Govt mulls ban on loose edible oil sales post Covid-19 over health concerns

The ban, if imposed, would affect the poor consumer who buys his requirement in rupee terms from his daily wages, not by weight

The government is contemplating a ban on the sale of loose edible oil after concerns were raised about its authenticity and the possible impact on health, in the backdrop of the Covid-19 pandemic.

While deliberating on the challenges being faced by the edible oil industry in the post Covid-19 scenario at a webinar today, Atul Chaturvedi, President of the Solvent Extractors’ Association (SEA), said, “The government is contemplating on ban on loose edible oils which gives an opportunity for packaged and branded players to boost their sales.”

The ban, if imposed, would affect consumers in India's poorer states, especially in rural areas. Many such consumers still purchase edible oils in very small quantities worth a few rupees. This means, rural and daily wage earning consumers buy their requirements in terms of rupee value from and not by weight. They buy edible oils everyday from the wage they earn and consume it.

Branded and packaged edible oils are selling currently at around 50 per cent premiums over loose their varieties. Hence, products using edible oils would be costlier going forward.

Apart from daily wage earners and rural poor, producers of fried products on the roadside (like makers of samosa and other such temporary dishes for snacks) normally consume a voluminous quantity of loose edible oils which works out to cheaper than branded and packaged ones.

B V Mehta, Executive Director, SEA estimates such consumers contribute nearly 40 per cent of India’s edible oil consumption to the tune of 23 million tonnes. India imports around 65 per cent of overall edible oil demand primarily from Indonesia, Malaysia and Argentina due to stagnant oilseeds production locally.

When market opens following ending of the nationwide lockdown, marketing strategy of all staple foods including edible oils would see a drastic change with lot of consumers shifting from unbranded to branded products and loose to packaged products for safety and security of their health. Consumer behaviour is set to change.

“The nationwide lockdown has seen a massive demand destruction due to closure of hotels, restaurants and catering services. While some losses are permanent, others are temporary which may see recovery after the lockdown ends. So, players in packaged oil category would have to be ready to grab this opportunity,” said Chaturvedi.

In a swift change, retailers have stopped stocking loose oils in their showrooms amid fear of weak sales during this Covid-19 pandemic and possible continuation thereafter.

“After Covid-19, we are not going to change like robots but lifestyle is going to change. Consumers are going to be more health conscious and therefore, they will be looking at health benefit products with no cholesterol or fats etc,” said Piyush Pandey, Executive Chairman India, Oglivy.

Pandey emphasized the need to continue reaching consumers even during the period of weak sales through advertising in various media or through messaging to have uninterrupted consumer connect. He stressed upon the one mother brand with many more others with their separate target audience.

“The nationwide lockdown has severely hit India’s ‘out of home’ consumption of edible oils especially from the segments like bakery, ice creams, farsan and other friend products which overall contributes nearly 27 per cent of India’s overall edible oil consumption,” said Angshu Mallick, Deputy Chief Executive Officer, Adani Wilmar Ltd, the producer of ‘Fortune’ brand edible oils.

Mallick forecast India’s edible oil consumption to recover in the second half of the current financial year due to possible opening up of schools, offices etc which would increase consumption of biscuits and retail delivery of food products through aggregator.

Priyam Patel, Director of N K Proteins, the producer of Tirupati brand edible oils, however, believes that digital sales and marketing to bring more attraction in the post Covid-19 scenario than ever before.