Cargill looks to double business in India by 2020
- Yet another train derailment in Uttar Pradesh leaves 3 dead, 9 injured
- Fewer GST rates possible in the future: CEA Arvind Subramanian
- Trump Tower launched in Kolkata, developers aim Rs700 crore in sales
- Netflix focused on a few great shows for India, says CEO Reed Hastings
- Uber Russia’s merger with Yandex approved
New Delhi: Cargill India Pvt. Ltd that sells Leonardo, Sweekar and Gemini edible oils targets doubling its branded consumer business in India by 2020, chief operating officer (foods) Deoki Muchhal said.
Towards this, Cargill plans to double the retail reach from the current network of around 400,000 outlets, double market share of each of its brands sustaining profitability and look at extension of the existing key brands into new categories over the next five years. The local unit of US-based food company Cargill Inc. will also continue to look at possible acquisitions in areas such as edible oil, fat and staples.
India is the third country after Brazil and Venezuela where Cargill has built a branded consumer business through acquisitions. In India, it has bought five edible oil brands and built just one.
Each of Cargill’s acquisitions served a purpose—entry into new product segment or strong distribution and retail presence in a particular geography in the country. “Over a period, we realized that consumer stickiness and loyalty are key factors. Trust matters. Also, we needed the channel connect. We bought brands because of distribution connect and consumer loyalty, to build business,” said Muchhal.
Cargill’s aim is to focus on pockets of top towns through modern retail. It is investing more than Rs100 crore to strengthen supply chain and double retail footprint, chief marketing officer Neelima Burra said. “By 2020, we aim to be the national leader in the sunflower oil category with Gemini, Sweekar and NatureFresh brands. With Leonardo olive oil, we are the leaders in the premium olive category. With the relaunch of NatureFresh brand in flour and edible oil category, we will be among top three leading brands of the country,” Burra added.
“All Cargill brands, except Leonardo, are mass market which is overcrowded with a lot of unknown and discounted players. Without scale and consolidation in edible oil space, the firm won’t benefit from these brands. Besides, Cargill’s retail presence in India is very limited which it needs to expand. Margin pressure and lack of scalability were among the reasons why Marico sold Sweekar,” said Abneesh Roy, analyst with Edelweiss Securities Ltd.
Over the next five years, Cargill will explore options beyond edible oil in India—through extensions of its key brands and through fresh acquisitions. It wants to build a portfolio that will have almost every product for the “centre of a consumer’s plate”, except rice, said Muchhal. “ For more acquisitions, it has to be really something,” Muchhal said.
Roy of Edelweiss, however, said Cargill would benefit from Leonardo as it is positioned as a premium brand and is marketed as a healthy option. “But, olive oil is a very small segment. It will take time to shape up,” he added.
India’s edible oil market is estimated to cross Rs2,080 billion by 2019 due to increase in number of brands and rising consumption of edible oil, according to a 22 May 2015 report by Ken Research, a consulting firm. The market has growing at a compounded annual rate of 13% between 2009 and 2014, it added.