The Indian edible oil market is projected to grow due to increasing disposable income and rising consumer awareness. Moreover, strong marketing activities by leading edible oil brands, changing tastes and preferences of consumers, expanding population, and shifting consumption pattern towards branded oils are fuelling consumption of edible oils in the country. Ajay Motwani, chief marketing officer, Adani Wilmar, also states that the sale of commodities, especially edible oils, was up in the March quarter amid rising prices. Although the growth was just lower than seen in the December quarter, the growth rate is still healthy.
Ahmedabad-headquartered Adani Wilmar is a joint venture between Adani Group and Wilmar International, a leading agribusiness group from Singapore. The company started its operations in 1999 with three product offerings – soyabean oil, sunflower oil, and cottonseed oil. Today, it covers a wide range of edible oils and other food categories, including basmati rice, pulses, soya chunks, besan, atta, ready-to-cook superfood Khichdi & soya chunkies, and sugar. Motwani states, “We are the clear market leader in edible oils with around 20% market share in the refined oil consumer pack category. We started as an edible oil company and have emerged as a total foods company in less than two decades. We are the leader, or among the top leaders in most of the other segments we have a presence in.”
In addition to Fortune, Adani Wilmar sells these products under the brand names King’s, Bullet, Fryola, Alpha, Alife, Raag, Avsar, Pilaf, Jubilee, and Aadhar. The company also caters to institutional demand through an essential range that includes bulk packs of consumer essentials and Lauric & Bakery fats, castor oil derivatives, Oleo chemicals, and soya value-added products.
Edible oil – Adani’s fastest-growing segment
Motwani states that the company is doing exceedingly well in all product segments and growing faster across product categories. Still, he counts the edible oil segment as the fastest-growing segment among others. He says, “We see a clear shift towards packed oil from loose oil due to hygiene concerns. Being the market leader in edible oils, we are benefitting from this shift.”
In the past month, edible oils have become a costly affair due to a significant rise in packed oil prices. According to Motwani, edible oil prices depend on the commodity. He comments, “There are seasonal changes, and they are also impacted by demand and supply of different commodities. Prices also change depending on the global market condition. Commodity prices have gone up sharply, but we have passed on just the bare minimum hike to our customers.”
Roadblocks in the growth of the edible market
It has been observed that loose or unbranded edible oils in the market pose a serious challenge to packed oil manufacturers as the consumer often falls for cheap selling loose products. The more worrying issue with the loose products is the uncertainty about its quality (hygiene and standards). However, Motawani sees encouraging signs where people, most of them if not all, are willing to pay more if they are assured of good quality. He says, “We are trying to deal with any challenges by making people aware of the benefits of buying branded products. At Adani Wilmar, we adhere to the highest food safety and quality standards in our products across the processing and supply chain. We have been working hard to detect illegal activities with the help of authorities. We keep on adding new security features to fight counterfeit.”
Motwani affirms that the loose oil market needs to be curtailed, and the focus should be on packed products to ensure hygiene and better quality. He highlights, “The key challenge is competing with various brands at the regional level that does not follow FSSAI guidelines and proper taxation norms, which allows them to offer products at lower price points compared with other players in the organized sector or us. It is for the authorities to come up with stricter standards and, more importantly, to ensure compliance with them by everyone, including those in the unorganized sector.”
Covid-19 & changing consumption patterns
The Covid-19 pandemic disruption has had an adverse impact across businesses, and the FMCG sector is no exception. Motwani explains key challenges faced by the company and the industry overall because the extended lockdowns impacted production due to manpower shortage, disruption in supply chain and distribution logistics, and shortage of packaging materials. “All products, including edible oil, were impacted. However, panic buying by customers in later stages of lockdown led to increased demand for various essential products. We have seen a shift in the consumption pattern as more consumers are now buying value packs. While the FMCG sector is placed better than others, growth will be hurt.”
Motwani agrees that the company has seen a huge shift in consumer preferences because of the pandemic. He explains, “The first and foremost is that due to the focus on hygiene, customers are increasingly opting for trusted packed products over loose or unbranded options. We also see eCommerce increasingly becoming the preferred mode of shopping for many of our customers. We believe that these two trends will accelerate going ahead.”
New products lined up for launch
Adani Wilmar is constantly expanding its product portfolio across categories. The company entered the foods segment in 2013 with the launch of besan, followed by soya chunks in 2014, basmati rice in 2015, and wheat flour in 2017. In 2019, it entered the ready-to-cook segment with the launch of ready-to-cook khichdi and launched Soya Chunkies last year.
“We will continue to innovate new product categories and expand our product portfolio and offerings to meet the requirements and expectations of customers. We have several products lined up which we will be launching soon,” Motwani concludes.