,800 Crores (1.2Million Tons) Palm Oil: Rs.25,000 Crores (5 Million Tons)Mustard Oil: Rs.24,000 Crores (3 Million Tons)Groundnut Oil: Rs.16,000 Crores (2 Million Tons) Sunflower Oil: Rs.48,000 Crores (6.4 Million Tons) 

Total Cooking Oil Market Size: Total Cooking Oil Market Size: Rs,1,27,860 CroresRs,1,27,860 Crores

Major BrandsMajor Brands

Sundrop PricingSundrop Pricing

Sunflower OilSunflower Oil

Channel ArrangementsChannel Arrangements

There are 2 broad categories of Channels Independent Channel Dependent Channel

Independent Channel has “conventional” distribution arrangement, a channel member negotiates deals with others that do not result in binding relationships

Dependent Channel, also called “vertical marketing system”, a channel member feels tied to one or more members of the distribution channel

Dependent Channel ArrangementDependent Channel Arrangement

Dependent Channel Arrangement can be further classified as Corporate supplier operates its own distribution system in a manner that produces an integrated channel

e.g. Starbucks Contractual a legal document obligates members to agree on how a product is distributed

•Wholesaler-sponsored

•Retailer-sponsored

•Franchised Administrative a single member may dominate the decisions that occur within the channel

e.g. Procter & Gamble, Wal-Mart

Factors in creating Dist. ChannelsFactors in creating Dist. Channels

Product Issues

The nature of the product often dictates the distribution options available especially if the product requires special handling

Promotion Issues

Distribution decisions are affected by the type of promotional activities needed to sell the product to customers

Pricing Issues

The desired price at which a marketer seeks to sell their product can impact how they choose to distribute

Target Market Issues A key decision in setting up a channel arrangement is for the marketer to choose the approach that reaches customers in the most effective way possible

Distribution MappingDistribution Mapping

Distribution Mapping - CitiesDistribution Mapping - Cities

3%

7%

High FrequencyStores

20%

Distribution Mapping - CitiesDistribution Mapping - Cities

20%

Controlled by retail owner

Modern Trade Outlets(Large # of outlets)

Distribution Mapping - Cities

10%

Modern Trade Outlets(Fewer outlets)

Gold Winner’s excl.distributors

20%

Distribution Mapping – Rural/ UpcountryDistribution Mapping – Rural/ Upcountry

5%

3%

8%

14%

Warehousing EssentialsWarehousing Essentials

Central Location

Insist on ISO 9001:2000 certification

Serving entire geographic region

Warehouse of 25,000 Sq.ft with 'A' class RCC construction and able to provide any required space at any time

All warehouses to be well identified through marking and display boards

Warehousing EssentialsWarehousing Essentials

Adequate safety measures have to be ensured as per requirement

Have 5+ registered transporters to serve even micro interiors in the state

For local transportation, have 3 -wheelers and a Mini-van

Have warehousing and liaisoning services at nodal points also for huge industries

Hub n Spoke Distribution ModelHub n Spoke Distribution Model

ChenglepetChenglepet

VelloreVellore

ChennaiChennai KanchipuramKanchipuram

ThiruvallurThiruvallur

VizhupuramVizhupuram

Feeder Markets

HubHub

Hub n Spoke Distribution ModelHub n Spoke Distribution Model

Indore

Aurangabad

Mumbai Pune

Dadar & Nagar Haveli

Goa & Panaji

Feeder Markets

Hub

Hub n Spoke - Advantages

The small number of routes generally leads to more efficient use of transportation resources.

Complicated operations, such as package sorting and accounting, can be carried out at the hub, rather than at every node.

Spokes are simple, and new ones can be created easily.

Customers (Dealers) may find the network more intuitive. Scheduling is convenient for them since there are few routes, with frequent service.

Questions?

Hari PrabhakarHari Prabhakar

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