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Govt May Ban Sale Of Loose Edible Oil; Demand For Branded Oils Seen Rising

30 May 2020 3:39 pm
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Mumbai (Commodities Control) - The government is contemplating a ban on the sale of loose edible oil after concerns were raised about its authenticity and the possible impact on health, in the backdrop of the Covid-19 pandemic.

In a webinar, Atul Chaturvedi, President of the Solvent Extractors’ Association (SEA), said, “The government is contemplating on ban on loose edible oils which gives an opportunity for packaged and branded players to boost their sales.”

The ban, if imposed, would affect consumers in India's poorer states, especially in rural areas. Many such consumers still purchase edible oils in very small quantities worth a few rupees. This means, rural and daily wage earning consumers buy their requirements in terms of rupee value from and not by weight. They buy edible oils everyday from the wage they earn and consume it.

Branded and packaged edible oils are selling currently at around 50% premiums over loose their varieties. Hence, products using edible oils would be costlier going forward.

Even producers of fried products on the roadside normally consume a voluminous quantity of loose edible oils which works out to cheaper than branded and packaged ones.

B V Mehta, Executive Director, SEA estimates such consumers contribute nearly 40% of India’s edible oil consumption to the tune of 23 million tonnes.

Experts believe that when market reopens following ending of the nationwide lockdown, marketing strategy of all staple foods including edible oils would see a drastic change. Lot of consumers are expected to shift from unbranded to branded products and loose to packaged products for safety and security of their health.

Chaturvedi says that nationwide lockdown has seen massive demand destruction due to closure of hotels, restaurants and catering services. Players in packaged oil category would have to be ready to grab this opportunity.

In a swift change, retailers have stopped stocking loose oils in their showrooms amid fear of weak sales during this Covid-19 pandemic and possible continuation thereafter.

“After Covid-19, we are not going to change like robots but lifestyle is going to change. Consumers are going to be more health conscious and therefore, they will be looking at health benefit products with no cholesterol or fats etc,” said Piyush Pandey, Executive Chairman India, Oglivy.

“The lockdown has severely hit India’s ‘out of home’ consumption of edible oils especially from the segments like bakery, ice creams, farsan and other friend products which overall contributes nearly 27% of India’s overall edible oil consumption,” said Angshu Mallick, Deputy Chief Executive Officer, Adani Wilmar Ltd, the producer of ‘Fortune’ brand edible oils.

Mallick forecast India’s edible oil consumption to recover in the second half of the current financial year due to possible opening up of schools, offices etc which would increase consumption of biscuits and retail delivery of food products through aggregator.

Priyam Patel, Director of N K Proteins, the producer of Tirupati brand edible oils, however, believes that digital sales and marketing to bring more attraction in the post Covid-19 scenario than ever before.

(Commodities Control Bureau)

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