Branded cooking oil sales rise led by higher in-home consumption

Sale of cooking oil between April and December increased by about 30% year-on-year, as in-home consumption helped branded cooking oil makers penetrate deeper into the market.

Data sourced from Bizom, a retail intelligence platform, showed that the prolonged lockdown drove up sales of branded edible oils by 28.2%.

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This was aided by the fact that hotels and restaurants were shut down for a while and then resumed business only partially. Consequently, the in-home usage moved consumption to soft cooking oils such as branded sunflower, groundnut and soybean oil.

“There is a clear shift towards in-home consumption over the last 10 months and we think this trend is going to continue in the coming quarters,” said Piyush Patnaik, managing director, at Cargill’s oil business in India. Cargill’s Gemini and Nature Fresh brand of cooking oils have both seen significant penetration gains in all markets across India. In larger cities, we could see the shift to higher health and wellness products and in other oils to larger pack sizes, Patnaik. Sales to consumers is over 80% of the company’s branded oils portfolio.

Patnaik said with revival in the packaged food industry demands, the company is seeing return of “strong” demand in its B2B business.

India’s edible oil industry is dominated by both loose and packaged oil including soy oil, mustard, coconut and groundnut oil. Several large companies participate in the market including Adani Wilmar, Marico, Cargill, Mother Dairy among others.

Indians are now consuming branded edible oils much more than ever, said Akshay D'Souza, Chief Marketing Officer at Bizom. “With celebrities promoting the various benefits of cooking oils, it is only natural that we are seeing a surge in the movement of consumer preference towards branded edible oils. As HORECA (Hotel, Resturants, Cafe) usage has been muted since the lockdown, we've seen consumption of edible oils increase significantly from home use,” said D’Souza.

Marico that sells the popular Saffola brand of cooking oils reported 17% volume growth, in the December quarter, slightly lower than the September quarter. Close to 65% of the growth driven by increase in overall penetration, the company said in its earnings announcement. “Increased household penetration and relevance of healthy cooking continued to lend impetus to the franchise,” it added.

The company is anticipating “sustained” growth for the portfolio going forward even as post-covid consumption patterns normalize. “We believe the brand can continue to grow in a high single digit over a medium term as a base case,” Saugata Gupta, MD and CEO, Marico Limited said in a post-earnings call last month.

India’s cooking oil market is estimated at $21.5 billion in 2019 and set to grow to $35.2 billion by 2025.

India imports palm oil from Indonesia and Malaysia, which is used by bulk or institutional consumers. Crude palm oil witnessed a sharp contraction in demand from bulk consumers, CARE Ratings said in a September 2020 report. On the other hand, the demand for soft oils picked up as demand from household segment gained traction during lockdown, it added. Soft oils refer to sunflower and soybean oils.

In the first quarter of the current financial year cooking oils reported sales growth of 31% year-on-year, sales surged to 34.9% in the second quarter, while settling in at 21.1% in the December quarter data from Bizom shows. “This signals consumption moving from unbranded oils to the perceived safer branded edible oils,” said D’Souza.