Description
Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery.
SUMMER PROJECT REPORT
Overall Organizational Study And Marketing Research on the Retailer Feedback
AT
Adani Wilmar Limited.
Submitted By: Sachin Patel MBA-III (2009-2010)
Submitted To: SARVODAY COLLEGE OF MGMT & TECHNOLOGY, LIMBDI. SAURASHTRA UNIVERSITY.
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PREFACE
The importance of the project preparation has been widely accepted in the educational institutions as well in business houses. The essence of the project preparation is to have an experience of all the hardship that is faced while setting up a new enterprise.
This project allows us to apply our theoretical knowledge as well as practical know how. During this project work, we got a chance to meet many executives who gave us a platform for learning from their experiences and knowledge.
Preparing a project is a system of logic where they use their logic sense to find out all the visions of project. As a management student, this work gives the basic knowledge and concept of various managerial functions in the most useful and organized way and thus we can?t afford to avoid.
Here, we have been given study report on “Market Research of Edible Oil” as a part of our summer training project in the 1st year MBA. In which we did a survey on edible oil and also dealt with four aspects of marketing section, which is product, price, place and promotion.
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Before presenting our project that would likely call a survey rather, we would like to say it is an image of our deep practical studies to whatever we have observed and analyzed. The purpose of writing a report is to put into work the practical training that is being imparted to us. Fundamentally the ground for preparation of the report is today?s information, cultures that requires in depth knowledge of sectors, which gives a clear and reliable under standing of practical training that we get. This opportunity helped us to develop and enhance our appetite for learning and served as a fusion of the theoretical concepts and their practical applications in the corporate world.
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ACKNOWLEDGEMENT
A feeling of gratefulness to anyone?s help directly arises from the bottom of the heart. The small but an important and timely help can prove to be a milestone in one?s helped. Every human being has such kind of experience. And we have achieved an important milestone in own life “The Completion of this project”.
This research is dedicated to all the people, whom we met, took guidance, talked, interviewed and learnt something from them. At this occasion, we want to grab this immense opportunity to acknowledge our sincere thanks to all of them while submitting this report.
We are indebted and whole-heartedly thankful for the assistance received from various individual in making this project a success. We have no words to express our gratitude towards those who were constantly involved with us throughout our wonderful experience working with this research project.
We are satisfied with the motivate task of project work provided to us as a part of our curriculum. These has proved work provided to be the first step towards globalize world with health management skills. Here, we have been given study report on “Market Research of Edible Oil” as
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a part of our summer training project in the 1st year MBA of SomLalit Institute of Business Management.
We are obliged to “AdaniWilmar Ltd” for providing an opportunity to undergo training in their esteem organization. We are thankful to Mr. VipulRajyaguru (Marketing Manager) for his co-operation and guidance.
The successful completion of this report would not have been possible without the proper guidance and support of our professors. We would also like to give our gratitude to our college, SomLalit Institute Of Business Management which helped us in every aspect to prepare this valuable report.
Someone has rightly said that the God is always keeping his eyes on your acts and helps you in your work. We always have felt the visible help from the almighty. And without the blessings of the almighty, we may not have succeeded.
And finally, how can we forget all those respondents who have given us their valuable time and have made our survey possible, without which it would not have been possible to test our hypothesis and thus get a fair picture about our assumptions.
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EXECUTIVE SUMMARY
This project is focused on „Market Research of Edible oil? and for that purpose we approached the „AdaniWilmar Ltd.?
The objective of doing this project is to understand the retailers? stocking behaviour, the stocking beliefs and factors of retailers?, consumers? preference for different oil category & brands available in the market and position of different brands in market.
To achieve our objective, we used primary data source i.e. questionnaire and secondary data source like Internet and reference books. In the next step, we have done overall analyses of our survey.
Finally, we conclude our project with the fulfillment of all the objectives of our research plan.
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Research Methodology
? Research Objectives 1. Understand consumer behavior towards buying and
consumption of edible oil 2. Study the market scenario in terms of customer demand 3. Analyze the benefits and satisfaction level of retailers towards different edible oil brands. 4. Importance and usage of different edible oil as per socio economic classification. 5. Price sensitivity on retailers' willingness to stock
? Research Design o Sampling method: Convenience Sampling method o Collection of data: Questionnaire
o Sample Universe: All the shops of the North & East zone of the Ahmedabad. o o Sample size: 100 Research was to be conducted in Ahmedabad.
o We divided the city into 2 zone. North & East.
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INDEX
TITLE PAGE PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMARY RESEARCH METHODOLOGY INDEX INTRODUCTION TO THE COMPANY Company Profile Product Profile Marketing INTRODUCTION TO THE EDIBLE OIL Overview of edible oil Characteristics Market Import and Prices Usages SCENARIO OF EDIBLE-OIL Global Scenario Indian Scenario India's trade scenario TYPES OF EDIBLE OIL CLASSIFICATION OF EDIBLE OIL Drying oil 8 56 51 46 36 8 10 2 4 6 7 1
Non-Drying oil Trade oil PROCESS OF EDIBLE OIL MARKET INFLUENCING FACTORS PRODUCTION, IMPORT AND TOTAL AVAILABILITY PRODUCTION, CONSUMPTION AND EXPORT 4Ps OF MARKETING Product Price Place Promotion RESEARCH PLAN MARKET RESEARCH FINDINGS AND INTERPRETATION DEMAND AND SUPPLY DRIVERS IN INDIA GLOBAL OILSEED PRODUCTION FORCAST Global edible oil production forecast Meal production forecast IMPACT OF INDIA SWOT ANALYSIS OF EDIBLE OIL INDUSTRY CONCLUSION FUTURE BIBLIOGRAPHY & WEBOGRAPHY 107 108 109 110 112 98 104 91 94 88 71 59 63 64 69
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INTRODUCTION TO THE COMPANY
COMPANY PROFILE
Name of the firm Factory Address : AdaniWilmar Limited : MundraPort, Mundra, Kutch, Gujarat. Registered Office Mithakhali Crossing Road, Navrangpura, Ahmedabad – 380009. Constitution Year of Incorporation Status of Industry Product : Company : 1999-2000 : Large Scale Industry : Fortune House, Nr. Shikhar Complex,
: Edible Oil : Mr. Gutam S. Adani (Chairman) Mr. Rajesh S. Adani (Managing Director) Mr. Kuok Khoon Hong (Director) Mr. ChauPhuayHee (Director) Mr. Nico L. Hans (Alt. Director to Mr. Kuok Khoon Hong) Mr. T. K. Kannan (Alt. Director to Mr.ChauPhuayHee )
Board of Directors
Company Secretary
: Mrs. Birva C. Patel
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Vision Statement
Corporate Profile
AdaniWilmar Limited (AWL), a Rs. 2600 Crore company; is a joint venture between two global corporations.
1. The Adani Group of India - The leaders in international trading & private infrastructure. 2. The Wilmar International Limited of Singapore - One of the World's largest traders and refiners of edible oils.
Together Adani Group and Wilmar Group have set up India's first port based refinery in 1999, at Mundra, Gujarat. Today the Mundra refinery is one of India's largest and most sophisticated oil refineries. FORTUNE, RAAGand JUBILEEare the brands under which AWL sells its range of edible oil, vanaspati and bakery shortening.
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In addition to Mundra refinery, AWL also owns refineries at Bundi [Rajasthan], Haldia [West Bengal] and Mantralayam [Andhra Pradesh]. Its cumulative refining capacity is more than 3200 Tones Per Day (TPD). The company also has packing operations at Chatral [Gujarat], Latur [Maharashtra], Jaipur [Rajasthan], Dharwad
[Karnataka], Dewas [Madhya Pradesh] and Cochin [Kerala]. With 80 branches, 5000 distributors catering to 1 million outlets, AWL?s products reach to 20 million households across India.
Since its launch in 2000, Fortune took just 20 months to become India?s No.1 edible oil brand, and they are still at the top of the chart.
Following the success in India, AWL introduced branded Soya bean oil to Middle East and is now exporting its products to more than 19 countries.
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PROMOTERS ? Adani Group Adani Groupwith its turnover exceedingRs.20250 Crores(US $ 4.5 billion)in 2006, is one of the fastest growing corporate houses in India. Its flagship company – Adani Enterprise Ltd [formerly known as Adani Exports Ltd], is one of the largest trading companies in India with Five Star Trading Housestatus (Highest status conferred by the Govt. of India).
Adani Exports trades in nearly 40 commodities in more than 55 countries around the world.
The Group owns a fully functional multi-purpose port at Mundra in the Gulf of Kutch, Gujarat. The Group has also set up a BPO in Ahmedabad, iCall India Ltd. which caters to both International and Domestic clients.
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Adani Group is also involved in infrastructure development which includes developing a Natural Gas distribution project, building a township and an SEZ at Mundra. Adani Group has emerged as an integrated and diversified group with leadership in the areas of global trading, edible oil manufacturing and infrastructure development.
? Wilmar International Wilmar International Limited is Asia?s leading agribusiness group and is amongst the largest listed companies by market capitalization on the Singapore Exchange. Wilmar International's business activities include oil palm cultivation, edible oils refining, oilseeds crushing, consumer pack edible oils processing and merchandising, specialty fats, oleo chemicals and biodiesel manufacturing, and grains processing and merchandising. Headquartered in Singapore, Wilmar International's operations are located in more than 20 countries across four continents, with a primary focus on Indonesia, Malaysia, China, India and Europe. Backed by a staff force of 60,000 people, over 160 processing plants and an
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extensive distribution network, their products are delivered to more than 50 countries globally.
Today Wilmar International is: ? The largest global processor and merchandiser of palm and lauric oils ? One of the largest plantation companies in Indonesia/Malaysia ? The largest palm biodiesel manufacturer in the world ? A leading consumer pack edible oils producer, oilseeds crusher, edible oils refiner, specialty fats and oleochemicals manufacturer in China ? The largest edible oils refiner in Ukraine
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? The leading importer of edible oils into East and South Africa MAUFACTURING NETWORK
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The company has strategically located its refining and processing facilities to cater to different parts of the country as well as harness the potential of oilseed growing areas. The locations are at Mundra (Gujarat), Mantralayam (Andhra Pradesh), Bundi (Rajasthan) and Haldia (West Bengal). AWL's largest state-of-the-art refinery is based at Mundra in the Gulf of Kutch in Gujarat and is India?s first port based refinery. The technology has been imported from De Smet of Belgium and Alfa Laval of Sweden. The quality of oil is at par with the best in the world, meeting USFDA standards. AWL refined oil goes through the strictest quality controlled and computerized manufacturing process with online monitoring.
AWL's Mundra refinery was started with an initial refining capacity of the 600 Tonnes per Day (TPD) and after the recent expansion; Mundra has a consolidated refining capacity of 2200 TPD and hydrogenation capacity of 350 TPD.
This refinery is a model for backward integration, starting from transportation of oil through pipelines from port to the plant, to in house packaging material manufacturing like; blow-molding facility, corrugated box plant, tin manufacturing facility and multi-layer
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packaging film plant. In addition to this is a 4 MW captive power plant that provides uninterrupted and hassle free electricity.
Such integration provides an edge in maintaining highest quality standards & a competitively priced product.
? Mantralayam (Andhra Pradesh)
This plant was acquired from ITC & is reputed to be one of the best plants in India for sunflower oil production. The plant has a capacity to crush 450 TPD of seedsandrefining capacity of180 TPDoil.Located in close proximity to the sunflower-growing belt of Andhra Pradesh and Karnataka, this plant is also suitable for crushing and refining Soyabean and Groundnut oil. It was strategically acquired to cater to South India?s demand for Refined Sunflower Oil.
? Bundi (Rajasthan)
This plant was taken over from RICO industries. It has a capacity to crush 450 TPD of seeds and refine 150 TPD of oil. The plant provides ideal location for processing both mustard and soyabean oil. Apart from it there is also a processing facility at Jaipur, which
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produces the premium quality pungent mustard oil packed as Fortune "KachiGhani", exclusively to cater to the taste of pungent and pure mustard oil of eastern India.
? Haldia (West Bengal) This plant was acquired from Acalmar, and has a capacity to refine 600 TPD of oil. This port-based refinery is ideal for catering to the Eastern parts of the country. It also has excellent facilities to manufacture Specialty Fats.
Packaging units
In addition to the above refineries, AWL also has packing operations at
? Chatral [Gujarat]
? Latur [ Maharashtra ]
? Jaipur [Rajasthan]
? Dharwad [Karnataka]
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? Dewas [Madhya Pradesh]
? Cochin [Kerala]
DISTRIBUTION NETWORK
The end-users of our products are: households and institutional buyers [catering / hospitality / processed food / snacks] set-ups. AWL has set up a strong distribution network of Company Distributors and Super Stockists for its retail operations. This chain helps to tap even the small retailers/traders and thus increasing our reach.
Today AWL has its distribution foot prints all across the country with various stock-points catering to more than5000 distributors,600 Super Stockists and numerous brokers and other trade associates.
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AWL's retail reach is more than 1,000,000 outlets and its consumer reach is more than 80 millionIndians.
[II] PRODUCT PROFILE Fortune Brands:
? Fortune Refined Soyabean Oil ? Fortune Refined Sunflower Oil ? Fortune Refined Cottonseed Oil ? Fortune Refined Groundnut Oil ? Fortune KachiGhani Mustard Oil ? Fortune Pure Groundnut Oil ? Fortune Pure Mustard Oil
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? Fortune Pure Coconut Oil ? Fortune Fryola ? Fortune Naturelle
Raag Brands:
? RaagVanaspati ? Raag Refined Soyabean Oil
Jubilee Brands:
? Jubilee Masterchef bakery Shortening Fortune Brands
? Fortune Refined Soyabean Oil Fortune Refined Soyabean Oil is light, odorless and healthy oil. Most importantly it contains OMG3 (Omega – 3 fatty acids) – an essential PUFA which needs to be supplemented from outside sources. Soyabean oil is the preferred oil of many a household across the world. Fortune Refined Soyabean Oil, enriched with OMG3, gives you and your family “Paanch Ka Aashirwad.”
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Five disease-countering benefits for the: ? ? ? ? ? Heart Eyes Immune System Diabetics Foetus
Fortune Refined Soyabean Oil is the highest seller in the refined soyabean oil category with 44% of the market share (As per AC Nielsen Retail Audit Index - MAT Mar.'06). Fortune Refined Soyabean Oil is available in:Liner Cartons Pouches PET Bottles Jerry Cans 200 ml 200 ml, 500 ml, 1 litre 500 ml, 1 litre, 2 litre, 5 litre 2 litre, 5 litre, 15 litre
Jerry cans [wide mouth] 15 litre, 15 kg Tins Maha Fortune 15 litre, 15 kg 15 litre
? Fortune Refined Sunflower Oil
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Fortune Refined Sunflower Oil is a light, nutritious and a healthy oil that is easy to digest. It goes through the highly specialized process of winterization that removes almost all the wax content in the oil, making it the lightest oil available today. Fortune Refined Sunflower Oil consists mostly of polyunsaturated fatty acids and is low in saturated fats. This oil is also a rich source of Vitamin E, which are a fat-soluble vitamin and an antioxidant. The E-Power you and your family get from Fortune Refined Sunflower Oil helps to: ? Prevent or delay heart disease and related complications ? Protect against prostate and other cancers. ? Slow down the aging process and boost the immune function. ? Promote healing of burns, eczema and other skin problems.
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Fortune Refined Sunflower Oil is available in
ouches PET Bottles Jerry Cans Tins ? 500 ml, 1 litre 500 ml, 1 litre, 2 litre, 5 litre 2 litre, 5 litre, 15 litre 15 litre, 15 kg
Fortune Refined Cottonseed Oil Fortune Refined Cottonseed Oil is very stable oil with a long shelf life. This oil does not deteriorate even at high temperatures. Also, its bland flavor retains the taste of the food cooked in it. Cottonseed oil has no cholesterol and is very low in trans-fatty acids. Fortune Refined Cottonseed Oil has many food applications. As a salad oil, it is used in mayonnaise, salad dressings, sauces, and marinades. As cooking oil, it is used for frying in both commercial and home cooking. Fortune Refined Cottonseed Oil is available inouches PET Bottles Jerry cans Tins 1 litre 1 litre 5 litre, 15 litre 15 litre, 15 Kg
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?
Fortune Refined Groundnut Oil Refined Groundnut Oil is traditionally preferred oil for deepfrying, as it preserves the natural aroma of the food cooked/fried in it and has a high smoke point. Fortune Refined Groundnut Oil is sourced from the best groundnut oil available in the country. Crystal clear oil, it is light to consume and is the preferred oil among various consumers.
Fortune Refined Groundnut Oil is available inouches PET Bottles Jerry cans Tins 1 litre 500 ml, 1 litre 5 litre, 15 litre 15 litre
?
Fortune KachiGhani Mustard Oil Fortune KachiGhani Pure Mustard Oil is Awl?s gift to consumers who loves high pungency mustard oil, is made from finest quality mustard seeds and is a delight of taste as well as health. Fortune KachiGhani Mustard Oil is made from the first press of the mustard in the traditional way by slowly crushing the best mustard seeds in a
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temperature controlled environment to retain its pungency and natural properties. Its high pungency level enhances the taste of the food cooked in it and helps stimulate your appetite. It also helps in keeping pickles fresh for a longer duration while retaining their traditional flavor.
Fortune KachiGhani Mustard Oil is available in:Liner Carton Pouches PET Bottles Jerry Cans 200 ml 500 ml, 1 litre 200 ml, 500 ml, 1 litre 2 litre, 5 litre, 15 litre
Tins (lithographically printed) 5 litre, 15 litre, 15 kg
?
Fortune Pure Groundnut Oil Fortune Pure Groundnut Oil is all-purpose oil that is subtly flavored with the richness of peanuts. Made from the first pressing of groundnuts, this oil is unsurpassed in its quality. It can also be heated to high temperatures, which makes it suitable for deepfrying and sautéing. It is used by consumers for its „nutty' flavor and taste. It is the preferred oil for various kinds of traditional dishes.
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Fortune Pure Groundnut Oil is available inouches PET Bottles Jerry cans Tins ? Fortune Pure Mustard Oil Fortune Pure Mustard Oil is targeted primarily at those customers who want the goodness of mustard oil but with less pungency. 1 litre 500 ml, 1 litre 5 litre, 15 litre 15 litre, 15 Kg
Fortune Pure Mustard Oil is available inouches PET Bottles Jerry cans 1 litre 200 ml, 500 ml, 1 litre 2 litre, 5 litre
Tins (lithographically printed) 5 litre
?
Fortune Pure Coconut Oil Rich in flavor and aroma, Fortune Pure Coconut Oil is made from superior quality coconuts. Our specialized filtering process
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assures that all the nutritious values of Coconut are kept intact. Fortune Pure Coconut Oil enriches your food with good taste and good health.
Fortune Pure Coconut Oil is available inouches Jerry Cans Tins 500 ml, 1 litre 5 litre, 5 kg 15 kg
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Fortune Fryola
Fortune Fryola – The Ultimate Frying Oil possesses the finest properties of all frying mediums. Being rich in PUFA, very low in saturates and free from trans-fatty acids, Fortune Fryola is good for health. It is also very stable during frying and doesn?t produce degraded applications. Apart from being healthy and stable, Fortune Fryola also provides several other benefits: carcinogenic compounds during prolonged frying
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? It is enriched with Vitamin A & D for further nutritional benefits. ? It ensures low oil absorption, hence makes the food healthier for heart. ? Its right fatty acid composition provides excellent flavor and color to the fried products. ? Food fried in Fortune Fryola retains its freshness for a long period. ? Due to its high smoke point it helps keep the kitchen environment healthy and hygienic. ? Due to reduced formation of thick sticky layer of burnt polymerized oil, cleaning of the oil becomes easier. ? It reaches frying temperature very quickly, which saves fuel and time. Fortune Fryola is available in:Tins 15 kg
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?
Fortune Naturelle Welcome to the World of Purity!!! Fortune Naturelle Pure Coconut Oil is made from the best quality roasted coconuts and is packed in a modern packing station where it is untouched by human hands. It has the natural goodness and aroma of coconut oil. Fortune Naturelle Pure Coconut Oil is available inouches PET Wide-Mouth Jar Tins 50 ml, 100 ml 50 ml, 100 ml, 200 ml, 500 ml 200 ml 500 ml
Raag Brands ? RaagVanaspati RaagVanaspati (also called „Vegetable Ghee' in the Middle East and African markets) is a white granular vanaspati (the hallmark of quality in any good vanaspati). Prepared through the hydrogenation of superior quality refined oil and fortified with Vitamin „A', it is preferred for food that needs to be deep fried or sautéed for a longer period. It is also preferred in the making of traditional sweets and snacks.
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RaagVanaspati is available inouches 200 ml, 500 ml, 1 litre Barni Matka Tins 2 litre, 5 litre, 15 litre 2 litre, 5 litre, 15 litre, 15 kg 15 litre, 15 kg
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Raag Refined Soyabean Oil Raag Refined Soyabean Oil is light, odorless and healthy oil. It is rich in Poly- unsaturated Fatty Acids (PUFA). Raag Refined Soyabean Oil is the preferred oil for the common man.
Raag Refined Soyabean Oil is available inouches Pet bottles Jerry cans Tins 1 litre 500 ml, 1 litre 5 litre, 15 litre 15 litre, 15 kg
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Jubilee Brands ? Jubilee Masterchef Bakery Shortening Jubilee Masterchef range of Bakery Shortening has been introduced keeping in mind the specific needs of the bakery products. With Hydrogenation facility available at Mundra (Gujarat) and interesterification facility at Haldia (WB), AWL specialty fats division is capable of providing any type of specialty fat – from Hydrogenated to trans-fatty acid free – anywhere in India or its neighborhood. Jubilee Masterchef Bakery Shortening has four variants:
? For creaming and icing on cakes and pastries ? For puffs and kharis. ? For biscuits, cookies and cakes. ? For all bakery purposes Jubilee Masterchef Bakery Shortening is available in:Bag and Box Packs Tins 15 kg 15 kg
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[III] MARKETING
AdaniWilmar Ltd has always believed in delighting customers by providing Branded products and services. In the process AWL has created brands, which adds value to customer satisfaction.
Its flagship brand Fortune has became India?s No 1 edible oil brand within 20 months of its inception and has remained so ever since. This shows how much they have been successful in delivering value to their brand that, once their customer is always theirs.
With its various product launches and concentrated branding efforts AWL became one of the key drivers in stabilizing a fragmented edible oil market in India.
AWL can also be credited for educating Indian consumers towards the health benefits of soyabean oil as well as clarifying past myths about it. Today branded refined soyabean oil category sale is 32% of all India edible oil sales and Fortune Refined Soyabean Oil is the highest seller in it.
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In last 8 years AWL has created a basket of distinctive brands of different oils to cater all sections of Indian consumers.
No wonder, AWL?s brand Fortune has helped to energize the youth, power vibrant markets and pump the growing economy of a Healthy Growing India.
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INTRODUCTION TO THE EDIBLE OIL
Overview of Edible Oil Edible oil in the pulses, edible oil order, 1977 by ministry of food says edible oil means any oil used directly or after processing for human consumption and include hydrogenated vegetable oil.
Indian vegetable oil economy is the 4th largest in the world after USA, china &Brazil, being the largest importer and 3rd largest consumer of edible oil. India is a major player in the international edible oil markets. Each year India consumes over 10 million tones of edible oil. However the per capita consumption of edible oil is around 10.4 kg per year. This is considerably lower than most developed countries. Palm oil &soyabean oil account for almost half of the total edible oil consumption in India followed by mustard & groundnut oil.
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India - one of world?s leading producers of oil seeds (9.3 %) and oil
? ? ?
Technology Mission on oilseeds set up in 1996 Oilseeds have support price mechanisms India - second largest importer of edible oils (2 million MT
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?
Vanaspathi - a substitute for ghee, formed by hydrogenation of crude vegetable oil.
? ?
Free pricing in vanaspathi since 1989; delicensed in 1992 Oil season - November to October
EDIBLE oil is extracted from seeds of crops like rapeseed, mustard, groundnut, linseed, sunflower, soybean, sesame and canola grown in the country. However, a large quantity of edible oil is obtained from cottonseed.
The total availability of edible oil in 2005-06 was 2.905 million tons. Local production stood at 0.793 million tons which accounts for 27 per cent of the total available quantity while the remaining 73 per cent was procured through imports. During 2006-07, local production of edible oil stood at 0.855 million tons. During this period, 2.201 million tons of edible oil was imported and 0.349 million tons extracted from imported seed.
The country imports edible oil from Malaysia, Indonesia, Norway, Singapore and Argentina. Of the imported quantity, about 56 % is of palm oil.
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Keeping in view record increase in the prices of edible oil in the world markets due to decline in world production of palm oil and soybean crops, edible oil crisis is looming large over the country. To add to this, the current year?s overall production of palm oil in South America and soybean production in some other countries, including Argentina and Brazil, has also declined significantly.
Due to rising demand and low supply, palm oil prices in the world market have shot up by $120 per ton to $1170 from $1050 per ton just within one month. Moreover, the prices of edible oil are likely to go up further which might create a crisis in the country. Similarly, in the domestic market, the prices of edible oil have gone up by Rs40 per kilograms within one month due to the soaring prices of palm oil and soybean oil in the world market so much so that the federal government has decided to reduce taxes on edible oil to bring down its sky-rocketing prices in the open market.
Presently, the country?s overall consumption of edible oil stands at three million tons, of which some 0.5 million tons is produced locally, while over 2.5 million tons is imported. To deal with the looming edible oil crisis, stringent efforts are needed to enhance local production of
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edible oil by bringing more area under cultivation of oilseed crops as well as increasing per acre yield.
Our farmers mainly grow traditional crops such as rapeseed and mustard. Per hectare yield of such crops is less compared to nontraditional crops of sunflower, soybean, canola etc. for instance, average per hectare yield of rapeseed and cotton seed is 750 kg and 1244 kg compared to per hectare of sunflower, soybean and canola viz.1810 kg, 1207kg and 1246 kg, respectively. There are many other factors such as sowing of poor quality seed, late sowing, inadequate use of fertilisers and poor plant protection that are contributing to low per hectare yield of oilseed crops. It is essential to bring more area under non-traditional oilseed crops to cope with the situation.
Seed selection is a main facet of farming and should not be based on advertising or sales but purely on yield performance. The farmers are, therefore, not afraid while using the yield trial information and look for hybrids that performed well before going for seed selection. Seed performance should be measured keeping in view certain parameters including germination capacity, physical and genetic purity, seed maturity, seed health and vigor etc. Soil type, soil nutrient status,
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soil moisture and weather conditions are the factors that affect these parameters.
The quality seed has the potential of increasing yield on an average of 20 per cent over traditional seed used by the farmers. But certified seed is largely limited to major crops like wheat, rice and cotton. It is essential to mobilize resources for development of high yielding oilseed crop cultivars as well as agriculture extension wing to inform the farmers about the modern production technology of such crops.
Inputs like fertilizers, irrigations, and pesticides vary with respect to type of cultivars, soil type, soil nutrient status, growth stage and climatic conditions. Certain non-traditional crops such as sunflower require more nutrients. The farmers should use fertilizers in balanced amount in a bid to obtain high crops produce.
A number of sowing techniques are practiced for the cultivation of oil seed crops that have great bearing on seed germination, plant growth, development and production. Bed plantation of sunflower gives 15 per cent higher yield than traditional broadcast method and also ensures conservation of about 45 per cent water.
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Cultivation area under oil seed crops is small compared to other crops like wheat, rice, cotton and sugarcane. During 2006-07, rapeseed/mustard, cottonseed, sunflower and canola were grown on an area of 628,000 acres, 7,599,000 acres, 937,000 acres and 359,000 acres, respectively. Small area under oil seed crops is due to competition from other crops like wheat, potato and maize.
One way to increase acreage under oilseed crops is to carry out cultivation on marginal lands and practicing inter-cropping. Saline soils can be managed by using gypsum and sulphuric or nitric acids in proper amounts and application of fertilizers, suitable cropping pattern including green manures and deep ploughing with chisel plough to reduce the severity of salinity/sodicity.
Inter-cropping of selected oilseed crops in wheat, sugarcane and potato is a best approach to enhance cultivation of oilseed crops. This would also increase cropping intensity that is less so far. Intercropping of sunflower in wheat, sugarcane and potato fields could yield best results.
Farmers prefer to grow cereals because of sound procurement system. In case of oilseed crops, there is non-existent of sound
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marketing system. Therefore, the farmers are reluctant to grow these crops. An efficient system of procurement is required to promote cultivation of oil seed crops. It is also essential that marketing system should not allow importers to exploit local producers, as it is a usual practice of importers to decrease the market prices of imported edible oil as the maturity period of crops approaches.
In a nutshell, non-availability of hybrid seeds, high cost of foreign imported hybrid seed, high cost of storage, lack of drying facilities, lack of modern production technology, use of marginal lands, non-availability of short duration varieties, lack of rhizobium inoculum, low prices of farmers? produce, lopsided marketing system, and high harvesting cost are factors shaping the mindset of the farmers for not opting oilseed crops cultivation.
Characteristic
? ?
Oils: primarily a commodity market - price sensitive Effective distribution chain - through a complex network of C&F agents, wholesalers / stockiest & retailers (kirana shops, supermarkets).
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?
Oil
sold
in
bulk
(tin,
HDPE
containers)
to
institutions;
In retail packs (PET bottles, cans, jars, pouches) to small customers.
?
Seasonal demand for oils &vanaspathi - September to November (peak season)
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Regulation: Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils cannot be sold loose? but can be sold only in `packed? form
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Oil consumption - North is largest market, followed by South, West & East zones.
Market
? ? ? ?
Highly fragmented industry Over 600 oil extraction units, 166 vanaspathi manufacturing units Only 10 edible oil units and 8 vanaspathi units have national reach Over 50% of the units - sick or under utilized due to surplus capacity
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Idle capacities among these units due to shortage in feedstock supply
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Major oil brands - - Sundrop, Dhara, Saffola, Sweekar, Ankur, Fortune
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Vanaspati Brand-
Dalda
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CAPACITIES
Installed Capacity and Prodcution Vanaspathi Capacity Production Utilisation 2,720,000 990,534 36% Edible Oils 30,368,000 6, 250,000 21%
Installed capacities and Production - in MT per year
Import & prices
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Oils and vanaspathi substitutes can be freely imported under OGL
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Import duties: 15 % basic + 10 % surcharge (Oil); 40% basic (Oilseeds)
?
Large scale imports of oils and vanaspathi substitutes - primarily to check price rise and meet supply shortages
? ?
Imports during 1998-99 - 2.38 million MT Estimated imports for 1999-2000: 3 million MT
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?
Prices of edible oils: RBD Palmolein Rs. 23,500/MT (Wholesale, ex-Mumbai) World market: $420/MT (Rs. 18,060/MT) c.i.f. -July „99
?
Prices of vanaspathi: Rs. 647/15 kg (Wholesale, ex-Calcutta) May „99
Usage ? Oil and vanaspathi used as cooking media (in households, hotels, restaurants,
?
Vanaspathi used as an industrial input - for making bakery products & confectionery canteens, institutions).
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SCENARIO OF EDIBLE-OIL
Global Scenario The size of the Indian oilseeds-based sector is estimated at US$ 16.5 billion (inclusive of exports and imports). India is the world's fourth largest vegetable oil economy. The industry comprises of 15,000 oil mills, 600 solvent extraction units, 250 vanaspati (hydrogenated oil) plants, and over 600 refineries, employing over one million persons. India is a leading importer of vegetable oil in the world. As per 'Oil World' magazine, during 2006-07, the European Union-25 was the world's largest importers of 17 oils & fats at 10.0 Mn. tonnes followed by China at 8.6 Mntonnes and India in the 3rd place at 5.4 Mn. tonnes. Each year, India consumes around 12.0 to 12.5 million tonnes of various edible oils. Although edible oils are widely consumed, the per capita consumption is around 11 kgs a year, considerably lower than in most developed countries. Palm oil (mainly imported) and Soybean Oil account for almost half of India's total edible oil consumption, followed by Mustard Oil, Groundnut Oil, Cottonseed Oil, Rice Bran Oil and Sunflowerseed Oil.
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Domestic vegetable oil production (7.0 to 8.0 million tonnes) is not sufficient to meet domestic demand. The trade policy reforms in the mid -1990s fuelled increase in edible oil imports, which now meet 40-45% of India's consumption requirement. India will continue to depend on imports in the future. The composition of the import basket will however depend on relative prices of oils. Currently, crude Palm oil / Palmolein and crude Soybean oil are the favourities as they provide the lowest price option. Currently, India accounts for 7.4% of world oilseeds output; 6.1% of world oilmeal production; 3.9% of world oilmeal export; 5.8% of world vegoil production; 11.2% of world vegoil import; and 9.3% of the world edible oil consumption (Source: Oil World). With steady growth in population and personal incomes, Indian per capita consumption of edible oil has been rising steadily. However, oilseeds output and, in turn vegetable oil production , have been trailing consumption growth, necessitating imports to meet supply shortfall.
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Indian Scenario
Climatic conditions in India favor growing a variety of oilseeds. On the demand side, a growing population and vastly varied dietary habits have ensured a thriving market for edible oil in the country. In fact, there is a substantial demand overhang, which is expected to continue for some years. At present, this is offset by imports that cater to almost half of the total domestic consumption. With cheap imports threatening to cripple the domestic industry, the government is walking a tightrope between filling the demand
supply gap and the political need to keep the domestic industry in good health.
Unorganized, medium and small players dominate the industry. Hence, quality remains a concern. There is need for better regulatory control to protect consumers. An average Indian's yearly edible oil requirement has gone up from 7.0 kg in 1996-97 to 11.8 kg in 2000-01. Despite the variety of oilseeds grown in India, the country imports a substantial quantity of edible oil, which also works out cheaper. Allied factors contributing to imports are the higher cost of cultivation in India and uneconomic oil extraction
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systems.
Oilseeds in India account for around 5.0 percent of the Gross National Product (GNP) and 14.0 percent of the country's area under cultivation of crops. Castor, Groundnut, Linseed, Niger, Rapeseed, Mustard, Safflower, Sesame and Sunflower are some of the major oilseeds grown. India produces 10 percent of the world's oilseeds, but has a low productivity of around 850-900 kg per hectare (compared to a world average of around 1,100-1,350 kg per hectare).
The amount of oil extracted from the seed varies with the type and quality of seed. In many cases, the oil recovery rate is upwards of 30.0 percent with Sesame accounting for a high 45.0 percent.
Domestic consumption of edible oils has been growing at 4.0-5.0 percent a year. The consumption in 2001-02 was around 25.75 million tons. Non-packaged oils account for nearly 50.0 percent of consumption in both urban and rural markets. In the remaining 50.0 percent contributed by packaged oils, branded oils constitute a small portion of approximately 10.0-15.0 percent.
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India's trade scenario
During the year 1950-51, the overall external trade of India reached Rs. 1214 crore. Since 1950, India is experiencing a persistent growth in external trade (external trade is the sum of total exports and imports, including re-exports). In fiscal year 2005-06, external trade in India touched Rs. 1085325 crore.
During the period 2005-06, export of merchandise commodities in India touched US$ 103 billion (Rs. 454800 crore). In the previous year (2005-06), India's export volume of merchandise commodities reached Rs. 375340 crore with a growth rate of 21.17 %. India is showing this positive trend, despite a higher demand for capital goods. During the last four years of 10th Five Year Plan India is experiencing a sustained 20% growth rate and consequently India's contribution to global exports increased from 0.66% in 2002 to 0.9% in 2005.
India's imports also exhibited a good result with an increase from Rs.501065 crore in 2004-2005 to Rs. 630527 crore in 2005-06.
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TYPES OF EDIBLE OIL There is a large variety of edible oil in India. Most of oil is used for cooking and also for salad dressing, condiments etc. The major edible oil in India like: 1. Sunflowers A sunflower seed extraction is widely used as protein material for animal feed. Indian sunflower seed extractions contain about 30% crude protein with 30% fiber. Although sunflower protein is low in lysine, methionime&cystine levels are favorable to meet poultry feed requirements. It is superior to most vegetable proteins in digestibility.
A sunflower seed extraction is therefore supple- melted with lysine, or fed with other high lusineproteine meals, like soybean meal or fishmeal. Recent development of various enzyme preparations, which can act upon fibre in sunflower meal, making it more
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digestible, can result in an economical substitute for various protein sources.
2. Rapeseed Rapeseed meal has min. 38% O&A and 12% max. fibre. It has a very low fat content (0.5%) and is very rich in proteins (37%). The digestibility of the hull fraction is good. The erucic acid content of the meal is very low (0.25% max.).Its extremely good amino acid composition, often compared to milk protein, contributes to its high nutritive value. The amino acid profile showing adequate lysine and methionine is very much favorable to the non-ruminent poultry feed.
3. Sesame Seed Sesame seed extraction is high protein feed meal. The protein has a high content of methionine &cystine and it is also rich in arginine and tryptophan but is deficient in lysine and to some
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extent in isoleucine. The PER value of the sesame extraction can be doubled by mixing it with an equal weight of soybean meal, which has high lysine content.
This can also be achieved by supplementation with synthetic amino acids like lysine (0.2%) and isoleucine (0.1%). It is being used as a valuable ingredient up to 5% in well-formulated poultry feed. 4. Cotton Seed
Decorticated cottonseed meal is one of the best protein supplements for dairy cows, buffaloes and sheep. It has been highly recommended for incorporation in the formulated feed so as to function as a by-pass protein to raise the milk yield.
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5. Groundnut India is in a position to offer groundnut extraction having protein content varying from 41% - 50% with aflatoxin content of less than 0.5% 0.2% or 0.05 ppm. Groundnut extraction is a very good vegetable protein for poultry feed and can be used up to the level of 25%.
6. Soya bean The Indian soybean extractions has a high profat content (49% - 50%) compared to a 44% profat content of China and other Western countries and is very well accepted in the international market.
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7. Coconut Coconut meal is fed mostly to dairy cattle. Though it is
comparatively a moderate protein (20% - 22%) source, it is highly palatable and its protein has a very high by-pass value. The copra meal produces firm butter of exceptional quality if it is used in cattle feed preparations.
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CLASSIFICATION OF EDIBLE OIL
Based on absorption of oxygen from atmosphere, there are three types of edible oil.
DRYIG OIL: ? Coconut oil Origin: South-west America Production and Market: World: South-west America, West Africa & India India: Kerala(leading), Goa, Maharastra&Karnatak The yield of oil being 50% to 60% or even more. Uses: Cooking, lighting, good quality soap, shampoo, hair oil, cosmetics, detergent, shaving cream, petrol, coercion
[II] NON-DRYING OIL ? Groundnut oil Origin: South America Production and Market: World: South America, Chine, Senegambia, Nigeria, Sudan, Africa & India
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India : Gujarat(leading),Tamil nadu, Andhra, Maharastra, Madhya pradesh, Punjab & Rajas than Export: France, England&Germany Uses: It is used to make mainly three types of product. 1.Edible oil 2.milk 3.Margarine-an imitation butter It is also used as a lubricant, as an insecticide for pest control, as a medicine to make many types of injections & added to make vegetative ghee.
? Mustered oil It is a winter crop of 5-6 months? duration. Production and Market: World: Afghanistan, Pakistan, Urope, Japan, Chine & India India: Uttar pradesh, Madhya pradesh, Punjab & Rajas than, Bihar, West Bengal, Orissa, Assam The yield of oil bring is 45%-50%. Uses: Cooking, lighting, soap making, hair oil, body oil etc.
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[III] SEMI-DRYING OIL ? Soya bean oil Production and Market: World: India, West Asia, China, Koria, Japan, Munchuria, Australia&USA. India: Gujarat, Rajasthan & Madhya Pradesh Uses: Soap, Lacithin, Colors, Tooth pasts
? Sesame oil Production and Market: World: India, Africa, China, Koria, Japan India: Tamil nadu ,Rajas than Karnataka, Goa ,Uttar Pradesh & Madhya Pradesh Uses: Soap, Lacithin, Colors, Tooth pasts
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PROCESS OF EDIBLE OIL
Vegetable oils which are obtained by processing soybeans, olives, coconuts, corn, peanuts, sunflower seeds, cotton seeds, sesame seeds, flax seeds and safflower seeds. Vegetable oils re recovered by grinding, cooking, expelling and pressing, or by solvent extraction of the raw materials. The oils are filtered and put in:
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(A) CRUDE OIL STORAGE - WITH FOOTS (Foots are the solid fragments of crushed seeds that pass through the filter) These tanks will be equipped with side entry mixers to keep the foots in suspension and ensure a uniform feed to down-stream equipment. Mixer selections are given in Table I. These tanks are often built with heating pipes. Agitation below these pipes will be reduced, resulting in solids settling and the need for periodic cleaning.
(B) BATCH REFINING
The next process step is called refining. The oil is treated with a 20% caustic solution to react the fatty acids. This results in the formation of soft soaps, which are decanted off. Too much agitation will emulsify the mix resulting in long separation times. Use gear drive portable mixers at 1 HP/1000 gallons, or small top entry mixers at 0,6 HP/1000 gallons. Some refining is done in continuous "packaged" systems built by suppliers of continuous separations equipment.
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(C) REFINED OIL STORAGE The oil now goes to refined oil storage. These tanks provide surge capacity in the system. Lower power levels are used than for crude oil with foots. See Table I for recommendations.
(D) BLENDING
Oils are sometimes blended before further processing. Blending may be done in small tanks with portable mixers at 0.3 - 0.4 HP/1000 gallons for 20 - 30 minute blend times. Larger tanks will use side entry mixers at 0.2 - 0.3 HP/1000 gallons. (E) BLEACHING
Blenching of the refined oil is accomplished by intensive mixing with 0.5 -2.0% bleaching clay. Use 4 HP/1000 gallons with side entry mixers or 2 - 3 HP/1000 gallons with top entry mixers using radial turbines.
(F) HYDROGENATION
Oils are modified by hydrogenation. To reduce the degree of unsaturation, raise the melting range, improve color and flavor and
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enhance the resistance to oxidation. Historically “Iodine Value” has been the method to measure unsaturation. Chromatography is slowly replacing I.V. as an analytical tool. Hydrogenators are usually tall tanks with cooling coils and multiple impellers operating at relatively high speeds (-100 RPM). The principal catalyst is nickel on Kieselguhr. The hydrogen feed is closely controlled because of the highly exothermic reaction. Mixer power levels will range from 3-10 HP/1000 gallons with Rushton turbines for primary gas dispersion and axial impellers to promote heat transfer and to reincorporate hydrogen from the vapor space by vortexing. Vegetable oils have a specific gravity of-0.92 at room temperature and 0.81 at 350°F. Viscosities range from 105 CPS at 50°F to 35 CPS at 100°F and 3 cps at 350°F.
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MARKET INFLUENCING FACTORS
? Variations in production and its effect on oil seeds, meal and oil production in the country. ? The arrival of seeds for crushing from the ginning centers of the country. ? Comparative price with other oilseeds, oil and meal in the domestic market. ? The demand from the industry, which is the major consumer of oilseeds meal.
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PRODUCTION, IMPORT AND TOTAL AVAILABILITY
Despite an impressive 25-26 million hectares under cultivated oilseeds, production is characterised by low yields. Domestic price support policies favour the production of crops (mainly, rice and wheat) that compete with oilseeds. Oilseeds are grown mainly on marginal and sub-marginal lands under low input usage. Moreover, less than 25% of the oilseed area is irrigated, rendering cultivation vulnerable to weather-related yield risk. This has resulted in slow growth in oilseed production and continued low yields. At about 970 kgs/ha, Indian oilseed yields are about half of the world?s average and almost onethird of leading producers. Oilseeds Production (2001-02 to 2006-07) (MT)
Crop Major Oilseeds Groundnut Rape/Mustard Soybean Other Six Sub-Total 7.0 5.1 5.6 3.0 20.7 4.1 3.9 4.6 2.2 14.8 8.1 6.3 7.8 3.0 25.2 6.8 7.6 6.9 3.1 24.4 8.0 8.1 8.3 3.5 27.9 4.9 6.7 8.7 2.9 23.2 01-02 02-03 03-04 04-05 05-06 06-07
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Others 9.0 Cottonseed Copra Grand Total 5.1 0.9 26.7 4.5 0.7 20.0 5.5 0.7 31.4 6.8 0.7 31.9 8.5 0.6 0.6 37.0 32.8
IMPORT Now let us look at the current scenario of edible oil import. From November 2006 to July, 2007 India imported 3.30 million tonnes of edible oils consisting of 2.23 million tonnes of palm products and 1.07 million tonnes of soft oils. The import volume increased by 8% over
the same period of previous year. During the next three months (Aug.October), arrivals would be 500-600,000 tonnes per month and the total imports would be 4.7 to 4.8 million tonnes for the whole year compared to 4.4 million tonnes last year (2005-06). India imports mainly crude oil to utilise its own processing capacity and practically 97-98% import is in crude form.
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Import of Edible Oils (2004-05 to 2006-07) (Qty in '000 Tons) Oil
Refined Palmolein Crude Palm Oil Crude Palmolein Soybean Oil Sunseed Oil Others Total 2004-05 (Nov – Oct) 423 2,360 187 2,001 5 65 5,041 2005-06 (Nov – Oct) 113 2,373 55 1,703 101 72 4,417 2006-07 (Nov'06–Aug.'07) 93 2,378 38 1,045 183 30 3,767 2006-07(E) (Nov-Oct) 150 2,900 50 1,350 250 50 4,750
Import of Vegetable Oils 2006-07 (P) & 2005-06
(Qty. in '000 Tons)
2006-07(Projected) Palm 3,100 300 Soft Oil 1,650 -Total 4,750 300 Palm 2,569 300 2005-06 Soft Oil 1,848 --Total 4,417 300 (+) 333 Nil Difference
Products Edible Oil Vanaspati (Hydrogenated Fat) Non-edible (CPS, PFAD & Other) Total
750
--
750
709
--
709
(+) 41
4,150
1,650
5,800
3578
1,848
5,426
(+) 374
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India - A growth market India will continue to be large importer of vegetable oil for quite some time - at least next 10 years - because domestic output growth is unlikely to catch up with demand growth. Strong GDP growth contributed mainly by manufacturing and service sectors as also rising population automatically translates to higher demand for a host of food products including edible oil.
TOTAL AVAILABILITY About 80 per cent of India's domestic oil output comes from the primary source that is nine cultivated oilseeds and two major oilbearing materials (Cottonseed and Copra). The secondary source comprises solvent extracted oils such as Rice bran oil as also oils from minor and tree-borne oilseeds. Oilseeds production for the current oil year ending October 2007 is estimated at 23.2 million tonnes (down 4.7 million tonnes from previous year), equivalent to 7.7 million tonnes of vegetable oils. Total availability of vegetable oils from domestic and import is estimated at 13.50 million tonnes during 2006-07.
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Vegetable Oil Availability (million tonnes)
Oil Year Domestic Veg. Oil Import of Vegetable Oil Edible Grade 4.75 4.42 5.04 4.39 5.11 4.42 4.83 Nonedible 0.75 0.71 0.40 0.23 0.28 0.39 0.26 Total Veg Oil Availability Vanaspati 0.30 0.30 0.20 0.10 0.10 0.10 0.10 Total 5.80 5.43 5.64 4.72 5.49 4.91 5.19 (Edible Non-edible) 13.50 13.46 13.29 12.31 10.64 11.63 11.00 &
(Nov-Oct)
Availability 2006-07 (E) 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 7.72 8.03 7.59 7.59 5.15 6.72 5.81
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PRODUCTION, CONSUMPTION AND EXPORT
India is a large producer of oilseed derivatives (oilcakes and meals/extractions) the export surplus is limited to about 4.0 - 5.0 million tonnes.
India?s Oilcake/meal Production vis-à-vis Consumption & Export (Qty. in Million Tonnes) Production Year Oilseeds/Oil Bearing Material
2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 33.40 34.88 33.92 32.54 23.46 29.15
Disappearance(cake/meal) Cake / Meal
21.05 22.07 21.64 19.88 14.74 17.70
Domestic
15.87 (75%) 17.65 (80%) 18.91 (87%) 16.51 (83%) 12.84 (87%) 14.68 (83%)
Export
5.18 (25%) 4.42(20%) 2.73 (13%) 3.37 (17%) 1.90 (13%) 3.02 (17%)
There is a growing internal market for animal feedstuffs as the livestock industry shows expansion by 10-15 percent per annum. It may come as a surprise to many that India is the world's largest producer
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of milk - 100 million tonnes and growing at 3.5 percent per annum. The poultry sector too has been registering robust growth. India is currently world's fifth largest producer of eggs. Currently, India accounts for 7.4% of world oilseeds output; 6.1% of world oil meal production; 3.9% of world oil meal export; 5.8% of world veg oil production; 11.2% of world veg oil import and 9.3% of the world edible oil consumption (Source: Oil World 2007). Clearly, India may not be such a big force to reckon with at this point in time as it is not in the big league of countries such as USA, Brazil and China. Yet, the India?s growth prospects and ravenous appetite for food including edible oils means that the world market cannot afford to ignore India's presence as a producer, consumer, importer or exporter.
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4Ps OF MARKETING
INTRODUCTION
The whole marketing concept depends upon the four major factors, which is called four P?s of marketing, which falls under the heading of marketing mix.
?
MARKETING MIX:
PRODUCT
PRICE
4P’S OFMARKETING
PROMOTION PLACE
The recent exponential growth in broadcasting alternatives means that marketing has become priority. Organizations must learn how to market themselves with greater success, despite opposition from their competitors.
Theoretically, each of the product, price, place and promotion variables can be controlled by organizations and at the same time. Taken together, they constitute the marketing mix. An organization
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must come up with a mix that will clearly differentiate its product from those of its competitors, while simultaneously considering the corporate goals.
Many people have already heard about the “4p?s of marketing”. Generally speaking, the so-called “marketing mix” is a framework that acts as a guideline for marketers to implement a marketing concept. It consists of a set of major decision areas that a company needs to manage in order to at least satisfy consumer needs.
PRODUCT:
The first element of the 4 Ps of marketing is product. It focuses on the individual goods and the product line. At heart of great brand is a great product. Product is a key element in the market offering. One of the definitions of product is as under.
“Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations and ideas.”
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A product is not only a tangible offering, but it can more than that. A product is anything that can be offered to market to satisfy a want or need. Products that are marketed are including physical goods, services, experience, events, persons, places, properties, organizations, information and ideas.
Here, we are classifying edible oil, as a tangible product, since it requires the elements of marketing mix to reach the customers.
? Product levels:
There are five different product levels, each of which represents a customer value hierarchy. These product levels are described as below. 1. Core benefit: The most fundamental level is the core benefit, the fundamental service or benefit that the customer is really buying. The consumer of edible oil is buying cooking.
2. Basic products:
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At this level, the marketer has to convert the core benefit into the basic product. Because his major emphasis is to satisfy basic need of customer. The basic product introduced, to satisfy the core benefit of “cooking”, is edible oil.
3. Expected product:
The marketer prepares an expected product, a set of attributes and conditions buyer normally expect when they purchase this product. The consumers while buying the edible oil products expect good cooking. 5. Augmented level:
The marketer prepares an augmented product that exceeds customer?s expectations. Product augmentation leads the marketer to look at the user?s total consumption system. According to levitt: - The new competition is not between what companies produce, but between what they add to their products in term of services, advertising, customers advice and other things that people value. In order to attract more customers, the marketer of edible oil can provide a variety of augmented services.
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6. Potential product: At the fifth level stands the potential product, which
encompasses all the possible augmentations and transformation the product or offering might undergo in the future. Here is where companies search for new ways to satisfy customers and distinguish their offer. Successful companies add benefits to their offering that not only satisfy customers but also surprises and delight them. Delighting customers is a matter of exceeding expectations.
? Product hierarchy:
Each product is related to certain other products. The product hierarchy stretches from basic needs to particular items that satisfy those needs. We can identify six levels of the product hierarchy. 1. NEED FAMILY: A need family consists of the core need that underlies the existence of a product family. The need family of edible oil is cooking.
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2. PRODUCT FAMILY: All the product classes that can satisfy a core need with reasonable effectiveness are included in product family. In case of edible oil, the product family is vegetable oil and non-vegetable oil. 3. PRODUCT CLASS: The product class includes a group of products within the product family recognized as having a certain functional coherence. Also known as product category. The product class of AWL is Fortune brands, Raag brands and Jubilee brands.
4.PRODUCT LINE: A product line is a group of products within a product class that are closely related because they perform similar kind of function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. In this case, product line is all the edible oil companies like Trirupati, Sun drop, Saffola, Dhara etc.
5.PRODUCT TYPE: A product type refers to a group of items within a product line that share one of several possible forms of the product. The product type
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of edible oil is Groundnut oil, cottonseed oil, Sunflower oil, coconut oil, Soybean oil, Mustered oil etc.
6.ITEM: It is also called stock keeping unit or product variant. A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute is an item. In our example the item is the edible oil itself.
The product hierarchy described above can be summed up in the figure mentioned below.
Item
Product Type Product Line Product Class Product Family Need Family
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? Product mix:
A product mix is also called a product assortment. It is a set of all products and items a particular seller offers for sale. A company?s product mix has a certain width, length, depth and consistency. The product mix of AWL is as follows.
PRODUCT WIDTH
Fortunne P R O D U C T L E N G T H jkhjhFOF ORTUNE
Refined Soyabean Oil Refined Sunflower Oil Refined Cottonseed Oil Refined Groundnut Oil Kachi Ghani Mustard Oil Pure Groundnut Oil Pure Mustard Oil Pure Coconut Oil Naturelle Fryola
Raag
JUBILEE
Vanaspati Refined Soyabean Oil
Masterchef bakeryShortening
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Product width: The product of a product mix refers to how many different products lines the company carries. The width of the AWL?s product mix is 3 i.e. FORTUNE, RAAG & JUBILEE.
Product length: The length of the product line refers to the total number of items in the line.In this case, the length of the product mix is 13.
Product depth: The depth of the product mix refers to how many variants are offered of each product in the line. In FORTUNE brand depth of the product mix is 10, and in RAAG it is 2, and in JUBILEE it is 1. Product consistency: The consistency of the product mix refers to how closely relate the various product lines are in end use, production requirements, distribution channels, or some other way. In case of AWL product mix is completely consistence.
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PRICE
From the point of view of manufacturer only, price represents the quality of money received by the firm of seller. Price is the most important factor of marketing mix, which gives absolute percentage about the purchase and sales.
Price is the one element of the marketing mix that produces revenue, the other elements produce costs. Price is one of the easiest marketing mix element to adjust product features channels and event promotion. Price also communicates with the market by which medium company can show their intention towards value positioning of its product or brand.
Traditionally
speaking
price
has
operated
as
the
major
determinant or the major influencing factor of the buyer?s choice. Even this behavior prevails not only in the underdeveloped or the developing countries but also in the developed countries, so more of lesser price does matter for any buyer irrespective of the income level or the demographic factors.
In the order to arrive at the most acceptable price level, the marketer needs to have the information on 3 C?s.
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? Customer: Price affects the customers by their income levels their willingness to purchase, ability to pay etc.
? Competitors: The company decides their product price according to their competitor?s price. The poor company ignores their
competitors. The average company copies their competitor?s price. The willing company leads their competitor?s price.
? Cost structure of the company: The company decides their price according to their expenditure such as preliminary expenses, factor expenses etc.
Price
High High 1.Premium Strategy Medium 2.Highvalue Strategy Low 3. Super value Strategy
Product quality
Medium
4.Overcharging Strategy
5.Medium value Strategy 8. Falls Economy Strategy
6.Goodvalue Strategy 9.Economy Strategy
Low
7.Ripoff Strategy
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There can be competition between price quality segments. The above figures show 9 price quality strategies. The diagonal strategies 1,5,7,9 can all co-exists in the same market i.e., one firm offers a high quality product at a high price, another offers an average – quality product at an average price, and still another offers a low quality product at a low price. All three competitors can co-exist as long as the market consists 3 groups of buyers, the firsts who insist on quality, secondly who insist on price and the others who balance the two.
Strategies 2, 3 & 6 are ways to attack the diagonal positions. Strategy 2 describes as “our product has the same high quality as product 1 but we charge less.”
Strategy 3 says the same thing and offers even greater saving. If quality sensitive customers believe these competitors product is good, they will sensibly buy from them and save money unless firm?s product has acquired snob appeal.
Positioning strategies 4, 7 & 8 amounts to overpricing the product in relation to its quality. The customers will fell “taken” and will probably complain or spread bad word of mouth about the company.
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PROMOTION
“All the activities which are undertaken by the entrepreneur to promote the product.” Promotion tells something about company.
Promotion can be defined as “activities that communicate the product or services and its merits to target customers and persuade them to buy.”
PROMOTION
ADVERTISING
SALESPROMOTI ON
PUBLIC RELATION
SALESFORCE
DIRECT MARKETIG
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Promotion is the advertising and selling part of marketing. Often, promotions are categorized into push versus pull. Advertising pulls by making consumer aware of, and ask for the product or service. Incentives, such as premiums or price reductions, push the product out the door encouraging the customers to purchase in volume, more, or more often then he would otherwise purchase.
Promotion is concept of organizational culture, popularly organized as “artifacts”-everything that can be seen, heard and felt, such the day-to-day behavior, physical environment, and communication of an organization. Thus, out of the 4ps of this EDIBLE OIL compete exclusively in the area of promotion. Promotion can be done by advertising, sales promotions, sales forces, public relations and direct marketing.
ADVERTISING:
“Advertising offers a reason to buy.” The edible oil Companies advertise their product through media, banners, hoardings, ambassadors and etc.
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EDIBLE OIL OFFICE
AdaniWilmar Limited “Fortune House” Nr. NavrangpuraRlv. Crossing, Ahmedabad-380009
LOGO
SALES PROMOTION:
“Sales promotion offers an incentive to buy.” For
sales promotion, companies held many offers like exchange of old models to new one by paying very less sum of money.
PUBLIC RELATION:
Public relation involves a variety of programmed designed to promote or protect a company?s image or its individual product. Sometimes companies also prefer seminars from which can they can show the company?s profile and also they can create a good image of the company.
DIRECT MARKETIING: 85
“Direct marketing is the use of consumer direct channels to reach and deliver goods and services to customers without using marketing middleman.”
SALES FORCE:
“Sales force is one of the marketing services from which manufacturer mainly based upon door to door selling.” In Edible oil door-to-door selling is not preferable, as it requires large amount to be invested.
PLACE:
Place is the 4th element of 4p?s of marketing. Place includes “all the company activities that make the product or service available to target customer.” In sample words, place means-where and how a product is distributed and sold. Whether to sell it directly, through a broker, or a distributor? Whether to run retail store or sell only to retailer? In case of service, whether to deliver it in person or through the Internet or telephone? These questions all involve “place”.
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As we?ve taken edible oil as our main product the distribution channels would be as follows:
(I)
MANUFACTURERS
DEALERS
WHOLESELLERS
RETAILERS
CONSUMER
(II) MANUFACTURERS
DEALERS
WHOLESELLERS
CONSUMER
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RESEARCH PLAN
Topic: - The Research conducted on Edible Oil Target: - Retailers Area: -AhmedabadCity.
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Research Problem: -
“To know how to expand the business of AWL?s edible oils in terms of market share, profitability with consumers? growing demand; so that it can break the competitors? business”
Research Design: -
1) 2) 3) 4) 5)
Sampling method: Convenience Sampling method Collection of data: Questionnaire Sample size: 100 Time: 15 days Cost: 500\- (approximate)
Limitations: (1) (2) The sample size is not large. We have time constraint because of which, we could cover only Ahmedabad city for the survey. (3) (4) Lack of practical knowledge. Respondents? did not like to share information.
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Objectives: -
1. Understand consumer behavior towards buying and consumption of edible oil 2. Study the market scenario in terms of customer demand 3. Analyze the benefits and satisfaction level of retailers towards different edible oil brands. 4. Importance and usage of different edible oil as per socio economic classification. 5. Price sensitivity on retailers' willingness to stock 6. Study consumer driven retailer preferences of stocking for different types of edible oils and reasons for differences by usage and area/sector
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MARKET RESEARCH
According to The American Management Association “Marketing researches the function that links an organization to its market through the gathering to information”.
This information allows for the identification and definition of market driven opportunities and problems. It also allows for the generation, refinement and evaluation of marketing actions. It allows for the monitoring of marketing performance and improved
understanding of marketing as a business process.”
Research is to see what everyday else has been and think what nobody else has thought. All market research should have clear objectives. Initiating research without objectives is like setting out on a drive without a destination.
? TYPES OF DATA SOURCES FOR MARKET RESEARCH:
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The sources of data structures and information needed to resolve decision and research problems.
? Primary Data: Most of the information that we have collected and presented in this project report is based on the questionnaire, which is our primary source.
? Secondary Data: We got other information from AMA library, newspaper, magazines and websites and as we all know Internet is one of the most popular medium to gain information regarding companies hence we?ve used Internet.
We have selected questionnaire as a primary data because it gives us all the information that we need in very less time and much less efforts. It was designed in such a way so as to cover as many aspects of consumer as possible.
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MARKETING RESEARCH PROCESS
Define problem and research objective
Develop the research Plan
Collect the Information
Analyze the information
Present the Findings
Make the decision
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FINDINGS AND INTERPRETATION (A) Retail penetration of various brands:
STORES
STORES, TIRUPATI RCNO, 99 STORES, TIRAPATI STORES, DALDA FGNO, 99 VANASPATI, 97
SAFFOLA GOLD STORES, VIMAL RCNO, 85 ANKUR RCNO SUNDROP SUN STORES, ANKUR RCNO, 71 STORES, ANKUR FGNO, 71 FORTUNE RCNO GULAB FGNO ANKUR FGNO STORES, GULAB FGNO, 55 STORES, GULAB RCNO, 55 FORTUNE SUN SUNDROP HEART STORES, APPU RCNO TIRUPATI MUSTARD, 46 GULAB RCNO VIMAL RCNO APPU MUSTARD DALDA VANASPATI STORES, FORTUNE RCNO, 17 STORES, SUNDROP STORES, SAFFOLA SUN, 7 GOLD, 5 STORES, FORTUNE SUN, 17 STORES, SUNDROP HEART, 7 TIRAPATI FGNO
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From the study of market Tirupati FGNO dominate in Groundnut& Cottonseed segment & Fortune sun in sunflower.
(B)
oil brand Tirupatifgno ankurfgno tirupatircno fortune rcno fortune sun sundrop sun stores 99 71 99 17 17 7
RETAIL PENETRATION:BRAND POLLING
100 90 80 70 60 no of 50 stores 40 30 20 10 0 99 71 99 Tirupatifgno ankur fgno tirupati rcno fortune rcno 17 17 7 1 oil brand fortune sun sundrop sun
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(c)
ZONE WISE STORES
stores, north, 51 stores, east, 49
east
north
(D)
market distribution on the basis of stores
Series1, kirana , 50 Series1, general, 36
Series1, oil, 14
no. of stores
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(E)
RE TAIL PE NE TRATION OF VARIOUS BRANDS OF OIL
120% S tocked E arlier but now not willing to stock Not stocked earlier & now not willing to stock Willing to S tock
100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 0% 1% 3% 0% 0% 15% 29% 29% 0% 80% 44% 44% 54% 0% 0% 60% 93% 40% 71% 55% 20% 2% 0% 5%
ld O Go CN r op
92%
81%
1%
81%
92%
1% 99% 85% 99% 0% 97%
71% 55% 2% 17% 1% 7%
a rt RC V im NO al RC Ap NO pu M Da us lda ta r d Va n a T ir sp up a ti a ti FG NO GN Su He NO O n
2% 1% 17% 7%
n NO Su NO
46% Already in S tore
RC
FG
rR
rF
ne
la
r op
la b
a ti
nd
ku
ku
nd
T ir up
Sa
rtu
Gu
Fo
Fo
Su
Gu
An
Su
An
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la b
ne
ffo
rtu
RC
DEMAND AND SUPPLY DRIVERS IN INDIA
Considering population growth rate of 1.8 percent (over 18 million additions every year) and income increases through economic growth (assuming average of 8 percent a year), we expect consumption demand for vegetable oil to expand on an average by 6-7 percent each one of the next five years. This translates to roughly 700,000 to 800,000 tonnes of additional demand every year. By 2012, India?s total vegetable oil consumption demand is slated to
reach 15-16 million tonnes. Prospects for indigenous supplies As per agricultural growth projections made by the Government of India for the period 2008-2012, oilseeds output is targeted to increase by 4 percent a year. Based on the current output of about 25 million tonnes, a 4 percent increase translates to about One million tonnes of oilseeds a year, equivalent to about
300,000-350,000 tonnes of oils. In fact, 4 percent is the targeted growth rate taking into account various operational constraints. There is no guarantee that even this modest growth will be achieved.
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As demand rises by about 700,000 tonnes a year, domestic production is likely to rise by just half of demand growth that is about 350,000 tonnes. The inference is clear. India's domestic supply shortfall, currently placed at 4.5-5.0 million tonnes, will continue to widen, conservatively and on an average increase by 350,000 tons a year. There is also the likelihood of the Government arranging for some additional imports for supply through the public distribution system to support the really needy sections of the growing population. In sum, India's vegetable oil consumption demand is expected to rise faster than domestic production growth. This will lead to import of larger volumes than at present, growing on an average by about 350,000 tonnes a year. The composition of imports will of course depend on the relative prices of various oils in the world market and import logistics.
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World Demand & Supply Situations
(Quantity in million metric tones) Year Beginning August 1 World beginning stock World Cotton seed production World Cotton seed Consumption World Cotton seed Export World Ending stock 01-02 6.81 14.33 13.41 4.31 7.98 02-03 7.98 12.87 14.35 4.44 6.71 03-04 6.71 13.81 14.52 4.84 6.21 04-05 6.20 17.53 15.75 4.85 8.03 05-06 8.03 16.45 16.72 6.53 7.90 06-07 7.90 16.89 17.43 5.53 7.62
Trends in global oilseed demand and supply
(Million tonnes)
2002-03 2003-04 2004-05 2005-06 2006-07 Total oilseeds Supply Demand stocks 322.4 318 53.2 324.1 329.7 47.6 371.4 354.5 64.5 380.8 374.7 70.6 385.5 389.2 66.9 Soybeans Supply Demand 196.9 190.5 185.5 191.6 216.3 204.1 220.1 214.6 226.6 226.2 Sunflower Supply Demand 23.9 24.2 26.9 26.8 26.2 26.3 29.3 30.2 30.4 30.7 Rapeseed Supply Demand 33.1 34.3 39 38.5 46.1 42.9 49.1 48.4 46.1 49.4
Demand on the other hand, is accelerating year-on-year due to rapid expansion in vegetable oils uses. In addition to the normal increase in demand from human consumption, the rapid expansion in demand has mainly sourced from two commercial purposes.
?
Firstly, growing demand from feed industry to substitute oil meal for grain. Grain prices, particularly, maize and sorghum have risen to
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a ten-year high in the current year forcing the feed industry to look for alternative feed sources.
?
Secondly, growing demand for bio-fuels. It is estimated
that demand for vegetable oils from bio-fuels industry is expected to boost import of soya oil, sun oil, rape oil and palm oil by EU to an extent of 2.08 million tonnes in Oct-Dec 2006, about 32% higher than a year before (Oilworld, 2006).
Thus, despite a record production of oilseeds, prices are expected to remain high due to steep rise in usage and increase in exports. However, price increase may be moderate compared to the previous year but may not reach the levels of 2003-04.
Edible Oil Demand Projection:
The demand for edible oils is expected to increase from the current level of 15.6 million tonnes in 2010 and further to 21.3 million tonnes by 2015. This assumes a per capita consumption increase of 4% and a population growth of 1.8% which translates to an overall growth in demand @ 6% p.a.
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Edible Oil Demand Projection Parameter Total Demand (Mn Tonnes) Total Area under Oilseeds (Mn Hectares) Yield (Tonnes/hectare) Production of Oilseeds (Mn tonnes) Domestic supply of edible oils (Mn tonnes) Total edible oil imports - (Mn tonnes) Imports as share of demand 2010 2015 15.6 21.3 28 32 1.2 33.6 10.1 5.9 38% 1.4 44.8 13.4 8.3 39%
India will continue her dependence on imports to the extent of about 40% of its consumption requirement. The improvement in yields and the increase in area under cultivation will ensure that the domestic oilseed production is sufficient to meet 60% of consumption requirement.
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GLOBAL OILSEED PRODUCTION FORCAST
The first table „Global oilseeds production forecast? shows the strong expectation of oilseed production expanding over the coming years by 10-13 million tons, a growth rate of about 3.3 percent a year. We must remember, in addition to the three major oilseeds plus copra, we have two more important oilseeds, namely cottonseed and peanut. Historical trends suggest world peanut production is unlikely to change significantly over the coming year. Cottonseed output too may be considered nearing a plateau; because gains in countries like India may be largely offset by output cutbacks in USA. Also, cottonseed is not a high oil content material. Global Major Oilseed Production Forecast (Qty. in '000 Tonnes)
Year 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Global Rapeseed 48,732 46,234 51,052 52,136 54,315 55,468 Global Soybean 220,556 236,075 222,054 229,819 238,847 247,200 Global Sunflowerseed 30,100 30,088 29,843 30,776 32,700 34,813 Global Copra 5,500 5,276 5,366 5,456 5,476 5,568 Total 304,888 317,673 308,315 318,187 331,339 343,050
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GLOBAL VEGATABLE OIL PRODUCTION FORCAST
The second table shows us „global vegetable oil production forecast?, according to which production is anticipated to expand by 5.0-5.5 million tons a year in the next few years. Oils shown in this table are what I would call „growth oils?; these are oils with production growth potential. Three other oils – peanut oil, cottonseed oil and olive oil – too contribute to the global vegoil basket. Again, recent trend suggest, their output growth would be rather modest, if at all. Under normal conditions, a 5.0-.5.5 million tons growth would result in build up of global inventory. However, in addition to food and industrial needs, existing and potential demand for biodiesel needs to be factored in. This is likely to lead to tightening of supplies.
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Global Vegetable Oil Production Forecast(Qty. in '000 Tonnes)
Global Global Rapeseed Year 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Oil 17,145 17,776 18,743 19,141 19,941 20,364 Global Soybean Oil 34,484 35,989 37,552 38,865 40,392 41,805 Global Sunflower Seed Oi 10,419 10,780 10,744 11,080 11,772 12,533 Global Coconut Oil 3,403 3,253 3,316 3,372 3,384 3,441 Palm & Palm Kernel Oil 40,194 41,380 44,304 46,949 49,752 52,722 Total 105,645 109,178 114,659 119,406 125,241 130,865
MEAL PRODUCTION FORCAST Last is the meal production forecast table. Clearly, soyameal has the greatest growth potential, followed by rapeseed meal. Fortunately, the global feed market is unlikely to face a serious shortage despite expanding meal demand to cater to the growing livestock industry. High vegoil prices will encourage expanded crushing of oilseeds for oil, which in turn will result in more meal production. In addition, we must remember, there will be large availability of “distillers? grains” from bio-ethanol plants that use corn (maize) for extracting ethanol. The potential loss of meal by way of lower oilseeds production (through loss of acreage to corn) will be partially made up by DDG.
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Meal Production Forecast (Qty. in '000 Tonnes) Global Palm Kernel Meal 5,215 5,389 5,686 5,868 6,111 6,327
Year 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Global Rapeseed Meal 26,222 27,054 28,429 29,032 30,246 30,888
Global Soybean Meal 145,603 153,533 160,378 165,987 172,507 178,540
Global Sunflowerseed Meal 11,380 11,803 11,767 12,135 12,893 13,727
Global Copra Meal 1,771 1,694 1,714 1,743 1,749 1,779
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IMPACT OF INDIA
During November, the Indian domestic market will come under harvest pressure. India?s imports during October and November will be sluggish. However, December will be a different story. There is usually a window for imported oil during the period January to March. Precisely at this point in December when my Indian compatriots think of entering the market, they may find prices beyond their reach. The impact of India is therefore likely to be felt post December and will be more bullish than we have seen in the past 18 months. INCREMENTAL SUPPLY & DEMAND Let us now look at the latest Incremental Supply & Demand position for the world for the period October 2006 to September 2007. The picture I had given out in Mumbai on 24th September was very alarming, as follows. 000 tonnes Soya oil Cotton oil Groundnut oil Sun oil Rape oil Palm Kernel oil Coconut oil Palm oil Net Change in Supply Demand
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Oct 2006 – Sept 2007 + 500 -----300 ----------+ 270 -----+ 2,500 + 2,970 + 6,500
SWOT ANALYSES OF EDIBLE OIL INDUSTRY
? Strengths: ? Industry is solar powered ? Provide oils usable for human consumption or for biofuels ? Weaknesses: ? Fossil fuels are extensively used in agriculture & production for edible oils ? Large-scale monocultural agricultural production is vulnerable to diseases and pests ? Opportunities: ? Some edible oil agriculture can use non-prime farmland (e.g., sunflower and canola in dry prairie) ? Agricultural production methods could reduce reliance on fossil fuel inputs ? With bio-diesel-fueled equipment, edible oil industry could fuel its own tractors and harvesting equipment! (Internal (inside-the-industry) fueling) ? Threats: ? Increased reliance on edible oils for biofuels will reduce supplies available for human consumption. ? Great reliance on edible oils for biofuels could cause environmental degradation (soil depletion, erosion, a runoff problems).
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CONCLUSION
It is assured from the above analysis that domestic outlook for a vegetable oil is strong due to a dip in domestic production. Hence, prices of domestically produced oilseeds like groundnut, cottonseed oil and mustard may move up significantly while Soya and palm may probably not gain beyond the international price variations. The most of the consumers are using mostly two types of edible oil i.e. Groundnut oil and Cottonseed oil. Thus the criteria applied for stocking Groundnut oil and cottonseed oil is High demand by Customers and those who are using sunflower oil is only for the purpose of good health. We also come to the conclusion that retailers? preference in stocking brand is mostly on the basis of customers' traditional demand behaviour.
From the study Fortune has the high opprtunity to cover the the market of Edible oil in Gandhinagar city
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FUTURE
?
Demand Drivers
?
? ?
Macroeconomic factors: Population growth, per capita income, purchasing power, oilseeds crop Other factors: Prices - domestic/ international, Availability oil, oilseeds Influence of branded products - `health? message Growing preference for convenience foods. Raw material sourcing: focus on improving yields, getting better quality oilseeds, ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (Vanaspathi - Dalda, Oils - Sundrop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based assistance to farmers of eliminate unofficial markets
?
?
Key Success Factors
? ?
?
Future
In the next five years, the market for edible oils will grow by 8% to 12.65 million MT, vanaspathi will grow to 1.5 million MT and Cottonseed oil will grow by 12% to 14%.
?
Business Concerns
?
Free imports, low import duties and slump in global prices - lead to `dumping? Domestic industries of edible oils and vanaspathi affected - low realisation and idle capacities in oil
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? ?
? ?
and vanaspathi industries Production slippages have also forced imports Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally Hence, farmers have shifted to other cash crops Increasing health awareness - impact of oils and vanaspathi usage on individual?s cholesterol levels
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BIBLIOGRAPHY
? Marketing Management, Kotler, Philip. New Delhi: Prentice Hall, 2004.
WEBOGRAPHY
www.seaofindia.com www.google.com
WWW.ADANIWILMAR.COM
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doc_973530553.docx
Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery.
SUMMER PROJECT REPORT
Overall Organizational Study And Marketing Research on the Retailer Feedback
AT
Adani Wilmar Limited.
Submitted By: Sachin Patel MBA-III (2009-2010)
Submitted To: SARVODAY COLLEGE OF MGMT & TECHNOLOGY, LIMBDI. SAURASHTRA UNIVERSITY.
1
PREFACE
The importance of the project preparation has been widely accepted in the educational institutions as well in business houses. The essence of the project preparation is to have an experience of all the hardship that is faced while setting up a new enterprise.
This project allows us to apply our theoretical knowledge as well as practical know how. During this project work, we got a chance to meet many executives who gave us a platform for learning from their experiences and knowledge.
Preparing a project is a system of logic where they use their logic sense to find out all the visions of project. As a management student, this work gives the basic knowledge and concept of various managerial functions in the most useful and organized way and thus we can?t afford to avoid.
Here, we have been given study report on “Market Research of Edible Oil” as a part of our summer training project in the 1st year MBA. In which we did a survey on edible oil and also dealt with four aspects of marketing section, which is product, price, place and promotion.
2
Before presenting our project that would likely call a survey rather, we would like to say it is an image of our deep practical studies to whatever we have observed and analyzed. The purpose of writing a report is to put into work the practical training that is being imparted to us. Fundamentally the ground for preparation of the report is today?s information, cultures that requires in depth knowledge of sectors, which gives a clear and reliable under standing of practical training that we get. This opportunity helped us to develop and enhance our appetite for learning and served as a fusion of the theoretical concepts and their practical applications in the corporate world.
3
ACKNOWLEDGEMENT
A feeling of gratefulness to anyone?s help directly arises from the bottom of the heart. The small but an important and timely help can prove to be a milestone in one?s helped. Every human being has such kind of experience. And we have achieved an important milestone in own life “The Completion of this project”.
This research is dedicated to all the people, whom we met, took guidance, talked, interviewed and learnt something from them. At this occasion, we want to grab this immense opportunity to acknowledge our sincere thanks to all of them while submitting this report.
We are indebted and whole-heartedly thankful for the assistance received from various individual in making this project a success. We have no words to express our gratitude towards those who were constantly involved with us throughout our wonderful experience working with this research project.
We are satisfied with the motivate task of project work provided to us as a part of our curriculum. These has proved work provided to be the first step towards globalize world with health management skills. Here, we have been given study report on “Market Research of Edible Oil” as
4
a part of our summer training project in the 1st year MBA of SomLalit Institute of Business Management.
We are obliged to “AdaniWilmar Ltd” for providing an opportunity to undergo training in their esteem organization. We are thankful to Mr. VipulRajyaguru (Marketing Manager) for his co-operation and guidance.
The successful completion of this report would not have been possible without the proper guidance and support of our professors. We would also like to give our gratitude to our college, SomLalit Institute Of Business Management which helped us in every aspect to prepare this valuable report.
Someone has rightly said that the God is always keeping his eyes on your acts and helps you in your work. We always have felt the visible help from the almighty. And without the blessings of the almighty, we may not have succeeded.
And finally, how can we forget all those respondents who have given us their valuable time and have made our survey possible, without which it would not have been possible to test our hypothesis and thus get a fair picture about our assumptions.
5
EXECUTIVE SUMMARY
This project is focused on „Market Research of Edible oil? and for that purpose we approached the „AdaniWilmar Ltd.?
The objective of doing this project is to understand the retailers? stocking behaviour, the stocking beliefs and factors of retailers?, consumers? preference for different oil category & brands available in the market and position of different brands in market.
To achieve our objective, we used primary data source i.e. questionnaire and secondary data source like Internet and reference books. In the next step, we have done overall analyses of our survey.
Finally, we conclude our project with the fulfillment of all the objectives of our research plan.
6
Research Methodology
? Research Objectives 1. Understand consumer behavior towards buying and
consumption of edible oil 2. Study the market scenario in terms of customer demand 3. Analyze the benefits and satisfaction level of retailers towards different edible oil brands. 4. Importance and usage of different edible oil as per socio economic classification. 5. Price sensitivity on retailers' willingness to stock
? Research Design o Sampling method: Convenience Sampling method o Collection of data: Questionnaire
o Sample Universe: All the shops of the North & East zone of the Ahmedabad. o o Sample size: 100 Research was to be conducted in Ahmedabad.
o We divided the city into 2 zone. North & East.
7
INDEX
TITLE PAGE PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMARY RESEARCH METHODOLOGY INDEX INTRODUCTION TO THE COMPANY Company Profile Product Profile Marketing INTRODUCTION TO THE EDIBLE OIL Overview of edible oil Characteristics Market Import and Prices Usages SCENARIO OF EDIBLE-OIL Global Scenario Indian Scenario India's trade scenario TYPES OF EDIBLE OIL CLASSIFICATION OF EDIBLE OIL Drying oil 8 56 51 46 36 8 10 2 4 6 7 1
Non-Drying oil Trade oil PROCESS OF EDIBLE OIL MARKET INFLUENCING FACTORS PRODUCTION, IMPORT AND TOTAL AVAILABILITY PRODUCTION, CONSUMPTION AND EXPORT 4Ps OF MARKETING Product Price Place Promotion RESEARCH PLAN MARKET RESEARCH FINDINGS AND INTERPRETATION DEMAND AND SUPPLY DRIVERS IN INDIA GLOBAL OILSEED PRODUCTION FORCAST Global edible oil production forecast Meal production forecast IMPACT OF INDIA SWOT ANALYSIS OF EDIBLE OIL INDUSTRY CONCLUSION FUTURE BIBLIOGRAPHY & WEBOGRAPHY 107 108 109 110 112 98 104 91 94 88 71 59 63 64 69
9
INTRODUCTION TO THE COMPANY
COMPANY PROFILE
Name of the firm Factory Address : AdaniWilmar Limited : MundraPort, Mundra, Kutch, Gujarat. Registered Office Mithakhali Crossing Road, Navrangpura, Ahmedabad – 380009. Constitution Year of Incorporation Status of Industry Product : Company : 1999-2000 : Large Scale Industry : Fortune House, Nr. Shikhar Complex,
: Edible Oil : Mr. Gutam S. Adani (Chairman) Mr. Rajesh S. Adani (Managing Director) Mr. Kuok Khoon Hong (Director) Mr. ChauPhuayHee (Director) Mr. Nico L. Hans (Alt. Director to Mr. Kuok Khoon Hong) Mr. T. K. Kannan (Alt. Director to Mr.ChauPhuayHee )
Board of Directors
Company Secretary
: Mrs. Birva C. Patel
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Vision Statement
Corporate Profile
AdaniWilmar Limited (AWL), a Rs. 2600 Crore company; is a joint venture between two global corporations.
1. The Adani Group of India - The leaders in international trading & private infrastructure. 2. The Wilmar International Limited of Singapore - One of the World's largest traders and refiners of edible oils.
Together Adani Group and Wilmar Group have set up India's first port based refinery in 1999, at Mundra, Gujarat. Today the Mundra refinery is one of India's largest and most sophisticated oil refineries. FORTUNE, RAAGand JUBILEEare the brands under which AWL sells its range of edible oil, vanaspati and bakery shortening.
11
In addition to Mundra refinery, AWL also owns refineries at Bundi [Rajasthan], Haldia [West Bengal] and Mantralayam [Andhra Pradesh]. Its cumulative refining capacity is more than 3200 Tones Per Day (TPD). The company also has packing operations at Chatral [Gujarat], Latur [Maharashtra], Jaipur [Rajasthan], Dharwad
[Karnataka], Dewas [Madhya Pradesh] and Cochin [Kerala]. With 80 branches, 5000 distributors catering to 1 million outlets, AWL?s products reach to 20 million households across India.
Since its launch in 2000, Fortune took just 20 months to become India?s No.1 edible oil brand, and they are still at the top of the chart.
Following the success in India, AWL introduced branded Soya bean oil to Middle East and is now exporting its products to more than 19 countries.
12
PROMOTERS ? Adani Group Adani Groupwith its turnover exceedingRs.20250 Crores(US $ 4.5 billion)in 2006, is one of the fastest growing corporate houses in India. Its flagship company – Adani Enterprise Ltd [formerly known as Adani Exports Ltd], is one of the largest trading companies in India with Five Star Trading Housestatus (Highest status conferred by the Govt. of India).
Adani Exports trades in nearly 40 commodities in more than 55 countries around the world.
The Group owns a fully functional multi-purpose port at Mundra in the Gulf of Kutch, Gujarat. The Group has also set up a BPO in Ahmedabad, iCall India Ltd. which caters to both International and Domestic clients.
13
Adani Group is also involved in infrastructure development which includes developing a Natural Gas distribution project, building a township and an SEZ at Mundra. Adani Group has emerged as an integrated and diversified group with leadership in the areas of global trading, edible oil manufacturing and infrastructure development.
? Wilmar International Wilmar International Limited is Asia?s leading agribusiness group and is amongst the largest listed companies by market capitalization on the Singapore Exchange. Wilmar International's business activities include oil palm cultivation, edible oils refining, oilseeds crushing, consumer pack edible oils processing and merchandising, specialty fats, oleo chemicals and biodiesel manufacturing, and grains processing and merchandising. Headquartered in Singapore, Wilmar International's operations are located in more than 20 countries across four continents, with a primary focus on Indonesia, Malaysia, China, India and Europe. Backed by a staff force of 60,000 people, over 160 processing plants and an
14
extensive distribution network, their products are delivered to more than 50 countries globally.
Today Wilmar International is: ? The largest global processor and merchandiser of palm and lauric oils ? One of the largest plantation companies in Indonesia/Malaysia ? The largest palm biodiesel manufacturer in the world ? A leading consumer pack edible oils producer, oilseeds crusher, edible oils refiner, specialty fats and oleochemicals manufacturer in China ? The largest edible oils refiner in Ukraine
15
? The leading importer of edible oils into East and South Africa MAUFACTURING NETWORK
16
The company has strategically located its refining and processing facilities to cater to different parts of the country as well as harness the potential of oilseed growing areas. The locations are at Mundra (Gujarat), Mantralayam (Andhra Pradesh), Bundi (Rajasthan) and Haldia (West Bengal). AWL's largest state-of-the-art refinery is based at Mundra in the Gulf of Kutch in Gujarat and is India?s first port based refinery. The technology has been imported from De Smet of Belgium and Alfa Laval of Sweden. The quality of oil is at par with the best in the world, meeting USFDA standards. AWL refined oil goes through the strictest quality controlled and computerized manufacturing process with online monitoring.
AWL's Mundra refinery was started with an initial refining capacity of the 600 Tonnes per Day (TPD) and after the recent expansion; Mundra has a consolidated refining capacity of 2200 TPD and hydrogenation capacity of 350 TPD.
This refinery is a model for backward integration, starting from transportation of oil through pipelines from port to the plant, to in house packaging material manufacturing like; blow-molding facility, corrugated box plant, tin manufacturing facility and multi-layer
17
packaging film plant. In addition to this is a 4 MW captive power plant that provides uninterrupted and hassle free electricity.
Such integration provides an edge in maintaining highest quality standards & a competitively priced product.
? Mantralayam (Andhra Pradesh)
This plant was acquired from ITC & is reputed to be one of the best plants in India for sunflower oil production. The plant has a capacity to crush 450 TPD of seedsandrefining capacity of180 TPDoil.Located in close proximity to the sunflower-growing belt of Andhra Pradesh and Karnataka, this plant is also suitable for crushing and refining Soyabean and Groundnut oil. It was strategically acquired to cater to South India?s demand for Refined Sunflower Oil.
? Bundi (Rajasthan)
This plant was taken over from RICO industries. It has a capacity to crush 450 TPD of seeds and refine 150 TPD of oil. The plant provides ideal location for processing both mustard and soyabean oil. Apart from it there is also a processing facility at Jaipur, which
18
produces the premium quality pungent mustard oil packed as Fortune "KachiGhani", exclusively to cater to the taste of pungent and pure mustard oil of eastern India.
? Haldia (West Bengal) This plant was acquired from Acalmar, and has a capacity to refine 600 TPD of oil. This port-based refinery is ideal for catering to the Eastern parts of the country. It also has excellent facilities to manufacture Specialty Fats.
Packaging units
In addition to the above refineries, AWL also has packing operations at
? Chatral [Gujarat]
? Latur [ Maharashtra ]
? Jaipur [Rajasthan]
? Dharwad [Karnataka]
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? Dewas [Madhya Pradesh]
? Cochin [Kerala]
DISTRIBUTION NETWORK
The end-users of our products are: households and institutional buyers [catering / hospitality / processed food / snacks] set-ups. AWL has set up a strong distribution network of Company Distributors and Super Stockists for its retail operations. This chain helps to tap even the small retailers/traders and thus increasing our reach.
Today AWL has its distribution foot prints all across the country with various stock-points catering to more than5000 distributors,600 Super Stockists and numerous brokers and other trade associates.
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AWL's retail reach is more than 1,000,000 outlets and its consumer reach is more than 80 millionIndians.
[II] PRODUCT PROFILE Fortune Brands:
? Fortune Refined Soyabean Oil ? Fortune Refined Sunflower Oil ? Fortune Refined Cottonseed Oil ? Fortune Refined Groundnut Oil ? Fortune KachiGhani Mustard Oil ? Fortune Pure Groundnut Oil ? Fortune Pure Mustard Oil
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? Fortune Pure Coconut Oil ? Fortune Fryola ? Fortune Naturelle
Raag Brands:
? RaagVanaspati ? Raag Refined Soyabean Oil
Jubilee Brands:
? Jubilee Masterchef bakery Shortening Fortune Brands
? Fortune Refined Soyabean Oil Fortune Refined Soyabean Oil is light, odorless and healthy oil. Most importantly it contains OMG3 (Omega – 3 fatty acids) – an essential PUFA which needs to be supplemented from outside sources. Soyabean oil is the preferred oil of many a household across the world. Fortune Refined Soyabean Oil, enriched with OMG3, gives you and your family “Paanch Ka Aashirwad.”
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Five disease-countering benefits for the: ? ? ? ? ? Heart Eyes Immune System Diabetics Foetus
Fortune Refined Soyabean Oil is the highest seller in the refined soyabean oil category with 44% of the market share (As per AC Nielsen Retail Audit Index - MAT Mar.'06). Fortune Refined Soyabean Oil is available in:Liner Cartons Pouches PET Bottles Jerry Cans 200 ml 200 ml, 500 ml, 1 litre 500 ml, 1 litre, 2 litre, 5 litre 2 litre, 5 litre, 15 litre
Jerry cans [wide mouth] 15 litre, 15 kg Tins Maha Fortune 15 litre, 15 kg 15 litre
? Fortune Refined Sunflower Oil
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Fortune Refined Sunflower Oil is a light, nutritious and a healthy oil that is easy to digest. It goes through the highly specialized process of winterization that removes almost all the wax content in the oil, making it the lightest oil available today. Fortune Refined Sunflower Oil consists mostly of polyunsaturated fatty acids and is low in saturated fats. This oil is also a rich source of Vitamin E, which are a fat-soluble vitamin and an antioxidant. The E-Power you and your family get from Fortune Refined Sunflower Oil helps to: ? Prevent or delay heart disease and related complications ? Protect against prostate and other cancers. ? Slow down the aging process and boost the immune function. ? Promote healing of burns, eczema and other skin problems.
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Fortune Refined Sunflower Oil is available in
ouches PET Bottles Jerry Cans Tins ? 500 ml, 1 litre 500 ml, 1 litre, 2 litre, 5 litre 2 litre, 5 litre, 15 litre 15 litre, 15 kgFortune Refined Cottonseed Oil Fortune Refined Cottonseed Oil is very stable oil with a long shelf life. This oil does not deteriorate even at high temperatures. Also, its bland flavor retains the taste of the food cooked in it. Cottonseed oil has no cholesterol and is very low in trans-fatty acids. Fortune Refined Cottonseed Oil has many food applications. As a salad oil, it is used in mayonnaise, salad dressings, sauces, and marinades. As cooking oil, it is used for frying in both commercial and home cooking. Fortune Refined Cottonseed Oil is available in
ouches PET Bottles Jerry cans Tins 1 litre 1 litre 5 litre, 15 litre 15 litre, 15 Kg25
?
Fortune Refined Groundnut Oil Refined Groundnut Oil is traditionally preferred oil for deepfrying, as it preserves the natural aroma of the food cooked/fried in it and has a high smoke point. Fortune Refined Groundnut Oil is sourced from the best groundnut oil available in the country. Crystal clear oil, it is light to consume and is the preferred oil among various consumers.
Fortune Refined Groundnut Oil is available in
ouches PET Bottles Jerry cans Tins 1 litre 500 ml, 1 litre 5 litre, 15 litre 15 litre?
Fortune KachiGhani Mustard Oil Fortune KachiGhani Pure Mustard Oil is Awl?s gift to consumers who loves high pungency mustard oil, is made from finest quality mustard seeds and is a delight of taste as well as health. Fortune KachiGhani Mustard Oil is made from the first press of the mustard in the traditional way by slowly crushing the best mustard seeds in a
26
temperature controlled environment to retain its pungency and natural properties. Its high pungency level enhances the taste of the food cooked in it and helps stimulate your appetite. It also helps in keeping pickles fresh for a longer duration while retaining their traditional flavor.
Fortune KachiGhani Mustard Oil is available in:Liner Carton Pouches PET Bottles Jerry Cans 200 ml 500 ml, 1 litre 200 ml, 500 ml, 1 litre 2 litre, 5 litre, 15 litre
Tins (lithographically printed) 5 litre, 15 litre, 15 kg
?
Fortune Pure Groundnut Oil Fortune Pure Groundnut Oil is all-purpose oil that is subtly flavored with the richness of peanuts. Made from the first pressing of groundnuts, this oil is unsurpassed in its quality. It can also be heated to high temperatures, which makes it suitable for deepfrying and sautéing. It is used by consumers for its „nutty' flavor and taste. It is the preferred oil for various kinds of traditional dishes.
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Fortune Pure Groundnut Oil is available in
ouches PET Bottles Jerry cans Tins ? Fortune Pure Mustard Oil Fortune Pure Mustard Oil is targeted primarily at those customers who want the goodness of mustard oil but with less pungency. 1 litre 500 ml, 1 litre 5 litre, 15 litre 15 litre, 15 KgFortune Pure Mustard Oil is available in
ouches PET Bottles Jerry cans 1 litre 200 ml, 500 ml, 1 litre 2 litre, 5 litreTins (lithographically printed) 5 litre
?
Fortune Pure Coconut Oil Rich in flavor and aroma, Fortune Pure Coconut Oil is made from superior quality coconuts. Our specialized filtering process
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assures that all the nutritious values of Coconut are kept intact. Fortune Pure Coconut Oil enriches your food with good taste and good health.
Fortune Pure Coconut Oil is available in
ouches Jerry Cans Tins 500 ml, 1 litre 5 litre, 5 kg 15 kg?
Fortune Fryola
Fortune Fryola – The Ultimate Frying Oil possesses the finest properties of all frying mediums. Being rich in PUFA, very low in saturates and free from trans-fatty acids, Fortune Fryola is good for health. It is also very stable during frying and doesn?t produce degraded applications. Apart from being healthy and stable, Fortune Fryola also provides several other benefits: carcinogenic compounds during prolonged frying
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? It is enriched with Vitamin A & D for further nutritional benefits. ? It ensures low oil absorption, hence makes the food healthier for heart. ? Its right fatty acid composition provides excellent flavor and color to the fried products. ? Food fried in Fortune Fryola retains its freshness for a long period. ? Due to its high smoke point it helps keep the kitchen environment healthy and hygienic. ? Due to reduced formation of thick sticky layer of burnt polymerized oil, cleaning of the oil becomes easier. ? It reaches frying temperature very quickly, which saves fuel and time. Fortune Fryola is available in:Tins 15 kg
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?
Fortune Naturelle Welcome to the World of Purity!!! Fortune Naturelle Pure Coconut Oil is made from the best quality roasted coconuts and is packed in a modern packing station where it is untouched by human hands. It has the natural goodness and aroma of coconut oil. Fortune Naturelle Pure Coconut Oil is available in
ouches PET Wide-Mouth Jar Tins 50 ml, 100 ml 50 ml, 100 ml, 200 ml, 500 ml 200 ml 500 mlRaag Brands ? RaagVanaspati RaagVanaspati (also called „Vegetable Ghee' in the Middle East and African markets) is a white granular vanaspati (the hallmark of quality in any good vanaspati). Prepared through the hydrogenation of superior quality refined oil and fortified with Vitamin „A', it is preferred for food that needs to be deep fried or sautéed for a longer period. It is also preferred in the making of traditional sweets and snacks.
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RaagVanaspati is available in
ouches 200 ml, 500 ml, 1 litre Barni Matka Tins 2 litre, 5 litre, 15 litre 2 litre, 5 litre, 15 litre, 15 kg 15 litre, 15 kg?
Raag Refined Soyabean Oil Raag Refined Soyabean Oil is light, odorless and healthy oil. It is rich in Poly- unsaturated Fatty Acids (PUFA). Raag Refined Soyabean Oil is the preferred oil for the common man.
Raag Refined Soyabean Oil is available in
ouches Pet bottles Jerry cans Tins 1 litre 500 ml, 1 litre 5 litre, 15 litre 15 litre, 15 kg32
Jubilee Brands ? Jubilee Masterchef Bakery Shortening Jubilee Masterchef range of Bakery Shortening has been introduced keeping in mind the specific needs of the bakery products. With Hydrogenation facility available at Mundra (Gujarat) and interesterification facility at Haldia (WB), AWL specialty fats division is capable of providing any type of specialty fat – from Hydrogenated to trans-fatty acid free – anywhere in India or its neighborhood. Jubilee Masterchef Bakery Shortening has four variants:
? For creaming and icing on cakes and pastries ? For puffs and kharis. ? For biscuits, cookies and cakes. ? For all bakery purposes Jubilee Masterchef Bakery Shortening is available in:Bag and Box Packs Tins 15 kg 15 kg
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[III] MARKETING
AdaniWilmar Ltd has always believed in delighting customers by providing Branded products and services. In the process AWL has created brands, which adds value to customer satisfaction.
Its flagship brand Fortune has became India?s No 1 edible oil brand within 20 months of its inception and has remained so ever since. This shows how much they have been successful in delivering value to their brand that, once their customer is always theirs.
With its various product launches and concentrated branding efforts AWL became one of the key drivers in stabilizing a fragmented edible oil market in India.
AWL can also be credited for educating Indian consumers towards the health benefits of soyabean oil as well as clarifying past myths about it. Today branded refined soyabean oil category sale is 32% of all India edible oil sales and Fortune Refined Soyabean Oil is the highest seller in it.
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In last 8 years AWL has created a basket of distinctive brands of different oils to cater all sections of Indian consumers.
No wonder, AWL?s brand Fortune has helped to energize the youth, power vibrant markets and pump the growing economy of a Healthy Growing India.
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INTRODUCTION TO THE EDIBLE OIL
Overview of Edible Oil Edible oil in the pulses, edible oil order, 1977 by ministry of food says edible oil means any oil used directly or after processing for human consumption and include hydrogenated vegetable oil.
Indian vegetable oil economy is the 4th largest in the world after USA, china &Brazil, being the largest importer and 3rd largest consumer of edible oil. India is a major player in the international edible oil markets. Each year India consumes over 10 million tones of edible oil. However the per capita consumption of edible oil is around 10.4 kg per year. This is considerably lower than most developed countries. Palm oil &soyabean oil account for almost half of the total edible oil consumption in India followed by mustard & groundnut oil.
?
India - one of world?s leading producers of oil seeds (9.3 %) and oil
? ? ?
Technology Mission on oilseeds set up in 1996 Oilseeds have support price mechanisms India - second largest importer of edible oils (2 million MT
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?
Vanaspathi - a substitute for ghee, formed by hydrogenation of crude vegetable oil.
? ?
Free pricing in vanaspathi since 1989; delicensed in 1992 Oil season - November to October
EDIBLE oil is extracted from seeds of crops like rapeseed, mustard, groundnut, linseed, sunflower, soybean, sesame and canola grown in the country. However, a large quantity of edible oil is obtained from cottonseed.
The total availability of edible oil in 2005-06 was 2.905 million tons. Local production stood at 0.793 million tons which accounts for 27 per cent of the total available quantity while the remaining 73 per cent was procured through imports. During 2006-07, local production of edible oil stood at 0.855 million tons. During this period, 2.201 million tons of edible oil was imported and 0.349 million tons extracted from imported seed.
The country imports edible oil from Malaysia, Indonesia, Norway, Singapore and Argentina. Of the imported quantity, about 56 % is of palm oil.
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Keeping in view record increase in the prices of edible oil in the world markets due to decline in world production of palm oil and soybean crops, edible oil crisis is looming large over the country. To add to this, the current year?s overall production of palm oil in South America and soybean production in some other countries, including Argentina and Brazil, has also declined significantly.
Due to rising demand and low supply, palm oil prices in the world market have shot up by $120 per ton to $1170 from $1050 per ton just within one month. Moreover, the prices of edible oil are likely to go up further which might create a crisis in the country. Similarly, in the domestic market, the prices of edible oil have gone up by Rs40 per kilograms within one month due to the soaring prices of palm oil and soybean oil in the world market so much so that the federal government has decided to reduce taxes on edible oil to bring down its sky-rocketing prices in the open market.
Presently, the country?s overall consumption of edible oil stands at three million tons, of which some 0.5 million tons is produced locally, while over 2.5 million tons is imported. To deal with the looming edible oil crisis, stringent efforts are needed to enhance local production of
38
edible oil by bringing more area under cultivation of oilseed crops as well as increasing per acre yield.
Our farmers mainly grow traditional crops such as rapeseed and mustard. Per hectare yield of such crops is less compared to nontraditional crops of sunflower, soybean, canola etc. for instance, average per hectare yield of rapeseed and cotton seed is 750 kg and 1244 kg compared to per hectare of sunflower, soybean and canola viz.1810 kg, 1207kg and 1246 kg, respectively. There are many other factors such as sowing of poor quality seed, late sowing, inadequate use of fertilisers and poor plant protection that are contributing to low per hectare yield of oilseed crops. It is essential to bring more area under non-traditional oilseed crops to cope with the situation.
Seed selection is a main facet of farming and should not be based on advertising or sales but purely on yield performance. The farmers are, therefore, not afraid while using the yield trial information and look for hybrids that performed well before going for seed selection. Seed performance should be measured keeping in view certain parameters including germination capacity, physical and genetic purity, seed maturity, seed health and vigor etc. Soil type, soil nutrient status,
39
soil moisture and weather conditions are the factors that affect these parameters.
The quality seed has the potential of increasing yield on an average of 20 per cent over traditional seed used by the farmers. But certified seed is largely limited to major crops like wheat, rice and cotton. It is essential to mobilize resources for development of high yielding oilseed crop cultivars as well as agriculture extension wing to inform the farmers about the modern production technology of such crops.
Inputs like fertilizers, irrigations, and pesticides vary with respect to type of cultivars, soil type, soil nutrient status, growth stage and climatic conditions. Certain non-traditional crops such as sunflower require more nutrients. The farmers should use fertilizers in balanced amount in a bid to obtain high crops produce.
A number of sowing techniques are practiced for the cultivation of oil seed crops that have great bearing on seed germination, plant growth, development and production. Bed plantation of sunflower gives 15 per cent higher yield than traditional broadcast method and also ensures conservation of about 45 per cent water.
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Cultivation area under oil seed crops is small compared to other crops like wheat, rice, cotton and sugarcane. During 2006-07, rapeseed/mustard, cottonseed, sunflower and canola were grown on an area of 628,000 acres, 7,599,000 acres, 937,000 acres and 359,000 acres, respectively. Small area under oil seed crops is due to competition from other crops like wheat, potato and maize.
One way to increase acreage under oilseed crops is to carry out cultivation on marginal lands and practicing inter-cropping. Saline soils can be managed by using gypsum and sulphuric or nitric acids in proper amounts and application of fertilizers, suitable cropping pattern including green manures and deep ploughing with chisel plough to reduce the severity of salinity/sodicity.
Inter-cropping of selected oilseed crops in wheat, sugarcane and potato is a best approach to enhance cultivation of oilseed crops. This would also increase cropping intensity that is less so far. Intercropping of sunflower in wheat, sugarcane and potato fields could yield best results.
Farmers prefer to grow cereals because of sound procurement system. In case of oilseed crops, there is non-existent of sound
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marketing system. Therefore, the farmers are reluctant to grow these crops. An efficient system of procurement is required to promote cultivation of oil seed crops. It is also essential that marketing system should not allow importers to exploit local producers, as it is a usual practice of importers to decrease the market prices of imported edible oil as the maturity period of crops approaches.
In a nutshell, non-availability of hybrid seeds, high cost of foreign imported hybrid seed, high cost of storage, lack of drying facilities, lack of modern production technology, use of marginal lands, non-availability of short duration varieties, lack of rhizobium inoculum, low prices of farmers? produce, lopsided marketing system, and high harvesting cost are factors shaping the mindset of the farmers for not opting oilseed crops cultivation.
Characteristic
? ?
Oils: primarily a commodity market - price sensitive Effective distribution chain - through a complex network of C&F agents, wholesalers / stockiest & retailers (kirana shops, supermarkets).
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?
Oil
sold
in
bulk
(tin,
HDPE
containers)
to
institutions;
In retail packs (PET bottles, cans, jars, pouches) to small customers.
?
Seasonal demand for oils &vanaspathi - September to November (peak season)
?
Regulation: Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils cannot be sold loose? but can be sold only in `packed? form
?
Oil consumption - North is largest market, followed by South, West & East zones.
Market
? ? ? ?
Highly fragmented industry Over 600 oil extraction units, 166 vanaspathi manufacturing units Only 10 edible oil units and 8 vanaspathi units have national reach Over 50% of the units - sick or under utilized due to surplus capacity
?
Idle capacities among these units due to shortage in feedstock supply
?
Major oil brands - - Sundrop, Dhara, Saffola, Sweekar, Ankur, Fortune
?
Vanaspati Brand-
Dalda
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CAPACITIES
Installed Capacity and Prodcution Vanaspathi Capacity Production Utilisation 2,720,000 990,534 36% Edible Oils 30,368,000 6, 250,000 21%
Installed capacities and Production - in MT per year
Import & prices
?
Oils and vanaspathi substitutes can be freely imported under OGL
?
Import duties: 15 % basic + 10 % surcharge (Oil); 40% basic (Oilseeds)
?
Large scale imports of oils and vanaspathi substitutes - primarily to check price rise and meet supply shortages
? ?
Imports during 1998-99 - 2.38 million MT Estimated imports for 1999-2000: 3 million MT
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?
Prices of edible oils: RBD Palmolein Rs. 23,500/MT (Wholesale, ex-Mumbai) World market: $420/MT (Rs. 18,060/MT) c.i.f. -July „99
?
Prices of vanaspathi: Rs. 647/15 kg (Wholesale, ex-Calcutta) May „99
Usage ? Oil and vanaspathi used as cooking media (in households, hotels, restaurants,
?
Vanaspathi used as an industrial input - for making bakery products & confectionery canteens, institutions).
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SCENARIO OF EDIBLE-OIL
Global Scenario The size of the Indian oilseeds-based sector is estimated at US$ 16.5 billion (inclusive of exports and imports). India is the world's fourth largest vegetable oil economy. The industry comprises of 15,000 oil mills, 600 solvent extraction units, 250 vanaspati (hydrogenated oil) plants, and over 600 refineries, employing over one million persons. India is a leading importer of vegetable oil in the world. As per 'Oil World' magazine, during 2006-07, the European Union-25 was the world's largest importers of 17 oils & fats at 10.0 Mn. tonnes followed by China at 8.6 Mntonnes and India in the 3rd place at 5.4 Mn. tonnes. Each year, India consumes around 12.0 to 12.5 million tonnes of various edible oils. Although edible oils are widely consumed, the per capita consumption is around 11 kgs a year, considerably lower than in most developed countries. Palm oil (mainly imported) and Soybean Oil account for almost half of India's total edible oil consumption, followed by Mustard Oil, Groundnut Oil, Cottonseed Oil, Rice Bran Oil and Sunflowerseed Oil.
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Domestic vegetable oil production (7.0 to 8.0 million tonnes) is not sufficient to meet domestic demand. The trade policy reforms in the mid -1990s fuelled increase in edible oil imports, which now meet 40-45% of India's consumption requirement. India will continue to depend on imports in the future. The composition of the import basket will however depend on relative prices of oils. Currently, crude Palm oil / Palmolein and crude Soybean oil are the favourities as they provide the lowest price option. Currently, India accounts for 7.4% of world oilseeds output; 6.1% of world oilmeal production; 3.9% of world oilmeal export; 5.8% of world vegoil production; 11.2% of world vegoil import; and 9.3% of the world edible oil consumption (Source: Oil World). With steady growth in population and personal incomes, Indian per capita consumption of edible oil has been rising steadily. However, oilseeds output and, in turn vegetable oil production , have been trailing consumption growth, necessitating imports to meet supply shortfall.
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Indian Scenario
Climatic conditions in India favor growing a variety of oilseeds. On the demand side, a growing population and vastly varied dietary habits have ensured a thriving market for edible oil in the country. In fact, there is a substantial demand overhang, which is expected to continue for some years. At present, this is offset by imports that cater to almost half of the total domestic consumption. With cheap imports threatening to cripple the domestic industry, the government is walking a tightrope between filling the demand
supply gap and the political need to keep the domestic industry in good health.
Unorganized, medium and small players dominate the industry. Hence, quality remains a concern. There is need for better regulatory control to protect consumers. An average Indian's yearly edible oil requirement has gone up from 7.0 kg in 1996-97 to 11.8 kg in 2000-01. Despite the variety of oilseeds grown in India, the country imports a substantial quantity of edible oil, which also works out cheaper. Allied factors contributing to imports are the higher cost of cultivation in India and uneconomic oil extraction
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systems.
Oilseeds in India account for around 5.0 percent of the Gross National Product (GNP) and 14.0 percent of the country's area under cultivation of crops. Castor, Groundnut, Linseed, Niger, Rapeseed, Mustard, Safflower, Sesame and Sunflower are some of the major oilseeds grown. India produces 10 percent of the world's oilseeds, but has a low productivity of around 850-900 kg per hectare (compared to a world average of around 1,100-1,350 kg per hectare).
The amount of oil extracted from the seed varies with the type and quality of seed. In many cases, the oil recovery rate is upwards of 30.0 percent with Sesame accounting for a high 45.0 percent.
Domestic consumption of edible oils has been growing at 4.0-5.0 percent a year. The consumption in 2001-02 was around 25.75 million tons. Non-packaged oils account for nearly 50.0 percent of consumption in both urban and rural markets. In the remaining 50.0 percent contributed by packaged oils, branded oils constitute a small portion of approximately 10.0-15.0 percent.
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India's trade scenario
During the year 1950-51, the overall external trade of India reached Rs. 1214 crore. Since 1950, India is experiencing a persistent growth in external trade (external trade is the sum of total exports and imports, including re-exports). In fiscal year 2005-06, external trade in India touched Rs. 1085325 crore.
During the period 2005-06, export of merchandise commodities in India touched US$ 103 billion (Rs. 454800 crore). In the previous year (2005-06), India's export volume of merchandise commodities reached Rs. 375340 crore with a growth rate of 21.17 %. India is showing this positive trend, despite a higher demand for capital goods. During the last four years of 10th Five Year Plan India is experiencing a sustained 20% growth rate and consequently India's contribution to global exports increased from 0.66% in 2002 to 0.9% in 2005.
India's imports also exhibited a good result with an increase from Rs.501065 crore in 2004-2005 to Rs. 630527 crore in 2005-06.
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TYPES OF EDIBLE OIL There is a large variety of edible oil in India. Most of oil is used for cooking and also for salad dressing, condiments etc. The major edible oil in India like: 1. Sunflowers A sunflower seed extraction is widely used as protein material for animal feed. Indian sunflower seed extractions contain about 30% crude protein with 30% fiber. Although sunflower protein is low in lysine, methionime&cystine levels are favorable to meet poultry feed requirements. It is superior to most vegetable proteins in digestibility.
A sunflower seed extraction is therefore supple- melted with lysine, or fed with other high lusineproteine meals, like soybean meal or fishmeal. Recent development of various enzyme preparations, which can act upon fibre in sunflower meal, making it more
51
digestible, can result in an economical substitute for various protein sources.
2. Rapeseed Rapeseed meal has min. 38% O&A and 12% max. fibre. It has a very low fat content (0.5%) and is very rich in proteins (37%). The digestibility of the hull fraction is good. The erucic acid content of the meal is very low (0.25% max.).Its extremely good amino acid composition, often compared to milk protein, contributes to its high nutritive value. The amino acid profile showing adequate lysine and methionine is very much favorable to the non-ruminent poultry feed.
3. Sesame Seed Sesame seed extraction is high protein feed meal. The protein has a high content of methionine &cystine and it is also rich in arginine and tryptophan but is deficient in lysine and to some
52
extent in isoleucine. The PER value of the sesame extraction can be doubled by mixing it with an equal weight of soybean meal, which has high lysine content.
This can also be achieved by supplementation with synthetic amino acids like lysine (0.2%) and isoleucine (0.1%). It is being used as a valuable ingredient up to 5% in well-formulated poultry feed. 4. Cotton Seed
Decorticated cottonseed meal is one of the best protein supplements for dairy cows, buffaloes and sheep. It has been highly recommended for incorporation in the formulated feed so as to function as a by-pass protein to raise the milk yield.
53
5. Groundnut India is in a position to offer groundnut extraction having protein content varying from 41% - 50% with aflatoxin content of less than 0.5% 0.2% or 0.05 ppm. Groundnut extraction is a very good vegetable protein for poultry feed and can be used up to the level of 25%.
6. Soya bean The Indian soybean extractions has a high profat content (49% - 50%) compared to a 44% profat content of China and other Western countries and is very well accepted in the international market.
54
7. Coconut Coconut meal is fed mostly to dairy cattle. Though it is
comparatively a moderate protein (20% - 22%) source, it is highly palatable and its protein has a very high by-pass value. The copra meal produces firm butter of exceptional quality if it is used in cattle feed preparations.
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CLASSIFICATION OF EDIBLE OIL
Based on absorption of oxygen from atmosphere, there are three types of edible oil.
DRYIG OIL: ? Coconut oil Origin: South-west America Production and Market: World: South-west America, West Africa & India India: Kerala(leading), Goa, Maharastra&Karnatak The yield of oil being 50% to 60% or even more. Uses: Cooking, lighting, good quality soap, shampoo, hair oil, cosmetics, detergent, shaving cream, petrol, coercion
[II] NON-DRYING OIL ? Groundnut oil Origin: South America Production and Market: World: South America, Chine, Senegambia, Nigeria, Sudan, Africa & India
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India : Gujarat(leading),Tamil nadu, Andhra, Maharastra, Madhya pradesh, Punjab & Rajas than Export: France, England&Germany Uses: It is used to make mainly three types of product. 1.Edible oil 2.milk 3.Margarine-an imitation butter It is also used as a lubricant, as an insecticide for pest control, as a medicine to make many types of injections & added to make vegetative ghee.
? Mustered oil It is a winter crop of 5-6 months? duration. Production and Market: World: Afghanistan, Pakistan, Urope, Japan, Chine & India India: Uttar pradesh, Madhya pradesh, Punjab & Rajas than, Bihar, West Bengal, Orissa, Assam The yield of oil bring is 45%-50%. Uses: Cooking, lighting, soap making, hair oil, body oil etc.
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[III] SEMI-DRYING OIL ? Soya bean oil Production and Market: World: India, West Asia, China, Koria, Japan, Munchuria, Australia&USA. India: Gujarat, Rajasthan & Madhya Pradesh Uses: Soap, Lacithin, Colors, Tooth pasts
? Sesame oil Production and Market: World: India, Africa, China, Koria, Japan India: Tamil nadu ,Rajas than Karnataka, Goa ,Uttar Pradesh & Madhya Pradesh Uses: Soap, Lacithin, Colors, Tooth pasts
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PROCESS OF EDIBLE OIL
Vegetable oils which are obtained by processing soybeans, olives, coconuts, corn, peanuts, sunflower seeds, cotton seeds, sesame seeds, flax seeds and safflower seeds. Vegetable oils re recovered by grinding, cooking, expelling and pressing, or by solvent extraction of the raw materials. The oils are filtered and put in:
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(A) CRUDE OIL STORAGE - WITH FOOTS (Foots are the solid fragments of crushed seeds that pass through the filter) These tanks will be equipped with side entry mixers to keep the foots in suspension and ensure a uniform feed to down-stream equipment. Mixer selections are given in Table I. These tanks are often built with heating pipes. Agitation below these pipes will be reduced, resulting in solids settling and the need for periodic cleaning.
(B) BATCH REFINING
The next process step is called refining. The oil is treated with a 20% caustic solution to react the fatty acids. This results in the formation of soft soaps, which are decanted off. Too much agitation will emulsify the mix resulting in long separation times. Use gear drive portable mixers at 1 HP/1000 gallons, or small top entry mixers at 0,6 HP/1000 gallons. Some refining is done in continuous "packaged" systems built by suppliers of continuous separations equipment.
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(C) REFINED OIL STORAGE The oil now goes to refined oil storage. These tanks provide surge capacity in the system. Lower power levels are used than for crude oil with foots. See Table I for recommendations.
(D) BLENDING
Oils are sometimes blended before further processing. Blending may be done in small tanks with portable mixers at 0.3 - 0.4 HP/1000 gallons for 20 - 30 minute blend times. Larger tanks will use side entry mixers at 0.2 - 0.3 HP/1000 gallons. (E) BLEACHING
Blenching of the refined oil is accomplished by intensive mixing with 0.5 -2.0% bleaching clay. Use 4 HP/1000 gallons with side entry mixers or 2 - 3 HP/1000 gallons with top entry mixers using radial turbines.
(F) HYDROGENATION
Oils are modified by hydrogenation. To reduce the degree of unsaturation, raise the melting range, improve color and flavor and
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enhance the resistance to oxidation. Historically “Iodine Value” has been the method to measure unsaturation. Chromatography is slowly replacing I.V. as an analytical tool. Hydrogenators are usually tall tanks with cooling coils and multiple impellers operating at relatively high speeds (-100 RPM). The principal catalyst is nickel on Kieselguhr. The hydrogen feed is closely controlled because of the highly exothermic reaction. Mixer power levels will range from 3-10 HP/1000 gallons with Rushton turbines for primary gas dispersion and axial impellers to promote heat transfer and to reincorporate hydrogen from the vapor space by vortexing. Vegetable oils have a specific gravity of-0.92 at room temperature and 0.81 at 350°F. Viscosities range from 105 CPS at 50°F to 35 CPS at 100°F and 3 cps at 350°F.
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MARKET INFLUENCING FACTORS
? Variations in production and its effect on oil seeds, meal and oil production in the country. ? The arrival of seeds for crushing from the ginning centers of the country. ? Comparative price with other oilseeds, oil and meal in the domestic market. ? The demand from the industry, which is the major consumer of oilseeds meal.
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PRODUCTION, IMPORT AND TOTAL AVAILABILITY
Despite an impressive 25-26 million hectares under cultivated oilseeds, production is characterised by low yields. Domestic price support policies favour the production of crops (mainly, rice and wheat) that compete with oilseeds. Oilseeds are grown mainly on marginal and sub-marginal lands under low input usage. Moreover, less than 25% of the oilseed area is irrigated, rendering cultivation vulnerable to weather-related yield risk. This has resulted in slow growth in oilseed production and continued low yields. At about 970 kgs/ha, Indian oilseed yields are about half of the world?s average and almost onethird of leading producers. Oilseeds Production (2001-02 to 2006-07) (MT)
Crop Major Oilseeds Groundnut Rape/Mustard Soybean Other Six Sub-Total 7.0 5.1 5.6 3.0 20.7 4.1 3.9 4.6 2.2 14.8 8.1 6.3 7.8 3.0 25.2 6.8 7.6 6.9 3.1 24.4 8.0 8.1 8.3 3.5 27.9 4.9 6.7 8.7 2.9 23.2 01-02 02-03 03-04 04-05 05-06 06-07
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Others 9.0 Cottonseed Copra Grand Total 5.1 0.9 26.7 4.5 0.7 20.0 5.5 0.7 31.4 6.8 0.7 31.9 8.5 0.6 0.6 37.0 32.8
IMPORT Now let us look at the current scenario of edible oil import. From November 2006 to July, 2007 India imported 3.30 million tonnes of edible oils consisting of 2.23 million tonnes of palm products and 1.07 million tonnes of soft oils. The import volume increased by 8% over
the same period of previous year. During the next three months (Aug.October), arrivals would be 500-600,000 tonnes per month and the total imports would be 4.7 to 4.8 million tonnes for the whole year compared to 4.4 million tonnes last year (2005-06). India imports mainly crude oil to utilise its own processing capacity and practically 97-98% import is in crude form.
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Import of Edible Oils (2004-05 to 2006-07) (Qty in '000 Tons) Oil
Refined Palmolein Crude Palm Oil Crude Palmolein Soybean Oil Sunseed Oil Others Total 2004-05 (Nov – Oct) 423 2,360 187 2,001 5 65 5,041 2005-06 (Nov – Oct) 113 2,373 55 1,703 101 72 4,417 2006-07 (Nov'06–Aug.'07) 93 2,378 38 1,045 183 30 3,767 2006-07(E) (Nov-Oct) 150 2,900 50 1,350 250 50 4,750
Import of Vegetable Oils 2006-07 (P) & 2005-06
(Qty. in '000 Tons)
2006-07(Projected) Palm 3,100 300 Soft Oil 1,650 -Total 4,750 300 Palm 2,569 300 2005-06 Soft Oil 1,848 --Total 4,417 300 (+) 333 Nil Difference
Products Edible Oil Vanaspati (Hydrogenated Fat) Non-edible (CPS, PFAD & Other) Total
750
--
750
709
--
709
(+) 41
4,150
1,650
5,800
3578
1,848
5,426
(+) 374
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India - A growth market India will continue to be large importer of vegetable oil for quite some time - at least next 10 years - because domestic output growth is unlikely to catch up with demand growth. Strong GDP growth contributed mainly by manufacturing and service sectors as also rising population automatically translates to higher demand for a host of food products including edible oil.
TOTAL AVAILABILITY About 80 per cent of India's domestic oil output comes from the primary source that is nine cultivated oilseeds and two major oilbearing materials (Cottonseed and Copra). The secondary source comprises solvent extracted oils such as Rice bran oil as also oils from minor and tree-borne oilseeds. Oilseeds production for the current oil year ending October 2007 is estimated at 23.2 million tonnes (down 4.7 million tonnes from previous year), equivalent to 7.7 million tonnes of vegetable oils. Total availability of vegetable oils from domestic and import is estimated at 13.50 million tonnes during 2006-07.
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Vegetable Oil Availability (million tonnes)
Oil Year Domestic Veg. Oil Import of Vegetable Oil Edible Grade 4.75 4.42 5.04 4.39 5.11 4.42 4.83 Nonedible 0.75 0.71 0.40 0.23 0.28 0.39 0.26 Total Veg Oil Availability Vanaspati 0.30 0.30 0.20 0.10 0.10 0.10 0.10 Total 5.80 5.43 5.64 4.72 5.49 4.91 5.19 (Edible Non-edible) 13.50 13.46 13.29 12.31 10.64 11.63 11.00 &
(Nov-Oct)
Availability 2006-07 (E) 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 7.72 8.03 7.59 7.59 5.15 6.72 5.81
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PRODUCTION, CONSUMPTION AND EXPORT
India is a large producer of oilseed derivatives (oilcakes and meals/extractions) the export surplus is limited to about 4.0 - 5.0 million tonnes.
India?s Oilcake/meal Production vis-à-vis Consumption & Export (Qty. in Million Tonnes) Production Year Oilseeds/Oil Bearing Material
2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 33.40 34.88 33.92 32.54 23.46 29.15
Disappearance(cake/meal) Cake / Meal
21.05 22.07 21.64 19.88 14.74 17.70
Domestic
15.87 (75%) 17.65 (80%) 18.91 (87%) 16.51 (83%) 12.84 (87%) 14.68 (83%)
Export
5.18 (25%) 4.42(20%) 2.73 (13%) 3.37 (17%) 1.90 (13%) 3.02 (17%)
There is a growing internal market for animal feedstuffs as the livestock industry shows expansion by 10-15 percent per annum. It may come as a surprise to many that India is the world's largest producer
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of milk - 100 million tonnes and growing at 3.5 percent per annum. The poultry sector too has been registering robust growth. India is currently world's fifth largest producer of eggs. Currently, India accounts for 7.4% of world oilseeds output; 6.1% of world oil meal production; 3.9% of world oil meal export; 5.8% of world veg oil production; 11.2% of world veg oil import and 9.3% of the world edible oil consumption (Source: Oil World 2007). Clearly, India may not be such a big force to reckon with at this point in time as it is not in the big league of countries such as USA, Brazil and China. Yet, the India?s growth prospects and ravenous appetite for food including edible oils means that the world market cannot afford to ignore India's presence as a producer, consumer, importer or exporter.
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4Ps OF MARKETING
INTRODUCTION
The whole marketing concept depends upon the four major factors, which is called four P?s of marketing, which falls under the heading of marketing mix.
?
MARKETING MIX:
PRODUCT
PRICE
4P’S OFMARKETING
PROMOTION PLACE
The recent exponential growth in broadcasting alternatives means that marketing has become priority. Organizations must learn how to market themselves with greater success, despite opposition from their competitors.
Theoretically, each of the product, price, place and promotion variables can be controlled by organizations and at the same time. Taken together, they constitute the marketing mix. An organization
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must come up with a mix that will clearly differentiate its product from those of its competitors, while simultaneously considering the corporate goals.
Many people have already heard about the “4p?s of marketing”. Generally speaking, the so-called “marketing mix” is a framework that acts as a guideline for marketers to implement a marketing concept. It consists of a set of major decision areas that a company needs to manage in order to at least satisfy consumer needs.
PRODUCT:
The first element of the 4 Ps of marketing is product. It focuses on the individual goods and the product line. At heart of great brand is a great product. Product is a key element in the market offering. One of the definitions of product is as under.
“Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations and ideas.”
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A product is not only a tangible offering, but it can more than that. A product is anything that can be offered to market to satisfy a want or need. Products that are marketed are including physical goods, services, experience, events, persons, places, properties, organizations, information and ideas.
Here, we are classifying edible oil, as a tangible product, since it requires the elements of marketing mix to reach the customers.
? Product levels:
There are five different product levels, each of which represents a customer value hierarchy. These product levels are described as below. 1. Core benefit: The most fundamental level is the core benefit, the fundamental service or benefit that the customer is really buying. The consumer of edible oil is buying cooking.
2. Basic products:
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At this level, the marketer has to convert the core benefit into the basic product. Because his major emphasis is to satisfy basic need of customer. The basic product introduced, to satisfy the core benefit of “cooking”, is edible oil.
3. Expected product:
The marketer prepares an expected product, a set of attributes and conditions buyer normally expect when they purchase this product. The consumers while buying the edible oil products expect good cooking. 5. Augmented level:
The marketer prepares an augmented product that exceeds customer?s expectations. Product augmentation leads the marketer to look at the user?s total consumption system. According to levitt: - The new competition is not between what companies produce, but between what they add to their products in term of services, advertising, customers advice and other things that people value. In order to attract more customers, the marketer of edible oil can provide a variety of augmented services.
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6. Potential product: At the fifth level stands the potential product, which
encompasses all the possible augmentations and transformation the product or offering might undergo in the future. Here is where companies search for new ways to satisfy customers and distinguish their offer. Successful companies add benefits to their offering that not only satisfy customers but also surprises and delight them. Delighting customers is a matter of exceeding expectations.
? Product hierarchy:
Each product is related to certain other products. The product hierarchy stretches from basic needs to particular items that satisfy those needs. We can identify six levels of the product hierarchy. 1. NEED FAMILY: A need family consists of the core need that underlies the existence of a product family. The need family of edible oil is cooking.
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2. PRODUCT FAMILY: All the product classes that can satisfy a core need with reasonable effectiveness are included in product family. In case of edible oil, the product family is vegetable oil and non-vegetable oil. 3. PRODUCT CLASS: The product class includes a group of products within the product family recognized as having a certain functional coherence. Also known as product category. The product class of AWL is Fortune brands, Raag brands and Jubilee brands.
4.PRODUCT LINE: A product line is a group of products within a product class that are closely related because they perform similar kind of function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. In this case, product line is all the edible oil companies like Trirupati, Sun drop, Saffola, Dhara etc.
5.PRODUCT TYPE: A product type refers to a group of items within a product line that share one of several possible forms of the product. The product type
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of edible oil is Groundnut oil, cottonseed oil, Sunflower oil, coconut oil, Soybean oil, Mustered oil etc.
6.ITEM: It is also called stock keeping unit or product variant. A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute is an item. In our example the item is the edible oil itself.
The product hierarchy described above can be summed up in the figure mentioned below.
Item
Product Type Product Line Product Class Product Family Need Family
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? Product mix:
A product mix is also called a product assortment. It is a set of all products and items a particular seller offers for sale. A company?s product mix has a certain width, length, depth and consistency. The product mix of AWL is as follows.
PRODUCT WIDTH
Fortunne P R O D U C T L E N G T H jkhjhFOF ORTUNE
Refined Soyabean Oil Refined Sunflower Oil Refined Cottonseed Oil Refined Groundnut Oil Kachi Ghani Mustard Oil Pure Groundnut Oil Pure Mustard Oil Pure Coconut Oil Naturelle Fryola
Raag
JUBILEE
Vanaspati Refined Soyabean Oil
Masterchef bakeryShortening
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Product width: The product of a product mix refers to how many different products lines the company carries. The width of the AWL?s product mix is 3 i.e. FORTUNE, RAAG & JUBILEE.
Product length: The length of the product line refers to the total number of items in the line.In this case, the length of the product mix is 13.
Product depth: The depth of the product mix refers to how many variants are offered of each product in the line. In FORTUNE brand depth of the product mix is 10, and in RAAG it is 2, and in JUBILEE it is 1. Product consistency: The consistency of the product mix refers to how closely relate the various product lines are in end use, production requirements, distribution channels, or some other way. In case of AWL product mix is completely consistence.
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PRICE
From the point of view of manufacturer only, price represents the quality of money received by the firm of seller. Price is the most important factor of marketing mix, which gives absolute percentage about the purchase and sales.
Price is the one element of the marketing mix that produces revenue, the other elements produce costs. Price is one of the easiest marketing mix element to adjust product features channels and event promotion. Price also communicates with the market by which medium company can show their intention towards value positioning of its product or brand.
Traditionally
speaking
price
has
operated
as
the
major
determinant or the major influencing factor of the buyer?s choice. Even this behavior prevails not only in the underdeveloped or the developing countries but also in the developed countries, so more of lesser price does matter for any buyer irrespective of the income level or the demographic factors.
In the order to arrive at the most acceptable price level, the marketer needs to have the information on 3 C?s.
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? Customer: Price affects the customers by their income levels their willingness to purchase, ability to pay etc.
? Competitors: The company decides their product price according to their competitor?s price. The poor company ignores their
competitors. The average company copies their competitor?s price. The willing company leads their competitor?s price.
? Cost structure of the company: The company decides their price according to their expenditure such as preliminary expenses, factor expenses etc.
Price
High High 1.Premium Strategy Medium 2.Highvalue Strategy Low 3. Super value Strategy
Product quality
Medium
4.Overcharging Strategy
5.Medium value Strategy 8. Falls Economy Strategy
6.Goodvalue Strategy 9.Economy Strategy
Low
7.Ripoff Strategy
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There can be competition between price quality segments. The above figures show 9 price quality strategies. The diagonal strategies 1,5,7,9 can all co-exists in the same market i.e., one firm offers a high quality product at a high price, another offers an average – quality product at an average price, and still another offers a low quality product at a low price. All three competitors can co-exist as long as the market consists 3 groups of buyers, the firsts who insist on quality, secondly who insist on price and the others who balance the two.
Strategies 2, 3 & 6 are ways to attack the diagonal positions. Strategy 2 describes as “our product has the same high quality as product 1 but we charge less.”
Strategy 3 says the same thing and offers even greater saving. If quality sensitive customers believe these competitors product is good, they will sensibly buy from them and save money unless firm?s product has acquired snob appeal.
Positioning strategies 4, 7 & 8 amounts to overpricing the product in relation to its quality. The customers will fell “taken” and will probably complain or spread bad word of mouth about the company.
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PROMOTION
“All the activities which are undertaken by the entrepreneur to promote the product.” Promotion tells something about company.
Promotion can be defined as “activities that communicate the product or services and its merits to target customers and persuade them to buy.”
PROMOTION
ADVERTISING
SALESPROMOTI ON
PUBLIC RELATION
SALESFORCE
DIRECT MARKETIG
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Promotion is the advertising and selling part of marketing. Often, promotions are categorized into push versus pull. Advertising pulls by making consumer aware of, and ask for the product or service. Incentives, such as premiums or price reductions, push the product out the door encouraging the customers to purchase in volume, more, or more often then he would otherwise purchase.
Promotion is concept of organizational culture, popularly organized as “artifacts”-everything that can be seen, heard and felt, such the day-to-day behavior, physical environment, and communication of an organization. Thus, out of the 4ps of this EDIBLE OIL compete exclusively in the area of promotion. Promotion can be done by advertising, sales promotions, sales forces, public relations and direct marketing.
ADVERTISING:
“Advertising offers a reason to buy.” The edible oil Companies advertise their product through media, banners, hoardings, ambassadors and etc.
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EDIBLE OIL OFFICE
AdaniWilmar Limited “Fortune House” Nr. NavrangpuraRlv. Crossing, Ahmedabad-380009
LOGO
SALES PROMOTION:
“Sales promotion offers an incentive to buy.” For
sales promotion, companies held many offers like exchange of old models to new one by paying very less sum of money.
PUBLIC RELATION:
Public relation involves a variety of programmed designed to promote or protect a company?s image or its individual product. Sometimes companies also prefer seminars from which can they can show the company?s profile and also they can create a good image of the company.
DIRECT MARKETIING: 85
“Direct marketing is the use of consumer direct channels to reach and deliver goods and services to customers without using marketing middleman.”
SALES FORCE:
“Sales force is one of the marketing services from which manufacturer mainly based upon door to door selling.” In Edible oil door-to-door selling is not preferable, as it requires large amount to be invested.
PLACE:
Place is the 4th element of 4p?s of marketing. Place includes “all the company activities that make the product or service available to target customer.” In sample words, place means-where and how a product is distributed and sold. Whether to sell it directly, through a broker, or a distributor? Whether to run retail store or sell only to retailer? In case of service, whether to deliver it in person or through the Internet or telephone? These questions all involve “place”.
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As we?ve taken edible oil as our main product the distribution channels would be as follows:
(I)
MANUFACTURERS
DEALERS
WHOLESELLERS
RETAILERS
CONSUMER
(II) MANUFACTURERS
DEALERS
WHOLESELLERS
CONSUMER
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RESEARCH PLAN
Topic: - The Research conducted on Edible Oil Target: - Retailers Area: -AhmedabadCity.
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Research Problem: -
“To know how to expand the business of AWL?s edible oils in terms of market share, profitability with consumers? growing demand; so that it can break the competitors? business”
Research Design: -
1) 2) 3) 4) 5)
Sampling method: Convenience Sampling method Collection of data: Questionnaire Sample size: 100 Time: 15 days Cost: 500\- (approximate)
Limitations: (1) (2) The sample size is not large. We have time constraint because of which, we could cover only Ahmedabad city for the survey. (3) (4) Lack of practical knowledge. Respondents? did not like to share information.
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Objectives: -
1. Understand consumer behavior towards buying and consumption of edible oil 2. Study the market scenario in terms of customer demand 3. Analyze the benefits and satisfaction level of retailers towards different edible oil brands. 4. Importance and usage of different edible oil as per socio economic classification. 5. Price sensitivity on retailers' willingness to stock 6. Study consumer driven retailer preferences of stocking for different types of edible oils and reasons for differences by usage and area/sector
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MARKET RESEARCH
According to The American Management Association “Marketing researches the function that links an organization to its market through the gathering to information”.
This information allows for the identification and definition of market driven opportunities and problems. It also allows for the generation, refinement and evaluation of marketing actions. It allows for the monitoring of marketing performance and improved
understanding of marketing as a business process.”
Research is to see what everyday else has been and think what nobody else has thought. All market research should have clear objectives. Initiating research without objectives is like setting out on a drive without a destination.
? TYPES OF DATA SOURCES FOR MARKET RESEARCH:
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The sources of data structures and information needed to resolve decision and research problems.
? Primary Data: Most of the information that we have collected and presented in this project report is based on the questionnaire, which is our primary source.
? Secondary Data: We got other information from AMA library, newspaper, magazines and websites and as we all know Internet is one of the most popular medium to gain information regarding companies hence we?ve used Internet.
We have selected questionnaire as a primary data because it gives us all the information that we need in very less time and much less efforts. It was designed in such a way so as to cover as many aspects of consumer as possible.
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MARKETING RESEARCH PROCESS
Define problem and research objective
Develop the research Plan
Collect the Information
Analyze the information
Present the Findings
Make the decision
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FINDINGS AND INTERPRETATION (A) Retail penetration of various brands:
STORES
STORES, TIRUPATI RCNO, 99 STORES, TIRAPATI STORES, DALDA FGNO, 99 VANASPATI, 97
SAFFOLA GOLD STORES, VIMAL RCNO, 85 ANKUR RCNO SUNDROP SUN STORES, ANKUR RCNO, 71 STORES, ANKUR FGNO, 71 FORTUNE RCNO GULAB FGNO ANKUR FGNO STORES, GULAB FGNO, 55 STORES, GULAB RCNO, 55 FORTUNE SUN SUNDROP HEART STORES, APPU RCNO TIRUPATI MUSTARD, 46 GULAB RCNO VIMAL RCNO APPU MUSTARD DALDA VANASPATI STORES, FORTUNE RCNO, 17 STORES, SUNDROP STORES, SAFFOLA SUN, 7 GOLD, 5 STORES, FORTUNE SUN, 17 STORES, SUNDROP HEART, 7 TIRAPATI FGNO
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From the study of market Tirupati FGNO dominate in Groundnut& Cottonseed segment & Fortune sun in sunflower.
(B)
oil brand Tirupatifgno ankurfgno tirupatircno fortune rcno fortune sun sundrop sun stores 99 71 99 17 17 7
RETAIL PENETRATION:BRAND POLLING
100 90 80 70 60 no of 50 stores 40 30 20 10 0 99 71 99 Tirupatifgno ankur fgno tirupati rcno fortune rcno 17 17 7 1 oil brand fortune sun sundrop sun
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(c)
ZONE WISE STORES
stores, north, 51 stores, east, 49
east
north
(D)
market distribution on the basis of stores
Series1, kirana , 50 Series1, general, 36
Series1, oil, 14
no. of stores
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(E)
RE TAIL PE NE TRATION OF VARIOUS BRANDS OF OIL
120% S tocked E arlier but now not willing to stock Not stocked earlier & now not willing to stock Willing to S tock
100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 0% 1% 3% 0% 0% 15% 29% 29% 0% 80% 44% 44% 54% 0% 0% 60% 93% 40% 71% 55% 20% 2% 0% 5%
ld O Go CN r op
92%
81%
1%
81%
92%
1% 99% 85% 99% 0% 97%
71% 55% 2% 17% 1% 7%
a rt RC V im NO al RC Ap NO pu M Da us lda ta r d Va n a T ir sp up a ti a ti FG NO GN Su He NO O n
2% 1% 17% 7%
n NO Su NO
46% Already in S tore
RC
FG
rR
rF
ne
la
r op
la b
a ti
nd
ku
ku
nd
T ir up
Sa
rtu
Gu
Fo
Fo
Su
Gu
An
Su
An
97
la b
ne
ffo
rtu
RC
DEMAND AND SUPPLY DRIVERS IN INDIA
Considering population growth rate of 1.8 percent (over 18 million additions every year) and income increases through economic growth (assuming average of 8 percent a year), we expect consumption demand for vegetable oil to expand on an average by 6-7 percent each one of the next five years. This translates to roughly 700,000 to 800,000 tonnes of additional demand every year. By 2012, India?s total vegetable oil consumption demand is slated to
reach 15-16 million tonnes. Prospects for indigenous supplies As per agricultural growth projections made by the Government of India for the period 2008-2012, oilseeds output is targeted to increase by 4 percent a year. Based on the current output of about 25 million tonnes, a 4 percent increase translates to about One million tonnes of oilseeds a year, equivalent to about
300,000-350,000 tonnes of oils. In fact, 4 percent is the targeted growth rate taking into account various operational constraints. There is no guarantee that even this modest growth will be achieved.
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As demand rises by about 700,000 tonnes a year, domestic production is likely to rise by just half of demand growth that is about 350,000 tonnes. The inference is clear. India's domestic supply shortfall, currently placed at 4.5-5.0 million tonnes, will continue to widen, conservatively and on an average increase by 350,000 tons a year. There is also the likelihood of the Government arranging for some additional imports for supply through the public distribution system to support the really needy sections of the growing population. In sum, India's vegetable oil consumption demand is expected to rise faster than domestic production growth. This will lead to import of larger volumes than at present, growing on an average by about 350,000 tonnes a year. The composition of imports will of course depend on the relative prices of various oils in the world market and import logistics.
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World Demand & Supply Situations
(Quantity in million metric tones) Year Beginning August 1 World beginning stock World Cotton seed production World Cotton seed Consumption World Cotton seed Export World Ending stock 01-02 6.81 14.33 13.41 4.31 7.98 02-03 7.98 12.87 14.35 4.44 6.71 03-04 6.71 13.81 14.52 4.84 6.21 04-05 6.20 17.53 15.75 4.85 8.03 05-06 8.03 16.45 16.72 6.53 7.90 06-07 7.90 16.89 17.43 5.53 7.62
Trends in global oilseed demand and supply
(Million tonnes)
2002-03 2003-04 2004-05 2005-06 2006-07 Total oilseeds Supply Demand stocks 322.4 318 53.2 324.1 329.7 47.6 371.4 354.5 64.5 380.8 374.7 70.6 385.5 389.2 66.9 Soybeans Supply Demand 196.9 190.5 185.5 191.6 216.3 204.1 220.1 214.6 226.6 226.2 Sunflower Supply Demand 23.9 24.2 26.9 26.8 26.2 26.3 29.3 30.2 30.4 30.7 Rapeseed Supply Demand 33.1 34.3 39 38.5 46.1 42.9 49.1 48.4 46.1 49.4
Demand on the other hand, is accelerating year-on-year due to rapid expansion in vegetable oils uses. In addition to the normal increase in demand from human consumption, the rapid expansion in demand has mainly sourced from two commercial purposes.
?
Firstly, growing demand from feed industry to substitute oil meal for grain. Grain prices, particularly, maize and sorghum have risen to
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a ten-year high in the current year forcing the feed industry to look for alternative feed sources.
?
Secondly, growing demand for bio-fuels. It is estimated
that demand for vegetable oils from bio-fuels industry is expected to boost import of soya oil, sun oil, rape oil and palm oil by EU to an extent of 2.08 million tonnes in Oct-Dec 2006, about 32% higher than a year before (Oilworld, 2006).
Thus, despite a record production of oilseeds, prices are expected to remain high due to steep rise in usage and increase in exports. However, price increase may be moderate compared to the previous year but may not reach the levels of 2003-04.
Edible Oil Demand Projection:
The demand for edible oils is expected to increase from the current level of 15.6 million tonnes in 2010 and further to 21.3 million tonnes by 2015. This assumes a per capita consumption increase of 4% and a population growth of 1.8% which translates to an overall growth in demand @ 6% p.a.
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Edible Oil Demand Projection Parameter Total Demand (Mn Tonnes) Total Area under Oilseeds (Mn Hectares) Yield (Tonnes/hectare) Production of Oilseeds (Mn tonnes) Domestic supply of edible oils (Mn tonnes) Total edible oil imports - (Mn tonnes) Imports as share of demand 2010 2015 15.6 21.3 28 32 1.2 33.6 10.1 5.9 38% 1.4 44.8 13.4 8.3 39%
India will continue her dependence on imports to the extent of about 40% of its consumption requirement. The improvement in yields and the increase in area under cultivation will ensure that the domestic oilseed production is sufficient to meet 60% of consumption requirement.
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GLOBAL OILSEED PRODUCTION FORCAST
The first table „Global oilseeds production forecast? shows the strong expectation of oilseed production expanding over the coming years by 10-13 million tons, a growth rate of about 3.3 percent a year. We must remember, in addition to the three major oilseeds plus copra, we have two more important oilseeds, namely cottonseed and peanut. Historical trends suggest world peanut production is unlikely to change significantly over the coming year. Cottonseed output too may be considered nearing a plateau; because gains in countries like India may be largely offset by output cutbacks in USA. Also, cottonseed is not a high oil content material. Global Major Oilseed Production Forecast (Qty. in '000 Tonnes)
Year 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Global Rapeseed 48,732 46,234 51,052 52,136 54,315 55,468 Global Soybean 220,556 236,075 222,054 229,819 238,847 247,200 Global Sunflowerseed 30,100 30,088 29,843 30,776 32,700 34,813 Global Copra 5,500 5,276 5,366 5,456 5,476 5,568 Total 304,888 317,673 308,315 318,187 331,339 343,050
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GLOBAL VEGATABLE OIL PRODUCTION FORCAST
The second table shows us „global vegetable oil production forecast?, according to which production is anticipated to expand by 5.0-5.5 million tons a year in the next few years. Oils shown in this table are what I would call „growth oils?; these are oils with production growth potential. Three other oils – peanut oil, cottonseed oil and olive oil – too contribute to the global vegoil basket. Again, recent trend suggest, their output growth would be rather modest, if at all. Under normal conditions, a 5.0-.5.5 million tons growth would result in build up of global inventory. However, in addition to food and industrial needs, existing and potential demand for biodiesel needs to be factored in. This is likely to lead to tightening of supplies.
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Global Vegetable Oil Production Forecast(Qty. in '000 Tonnes)
Global Global Rapeseed Year 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Oil 17,145 17,776 18,743 19,141 19,941 20,364 Global Soybean Oil 34,484 35,989 37,552 38,865 40,392 41,805 Global Sunflower Seed Oi 10,419 10,780 10,744 11,080 11,772 12,533 Global Coconut Oil 3,403 3,253 3,316 3,372 3,384 3,441 Palm & Palm Kernel Oil 40,194 41,380 44,304 46,949 49,752 52,722 Total 105,645 109,178 114,659 119,406 125,241 130,865
MEAL PRODUCTION FORCAST Last is the meal production forecast table. Clearly, soyameal has the greatest growth potential, followed by rapeseed meal. Fortunately, the global feed market is unlikely to face a serious shortage despite expanding meal demand to cater to the growing livestock industry. High vegoil prices will encourage expanded crushing of oilseeds for oil, which in turn will result in more meal production. In addition, we must remember, there will be large availability of “distillers? grains” from bio-ethanol plants that use corn (maize) for extracting ethanol. The potential loss of meal by way of lower oilseeds production (through loss of acreage to corn) will be partially made up by DDG.
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Meal Production Forecast (Qty. in '000 Tonnes) Global Palm Kernel Meal 5,215 5,389 5,686 5,868 6,111 6,327
Year 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Global Rapeseed Meal 26,222 27,054 28,429 29,032 30,246 30,888
Global Soybean Meal 145,603 153,533 160,378 165,987 172,507 178,540
Global Sunflowerseed Meal 11,380 11,803 11,767 12,135 12,893 13,727
Global Copra Meal 1,771 1,694 1,714 1,743 1,749 1,779
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IMPACT OF INDIA
During November, the Indian domestic market will come under harvest pressure. India?s imports during October and November will be sluggish. However, December will be a different story. There is usually a window for imported oil during the period January to March. Precisely at this point in December when my Indian compatriots think of entering the market, they may find prices beyond their reach. The impact of India is therefore likely to be felt post December and will be more bullish than we have seen in the past 18 months. INCREMENTAL SUPPLY & DEMAND Let us now look at the latest Incremental Supply & Demand position for the world for the period October 2006 to September 2007. The picture I had given out in Mumbai on 24th September was very alarming, as follows. 000 tonnes Soya oil Cotton oil Groundnut oil Sun oil Rape oil Palm Kernel oil Coconut oil Palm oil Net Change in Supply Demand
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Oct 2006 – Sept 2007 + 500 -----300 ----------+ 270 -----+ 2,500 + 2,970 + 6,500
SWOT ANALYSES OF EDIBLE OIL INDUSTRY
? Strengths: ? Industry is solar powered ? Provide oils usable for human consumption or for biofuels ? Weaknesses: ? Fossil fuels are extensively used in agriculture & production for edible oils ? Large-scale monocultural agricultural production is vulnerable to diseases and pests ? Opportunities: ? Some edible oil agriculture can use non-prime farmland (e.g., sunflower and canola in dry prairie) ? Agricultural production methods could reduce reliance on fossil fuel inputs ? With bio-diesel-fueled equipment, edible oil industry could fuel its own tractors and harvesting equipment! (Internal (inside-the-industry) fueling) ? Threats: ? Increased reliance on edible oils for biofuels will reduce supplies available for human consumption. ? Great reliance on edible oils for biofuels could cause environmental degradation (soil depletion, erosion, a runoff problems).
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CONCLUSION
It is assured from the above analysis that domestic outlook for a vegetable oil is strong due to a dip in domestic production. Hence, prices of domestically produced oilseeds like groundnut, cottonseed oil and mustard may move up significantly while Soya and palm may probably not gain beyond the international price variations. The most of the consumers are using mostly two types of edible oil i.e. Groundnut oil and Cottonseed oil. Thus the criteria applied for stocking Groundnut oil and cottonseed oil is High demand by Customers and those who are using sunflower oil is only for the purpose of good health. We also come to the conclusion that retailers? preference in stocking brand is mostly on the basis of customers' traditional demand behaviour.
From the study Fortune has the high opprtunity to cover the the market of Edible oil in Gandhinagar city
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FUTURE
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Demand Drivers
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Macroeconomic factors: Population growth, per capita income, purchasing power, oilseeds crop Other factors: Prices - domestic/ international, Availability oil, oilseeds Influence of branded products - `health? message Growing preference for convenience foods. Raw material sourcing: focus on improving yields, getting better quality oilseeds, ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (Vanaspathi - Dalda, Oils - Sundrop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based assistance to farmers of eliminate unofficial markets
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Key Success Factors
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Future
In the next five years, the market for edible oils will grow by 8% to 12.65 million MT, vanaspathi will grow to 1.5 million MT and Cottonseed oil will grow by 12% to 14%.
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Business Concerns
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Free imports, low import duties and slump in global prices - lead to `dumping? Domestic industries of edible oils and vanaspathi affected - low realisation and idle capacities in oil
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? ?
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and vanaspathi industries Production slippages have also forced imports Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally Hence, farmers have shifted to other cash crops Increasing health awareness - impact of oils and vanaspathi usage on individual?s cholesterol levels
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BIBLIOGRAPHY
? Marketing Management, Kotler, Philip. New Delhi: Prentice Hall, 2004.
WEBOGRAPHY
www.seaofindia.com www.google.com
WWW.ADANIWILMAR.COM
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