Cooking Oil Usage Pattern in India Avishek Singal Nimal Nithyanandham Ram Mohan M.P Ratnavel Subramanian

AGENDA What are cooking oils? The consumption and production in India The trends in oil demand The future Reasons Conclusion Praxis Business School2 of 11

What are the cooking oils? Cooking/Edible oils constitute a huge variety of oils extracted from various natural sources like nuts, citrus, melon & gourd seeds etc. The major differentiating factors in usage of these oils are: – Availability – Cholesterol content – Taste – Smoke point Praxis Business School3 of 11

Consumption and Production in India Annual consumption m tons (Risen by 6% over last year’s usage) Total market size - Rs. 60,000 cr Total import-export trade - Rs.13,000 cr India’s packaged edible oil market - Rs. 24,000 cr (as per industry data,2013.) With 31% of urban households & 9% of rural households consuming branded edible oil, the national average approximately sums to 15.6% Praxis Business School4 of 11

Consumption and Production in India Loose oil sales in India have dropped significantly from 74% in 2005 to 40% in 2013 In , sales of the packaged cooking oil in the country overall rose to 30%. And, the share of branded and packaged oil in the overall cooking oil segment shot up to 60 % from 45% in the previous year. Packaged cooking oil is expected to grab 80% market share by 2015 India’s per capita consumption of edible oil rose from 3Kg annually in 1950 to 14.2Kg in 2011 India’s per capita consumption of edible oil might rise by 4.19% in 2013 Source : Hindustan Times, Times of India and Business Standard Praxis Business School5 of 11

The trends in oil demand Oil production share of various types in India Praxis Business School ProductionConsumption Palm Oil*1.07%46.0% Soya Oil23.47%16.2% Rapeseed Oil26.80%11.1% Sunflower Oil*2.80%7.9% Cottonseed Oil15.07%7.2% Groundnut Oil*1.60%2.4% Rice Bran Oil12.00%5.2% Others17.20%4.0% 6 of 11

The trends in oil demand Praxis Business School The import of various oils in India are as follows: Palm oil is the mostly consumed oil and its production in India is the lowest among all the other popular oils The anomaly in the usage pattern is that there has been an increased usage of Palm Oil as compared to traditional usage of Groundnut Oil. This was mainly post 1991 Imported (Mn T) % of total import of oils Palm Oil % Soya Oil % Rapeseed Oil % Sunflower Oil % 7 of 11

The trends in oil demand Praxis Business School Source: SEA India Online 8 of 11

The future Praxis Business School The expected production/import and consumption based on the past trend is as shown: *Considering 3% growth in population All data Source: SEA of India PARAMETERS *2020* Population in Bn Total Demand (Mn T) Domestic Supply (Mn T) Import (Mn T) Import as a % Share of Demand60%57%61% 9 of 11

Reasons The major reasons for the general increase in consumption of edible oil were discovered as: – Overall increase in population – Change in food habits – Increase in per capita income – Health consciousness Recent paradigm shift was mainly due to the following reasons: – Higher cost in production of oils like groundnut oil as compared to Soya or Cottonseed oil – Erratic monsoon affecting production – Due to the above two reasons, there has been an average fall of 8% in the supply of oils like groundnut oil leading to rise in prices of these oils Palm oil being cheaper than other options eventually became the choice of people opting for economy Praxis Business School10 of 11

Conclusion The reasons for the trend was clearly seen. Though health related issues also play a key role, the major reason behind the paradigm shift in the usage pattern was because of cost-effective alternatives Apart from increase in the usage of Palm Oil, the market for Olive Oil and Rice Bran are also new and attractive because of health related reasons Praxis Business School11 of 11