MNCs are lining up procurement plans, but only an aggressive retail strategy will enable them to make inroads
This genre of oil draws quite a few parallels with crude oil
currently, only, it is of the edible kind. For one, it is becoming a critical component of the Indian economic scenario, with projections of the sector reaching a phenomenal annual turnover of Rs.980 billion in 2015. And then, just like crude oil, India faces a critical problem of rising prices and demand-supply gap currently. Demand is increasing at 20% per annum (as per All India Food Processors’ Association). Part of the problem is that around 45% of edible oil is being imported. In response, the Government has imposed a ban on export of edible oil till March 16, 2009. “We must meet the demand of the country first and at present, edible oil has a big market in our country,” feels Subodh Kant Sahai, Minister for Food Processing Industries.
Considering that the Indian domestic market is teeming with potential, there are clearly visible trends showing an optimistic response by companies within and beyond our borders. The $88 billion Cargill from the country of Uncle Sam seems to be bent on living up to benchmarks in India too. “We will be venturing into new segments and we will be leveraging a lot of our global strength, which has enabled us to create an edge,” reveals Siraj A. Chaudhry, ceo, Refined Oils India, Cargill. Leveraging its global strength and bucked up by its phenomenal set up, which includes three state-of-the-art refineries; Cargill, with its brand Nature Fresh, is on a spree to double its turnover in the edible oil market. And the group believes that to cash in on India, it becomes necessary to bank on its global outsourcing model, like 50-60% of raw material is outsourced by Cargill from their parent company, which has enabled them to produce at a very low cost. With the Government not imposing any restrictions on import of raw material, players from usa, like Cargill & Agro Tech (of Sundrop fame) are scouting for raw material outsourcing destinations in places like Indonesia and Myanmar.
On the other hand, Singapore-based Wilmar International Ltd, which entered India in a joint venture with the Adani Group, believes in local procurement for its operations. Reasons Angshu Mallick, Asst. Vice President, Sales & Marketing, Adani Wilmar Ltd, “It ensures quality for the long run and the market is constantly growing, so to meet the demand, you have to be present in every segment of the production cycle.” Ensuring its presence on the front end, the group has made its Fortune brand available in 6 lakh out of 8 lakh organised grocery retail outlets across the country (according to ACNielsen figures). This has enabled Adani-Wilmar to mint an incredible turnover of Rs.32 billion for the financial ended 2007-08 and to target a turnover of Rs.120 billion by 2010. Marico’s Saffola is not sitting quite either, as sources from the company confirm to B&E that they are charting out plans to significantly increase production capacity and enhance their retail presence. This increased retail presence has also played the most critical role in making Ruchi Soya’s story a success in India; making it the largest domestic player today.
In the face of such promises, however, there is a challenge, which stares at all those dreaming big on the subcontinent – a market which today includes 80% of the organised segment. Hence, for those wanting to walk steadily here, the only strategy left forward is to magnify their channels and grow it to the maximum. It’s a slippery surface out there and you do need the retail support to run on it!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
This genre of oil draws quite a few parallels with crude oil
currently, only, it is of the edible kind. For one, it is becoming a critical component of the Indian economic scenario, with projections of the sector reaching a phenomenal annual turnover of Rs.980 billion in 2015. And then, just like crude oil, India faces a critical problem of rising prices and demand-supply gap currently. Demand is increasing at 20% per annum (as per All India Food Processors’ Association). Part of the problem is that around 45% of edible oil is being imported. In response, the Government has imposed a ban on export of edible oil till March 16, 2009. “We must meet the demand of the country first and at present, edible oil has a big market in our country,” feels Subodh Kant Sahai, Minister for Food Processing Industries.Considering that the Indian domestic market is teeming with potential, there are clearly visible trends showing an optimistic response by companies within and beyond our borders. The $88 billion Cargill from the country of Uncle Sam seems to be bent on living up to benchmarks in India too. “We will be venturing into new segments and we will be leveraging a lot of our global strength, which has enabled us to create an edge,” reveals Siraj A. Chaudhry, ceo, Refined Oils India, Cargill. Leveraging its global strength and bucked up by its phenomenal set up, which includes three state-of-the-art refineries; Cargill, with its brand Nature Fresh, is on a spree to double its turnover in the edible oil market. And the group believes that to cash in on India, it becomes necessary to bank on its global outsourcing model, like 50-60% of raw material is outsourced by Cargill from their parent company, which has enabled them to produce at a very low cost. With the Government not imposing any restrictions on import of raw material, players from usa, like Cargill & Agro Tech (of Sundrop fame) are scouting for raw material outsourcing destinations in places like Indonesia and Myanmar.
On the other hand, Singapore-based Wilmar International Ltd, which entered India in a joint venture with the Adani Group, believes in local procurement for its operations. Reasons Angshu Mallick, Asst. Vice President, Sales & Marketing, Adani Wilmar Ltd, “It ensures quality for the long run and the market is constantly growing, so to meet the demand, you have to be present in every segment of the production cycle.” Ensuring its presence on the front end, the group has made its Fortune brand available in 6 lakh out of 8 lakh organised grocery retail outlets across the country (according to ACNielsen figures). This has enabled Adani-Wilmar to mint an incredible turnover of Rs.32 billion for the financial ended 2007-08 and to target a turnover of Rs.120 billion by 2010. Marico’s Saffola is not sitting quite either, as sources from the company confirm to B&E that they are charting out plans to significantly increase production capacity and enhance their retail presence. This increased retail presence has also played the most critical role in making Ruchi Soya’s story a success in India; making it the largest domestic player today.
In the face of such promises, however, there is a challenge, which stares at all those dreaming big on the subcontinent – a market which today includes 80% of the organised segment. Hence, for those wanting to walk steadily here, the only strategy left forward is to magnify their channels and grow it to the maximum. It’s a slippery surface out there and you do need the retail support to run on it!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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