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Edible Oil Makers Slash Prices By Up To 15%, Expect Demand Boost

While Adani Wilmar has cut Fortune oil prices by Rs 10, Mother Dairy says Dhara will now cost Rs 15 less per litre across variants

<div class="paragraphs"><p>Cooking deep-fried wheat bread. (Photo:&nbsp;Ashwini Chaudhary/Unsplash)</p></div>
Cooking deep-fried wheat bread. (Photo: Ashwini Chaudhary/Unsplash)

Cooking oil makers have cut prices as the government reduced import duties and availability eased with global suppliers relaxing export curbs.

The maximum retail price of sunflower, soybean, mustard, and palm oil will be slashed by up to 15% or Rs 20, according to industry executives BQ Prime spoke with. These packs will hit the markets next week and could potentially reverse the current trend of consumers shifting to smaller and unbranded packs to keep pace with sky-high inflation.

Adani Wilmar Ltd., the country’s largest edible oil producer, has cut prices of its products under the ‘Fortune’ brand by Rs 10. While the MRP of one-litre sunflower pack will now be available for Rs 210, its mustard oil will be priced at Rs 195.

India has allowed duty-free import of 20 lakh metric tonnes each of crude sunflower and soybean oil a year till 2024. The government has also reduced the import prices of crude palm oil and soy oil.

“We are passing on the benefit of this reduced cost and customers can expect purest edible oil made with highest safety and quality standards which are also light on their pockets,” Angshu Mallick, managing director and chief executive officer at Adani Wilmar, said. “We are confident that lower prices will boost demand.”

A Mother Dairy spokesperson said prices of ‘Dhara’ edible oils, including mustard, soybean and sunflower, are being reduced by up to Rs 15 a litre across variants. Ease in availability of sunflower oil, including improved domestic crop, also led firms to consider price cuts.

One litre of refined Dhara sunflower oil currently retails at Rs 235, while a Kachi Ghani mustard oil pack comes for Rs 210. A vegetable oil carton is priced at Rs 220. The new stocks will hit the market coming week, the spokesperson said.

Hyderabad-based Gemini Edibles & Fats has also reduced MRP of its 1-litre ‘Freedom’ Sunflower Oil by Rs 15 to Rs 220 last week, and is set to cut prices by Rs 20 more this week to Rs 200 a litre, it said.

Cooking oil prices are now below their peak levels but remain elevated. The oils are still 25-30% expensive over 2019 levels.

The four key edible oils—palm, soya, mustard and sunflower—constitute 85-88% of the total consumption in India by volume.

The choice of edible oil often varies with region, with soya and sunflower typically favoured in the south and west, and mustard popular in the north and east. Palm oil is primarily used by large-scale food processing enterprises. It’s used in making biscuits, chocolates, shampoo and cosmetics, among others.

India is the world’s largest palm oil importer and depends on Indonesia and Malaysia to meet domestic demand. Every year, according to Solvent Extractors’ Association of India, the country imports 13-14 million tonnes of edible oils, of which palm oil accounts for 8.5-9 million tonnes.

Prices of edible oil soared globally on supply concerns, and later amplified by the Russia-Ukraine conflict. India is especially vulnerable to rising oil prices as it relies on imports for 60% of its needs. This prompted domestic fast-moving consumer goods firms to hike prices.

The higher prices affected consumption.

“Currently, edible oil demand has been affected by higher prices, aggravated by the summer season, which generally sees contraction of demand,” Nirmal Bang said quoting Atul Chaturvedi, president at Solvent Extractors’ Association of India and advisor to Adani Wilmar, as saying during an interaction. Of the total edible oil consumption of 22 million tonnes, mustard oil accounts for 4.5 million tonnes, palm oil 7.5-8 million tonnes, soybean oil 5.5-5.75 million tonnes and sunflower oil accounts for 2 million tonnes.

“In 2019, 18 kg per capita consumption was recorded, which is now expected to fall to 16.5 kg. But once the monsoon season takes hold and the festival season arrives, demand should pick up pace.”

As for palm oil, Chaturvedi said, the exports have not smoothened in spite of Indonesia lifting ban on export of the commodity.

Falling prices and a marketing drive that often plays on health concerns over unbranded sales is likely to spur demand.

“We have seen consumers downtrading but it was mostly in the hope of prices regulating downwards. There’s also a move toward value pack offerings where consumers are looking to manage consumption and spends by buying multiuse packs at lower cost rather than single-use packs only,” Akshay D’Souza, chief insights and growth officer of retail intelligence platform, Bizom, told BQ Prime.

“But over the last decade, we’ve seen consumer preference for cooking oils move towards branded items for the convenience and quality offered. During multiple waves of Covid-19, we did see the preference for branded products rise, especially value-added products like blended spices or healthy oils,” he sai. “With prices now being corrected downwards, the move from unbranded to branded will continue over time.”