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Bunge spreads out market increase strategy

Bunge spreads out market increase strategy
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First Published: Sat, Feb 10 2007. 12 00 AM IST
Updated: Fri, Feb 09 2007. 11 26 PM IST
 Mumbai: Global agribusiness and food major Bunge Ltd is stepping up its presence in India’s Rs45,000 crore staple food market to tap the pick-up in the industry’s growth rate, currently at 15-16% per annum.
The company has chalked out a three-pronged strategy for growth, including acquiring regional oil brands to supplement its portfolio of vegetable oils and fats in the Indian market. “We are in talks with a few regional brands for acquisitions, but are waiting for a feasible valuation,” said Bunge India managing director Adhiraj Sarin.
Bunge also plans to introduce cooking oils and fats from its global portfolio that are not yet here. The $25 billion (Rs1.1 lakh crore) Bunge, best known for India’s largest vanaspati brand Dalda, also sells Chambal soya oil and Masterline butter. Its global portfolio includes Elite Nutra clear Canola oil and Squirrel Peanut oil.
Globally, Bunge sells oils processed from soyabeans, corn, cottonseed, peanut and canola. For instance, it sells corn and olive oil Lesieur in France and sunflower oils Vénusz and Floriol in Hungary. In India, it only has soyabean and vegetable oils.
The Indian market for edible oils is largely dominated by sunflower, groundnut and mustard oils in addition to large-scale sales of soyabean and palm oil at the cheaper end. Corn oil and rice bran oil too are sold in limited quantities with imported olive oil targeted at connoisseurs. Dalda vanaspati (the poor man’s ghee) is currently sold at Rs68 against Rs50 per litre for a pack of pure ghee. Health-conscious consumers purchase sunflower oils such as Marico’s Saffola as they are supposed to be more heart-friendly.
In tune with its global position as the largest seller of bottled vegetable oil, Bunge is in talks with organized retailers in India to supply vegetable oils to be sold under its own brands.
For instance, Food Bazaar gets its Fresh and Pure brand manufactured by Ruchi Soya, which also sells its own Nutrela brand. Food Bazaar claims that edible oil accounts for more than 10% of its revenue.
“Reliance Retail and Subhiksha have approached us for supplying loose oils for their private labels, but we are still to take the final decision as yet,” said Sarin who represents the world’s largest oilseed processor in India. Partnering with a global player like Bunge would help these retailers get global supply chain efficiencies to bear on their final product price, especially when both chains are positioned on a value-for-money platform.
While Reliance has forecast that retail will be a multi-billion dollar business in a few years for it, Subhiksha is already the largest chain of supermarkets in Mumbai with over 74 outlets.
Globally, Bunge has been focusing on high growth areas such as South America and Asia. Asia accounts for almost 1/3rd of the world population and is one of the few regions of the world where population is expected to expand unlike Europe for instance.
The economies of the region, too, are growing rapidly powered by the over 9% growth in India and China which is leading to rising incomes and greater demand for basic products like oils used for everything from garnishing dal fry to frying samosas.
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First Published: Sat, Feb 10 2007. 12 00 AM IST
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