Rise in Urbanization, Growth in Organized Sector and Out-of-Home Eating to Drive the Market for Edible Oil in India
Edible Oil Market is expected to move towards organized sector where producers will be held liable for quality of his products.
Demand for packaged edible oil is expected to increase as it is convenient to store and is available in variety of packaging sizes.
Regional oil will continue their dominance in the market but prices will play a key role in retaining the customer to particular oil as his or her first choice.
Increased productivity and support from government in form of better MSP, technical education, creating infrastructure and framing favorable policies will boost the domestic production.
Edible oil market growth is mainly driven by increased demand for out-of-home consumption and rising population especially in urban areas. Share of organized sector is expected to register a double digit growth rate registering significant increase in market penetration and better availability of package oil in all sizes. Manufacturing of customized oil which is generally sold at premium will gain market share as awareness about their availability increases. Entry of new players such as Mahindra, Cofco, and Patanjali will further boost the market. Even though per capita consumption is highest in western region volume demand will remain maximum in northern part due to large concentration of population.
Demand for healthy oils is on rise which is evident from the fact that rice bran oil, sunflower oil, olive oil and their blends have gained popularity in the market. Oil targeting specific set of population was also launched to attract customers and get the first mover advantage. Urban cities account for majority of the demand for packaged healthy and branded blended oils and the trend will continue in the future with tier 3 cities also joining the league. Penetration of packaged oil is on improvement as distribution improves ensuring that all type of oil is available in all sizes based on demand. Increased habit of eating out has driven the demand for large size packages and cheaper edible oil and the trend is expected to continue in the future.
According to analysts at Ken Research, increased import duty of refined oil will increase the utilization rate of Indian refineries and ban on selling edible oil in open will help in checking the adulteration. Creating consumer awareness about new product and helping them to select the right oil will further help the companies to boost their revenue and gain the goodwill about the brand. Government can continue to support farmers through MSP and better training and forecasts about the weather.
Ken Research in its latest study titled “India Edible Oil Market Outlook to 2022 – Growth in Organized Sector and Out-of-Home Eating Trend to Drive Future Demand” expected that future demand for edible oil will increase from 25.6 million metric tons in FY’2018 to 32.4 million metric tons in FY’2022.