MNCs are lining up procurement plans, but only an aggressive retail strategy will enable them to make inroads
This genre of oil draws quite a few parallels with crude oil currently, only, it is of the edible kind. For one, it is becoming a critical component of the Indian economic scenario, with projections of the sector reaching a phenomenal annual turnover of Rs.980 billion in 2015. And then, just like crude oil, India faces a critical problem of rising prices and demand-supply gap currently. Demand is increasing at 20% per annum (as per All India Food Processors’ Association). Part of the problem is that around 45% of edible oil is being imported. In response, the Government has imposed a ban on export of edible oil till March 16, 2009. “We must meet the demand of the country first and at present, edible oil has a big market in our country,” feels Subodh Kant Sahai, Minister for Food Processing Industries.
Considering that the Indian domestic market is teeming with potential, there are clearly visible trends showing an optimistic response by companies within and beyond our borders. The $88 billion Cargill from the country of Uncle Sam seems to be bent on living up to benchmarks in India too. “We will be venturing into new segments and we will be leveraging a lot of our global strength, which has enabled us to create an edge,” reveals Siraj A. Chaudhry, ceo, Refined Oils India, Cargill. Leveraging its global strength and bucked up by its phenomenal set up, which includes three state-of-the-art refineries; Cargill, with its brand Nature Fresh, is on a spree to double its turnover in the edible oil market. And the group believes that to cash in on India, it becomes necessary to bank on its global outsourcing model, like 50-60% of raw material is outsourced by Cargill from their parent company, which has enabled them to produce at a very low cost. With the Government not imposing any restrictions on import of raw material, players from usa, like Cargill & Agro Tech (of Sundrop fame) are scouting for raw material outsourcing destinations in places like Indonesia and Myanmar.
This genre of oil draws quite a few parallels with crude oil currently, only, it is of the edible kind. For one, it is becoming a critical component of the Indian economic scenario, with projections of the sector reaching a phenomenal annual turnover of Rs.980 billion in 2015. And then, just like crude oil, India faces a critical problem of rising prices and demand-supply gap currently. Demand is increasing at 20% per annum (as per All India Food Processors’ Association). Part of the problem is that around 45% of edible oil is being imported. In response, the Government has imposed a ban on export of edible oil till March 16, 2009. “We must meet the demand of the country first and at present, edible oil has a big market in our country,” feels Subodh Kant Sahai, Minister for Food Processing Industries.
Considering that the Indian domestic market is teeming with potential, there are clearly visible trends showing an optimistic response by companies within and beyond our borders. The $88 billion Cargill from the country of Uncle Sam seems to be bent on living up to benchmarks in India too. “We will be venturing into new segments and we will be leveraging a lot of our global strength, which has enabled us to create an edge,” reveals Siraj A. Chaudhry, ceo, Refined Oils India, Cargill. Leveraging its global strength and bucked up by its phenomenal set up, which includes three state-of-the-art refineries; Cargill, with its brand Nature Fresh, is on a spree to double its turnover in the edible oil market. And the group believes that to cash in on India, it becomes necessary to bank on its global outsourcing model, like 50-60% of raw material is outsourced by Cargill from their parent company, which has enabled them to produce at a very low cost. With the Government not imposing any restrictions on import of raw material, players from usa, like Cargill & Agro Tech (of Sundrop fame) are scouting for raw material outsourcing destinations in places like Indonesia and Myanmar.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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