Cooking oil cools as firms pass on fall in input costs

Retail prices of branded edible oil are inching down as packaged consumer goods firms pass on the gains from import duty cuts and cooling global prices, in a relief for millions of households scarred by rising prices. While Adani Wilmar, Patanjali, Mother Dairy and Emami Agrotech have already cut prices, others are expected to introduce promotions to win back consumers lost to cheaper products.

Adani Wilmar has reduced the price of its 1 litre Fortune refined Sunflower oil pack from ₹220 to ₹210, and that of Fortune Soyabean and Fortune Kachi Ghani (mustard oil) 1 litre pack from ₹205 to ₹195. Angshu Mallick, MD and CEO, Adani Wilmar, said the company is passing on the benefit of lower costs to customers. “We are confident that lower prices will also boost demand,” he added.

Patanjali Ayurved has lowered edible oil prices by 7-10%, an executive at the Baba Ramdev-led company said on condition of anonymity. Prices have been cut across its entire range of cooking oils including soybean, groundnut, sunflower and rice bran after oil prices softened over the last six months, the executive said.

New Delhi-based milk cooperative Mother Dairy recently cut maximum retail prices (MRP) of its Dhara edible oils by up to ₹15 per litre across variants. “This reduction is largely being done for oils majorly consumed in our country such as mustard oil, soyabean oil and sunflower oil, on account of recent government-led initiatives, reduced impact of international markets and ease in availability of sunflower oil, including improved domestic sunflower crop. Dhara edible oil variants with the new MRP will reach the market by next week,” the company said on 16 June.

BL Agro that sells branded mustard and soybean oil has slashed prices too.

"The market is always driven by the global scenario and since the overall raw oil market is down, we have also reduced the prices of the edible oils we process. With this, we wish to transfer the benefit to our customers. At BL agro, we have reduced the prices of Soyabean oil by ₹20 per litre, palmolein ₹20 per litre and m ustard ₹5 per litre," said Ashish Khandelwal, Managing Director, BL Agro.

B.V. Mehta, executive director, Solvent Extractors’ Association of India, said Cargill India has reduced the maximum selling price of its Gemini sunflower cooking oil by ₹35 per litre. Similarly, Emami, popular in the east, and other companies, have also reduced prices, along with the fall in international prices, he said. Cargill India, as well as Marico India which makes Saffola oil, declined to comment on prices.

Edible oil prices surged worldwide during 2021-22, as oilseed production fell, and manufacturing and logistics costs rose. However, the recent reduction in import duty on crude and refined edible oils have helped FMCG companies pass on the benefits to consumers. Global palm oil prices have also dropped below $1,300 per metric tonne, from the peak levels of $1,800-1,900 per metric tonne.

India imports roughly 14 million metric tonnes of vegetable oils every year, of which palm oil accounts for about 60%, followed by soybean oil and sunflower oil, at 35%-40%, showed data from the Solvent Extractors’ Association of India. However, late April, Indonesia, the world’s biggest producer and exporter of palm oil, temporarily banned exports citing domestic shortages, before lifting it on 23 May.

India cut palm oil import duty earlier this year; in May, the government also allowed duty-free imports of two million metric tonnes each of crude soybean oil and crude sunflower oil for two years.

Companies which have not taken any price cuts are likely to offer promotions on edible oils. “Brands may want to try consumer promotions and price-offs over price cuts as the duty cuts may not be long term for now. Since the category consumption is fixed for a household and price rise was high, brands saw consumers switching over to cheaper alternatives and will, hence, woo them back,” said Aditya Goel, co-founder of Love in Store, a trade activation and execution company that works with FMCG companies and retailers.

However, Abneesh Roy, executive vice-president, institutional equities, Edelweiss Securities, said companies need to monitor stability in global prices.