ggpatel presentation pipoc 2011

8/13/2019 GGPatel Presentation PIPOC 2011

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ConsumerTrendInIndia

WithReference

To

Palm

Oil

By

Govindbhai G.

PatelManagingPartner

G.G.Patel&NikhilResearchCompany

At

PIPOC2011

KualaLumpur

on16th November,

2011


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INDIANDEMOGRAPHICS


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Secondmostpopulousnation

1.231Bn people

Largestdemocracy

Countrywithmaximumyoungpeople

Medianage

24.4

years

In 2025, more than 55 per cent of the population of India

would be of working age.

Amongstthefastestgrowingeconomics

Fourthlargesteconomy,poisedtobeNo.2or3innext10years

WhatPeopleTalkAboutIndia


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India a fast growing significant economy in spite of global

slowdown

StrongMacroeconomicfundamentals

GDPValue:OverUS$1.3Trillion(Tn)

PurchasingPowerParity(PPP):US$5Tn

Forex Reserve:US$298Bn.andgrowing

HouseholdSavingsRate(200910):32.5%(worldshighest)

AverageGDP

Growth

Rate

(last

5years):

8.4%

IndianMacroeconomicOverview


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GROWTHSTORY


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GrowthEnablers

Consumer expenditure on Food, Beverage & Tobacco in India iscurrently US$ 375.3 bil lion in 2010 and it is expected to go upto US$588 bill ion in 2015.

India Retail market is US$ 450 billion currently, which is 3rd largestin Asia in terms of sale.

The total retail sale is expected to double in the next 5 years.


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DemanddriversofedibleoilinIndia

ConsistentGDPgrowthforecastofmorethan8%.

A

big

expansion

in

the

Indian

middle

class,

due

to

a

big

rise

inincomelevelsofthepoorclass.

The double digit growth of out of home consumption of

edibleoil.

Per capita consumption of Edible oils in India at 12.8 kg is

still a lot below threshold level of consumption. Low

consuming

states

of

central

and

East

India

at

810

kg

will

catchupwiththeirpeersofWest&NorthIndiaat15/17kg.


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Evenwithamoderatepopulationgrowth theabsolute

increaseinnumberofpeopleisquietHigh.

Schemes like NREGA and rising labor income is

increasing the income level of people who are

consumingmuchbelowtheallIndialevel.

RisingUrbanpopulation&manymore.

Hence

India

will

be

a

promising

consumer

marketwithahighgrowthinconsumption.

DemanddriversofedibleoilinIndia


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ImportStatistics


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Imports

of

last

10

years

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

Year

QtyInmlT

Edible Palm Oil

Soya Oil

Sun Oil

Others Edi.Oils

TOTAL


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MAJOREDIBLEOILSYEARLYCONSUMPTION

So even after increase in absolute quantity of consumption of Palmoil, the share of Palm oil is also increasing.

Year

GN SBO RAPE SUN CSO PALM OTHER TOTAL

% % % % % % %Qty in

ml T%

2001/02 12.0% 22.3% 17.0% 3.0% 4.3% 29.0% 12.1% 10.1 100%

2002/03 7.4% 19.1% 12.3% 5.2% 4.2% 39.4% 12.1% 9.6

100%2003/04 8.6% 18.0% 16.5% 4.7% 4.8% 33.3% 13.8% 10.3 100%

2004/05 7.9% 26.1% 12.5% 4.0% 6.0% 28.2% 14.8% 10.9 100%

2005/06 7.0% 24.9% 19.6% 5.11% 6.6% 22.7% 13.8% 11.4 100%

2006/07 5.0% 22.4% 17.6% 5.7% 7.8% 26.9% 14.4% 11.8

100%

2007/08 5.5% 17.5% 14.6% 4.3% 8.6% 35.8% 13.4% 12.4 100%

2008/09 4.2% 15.0% 11.4% 6.0% 6.8% 45.4% 10.9% 14.1 100%

2009/10 2.6% 19.0% 11.4% 6.4% 7.7% 42.8% 9.8% 14.8 100%

2010/11 3.1% 16.5% 14.4% 6.4% 6.9% 42.8% 9.5% 15.7 100%


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There is an increase in per capita consumption of edible

oilsandthedomesticproductionofoilsisnotabletocope

atthesamepace.

The per capita consumption is increasing as the country

hasconsistentlygrownby8%orabove in last10yrs,the

incomelevel

of

people

have

risen

and

there

is

ageneral

environmentofoptimismandincreasedspending.

Zero import duty on crude edible oil and very nominal

duty

on

refined

oils

have

favoured the

import

over

domestic oils at the expenses of Indian oilseeds farmers

andcrushers.

Whyhastheimportofedibleoilsincreased ?


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Govt. schemes like midday meals, subsidized oil supply to

belowpovertylinefamiliesboostedthedemandforedibleoils.

Majorlypalmisusedinit.

Also Govt. schemes like NREGA (national rural employment

guarantee) also has lead to employment to unemployed and

improvedtheincomelevelsofthebottomofthepyramid.

Highpriceelasticity lowerpricehasboostedthedemandand

consumption.

Whyhastheimportofedibleoilsincreased ?


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DemandSideofIndian

Market


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Characteristics of different oils consumed in India

Groundnut Oil

Once upon a time the most preferred oil but now is slowly dying out due tohigh prices and low availability. The demand of Groundnut Kernel isphenomenally growing, hence creating a scarcity of available seed forcrushing.

Rapeseed / Mustard Oil

Mustard oil is Kachi Ghani oil with strong Pungent taste. The biggest marketsfor this oi l is east India followed by North India.

Cottonseed Oil

This oil has a largest consumption in Gujarat and surrounding areas. Thefrying quality of this oil is also good and so is preferred by local Snackmanufacturers. The production of this oil is scattered all over the country.


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Characteristics of different oils consumed in India

Sunflower OilSunflower oil preferred by the affluent class of south and west India. South isa big market for this oil. This oil has the highest percentage increase inconsumption though the absolute numbers may not be very big. This oil may

increase and capture a big share of the growing affluent class of India andmay replace some oils specially Groundnut oil .

Soybean Oil

Refined Soybean oil is the oil preferred by the middle and the upper middleclass. This is the oil which has the highest sale in the consumer packs.

Palm Oil

The highest selling oil in the country. This oil is gaining big popularity in theout of Home (HORECA) segment. This is the preferred oil in South India andcoastal East India. As it is generally cost effective this has become thecommon mans oil . Government supplies are also of Palm Oil.


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Type of Oil

Current Core Demand

( Non-switchable Demand)(Monthly estimate in Thousand T)

GroundnutOil 35 45

MustardOil 140 160

CottonSeed

Oil

55

65

SunflowerOil 7585

SoybeanOil 180 200

PalmOil 380 420

OtherOils 75 85

AverageSwitchable

Demand 350

India is a very price sensitive market and a good quantity ofconsumption switches to the cheapest oil available.

Though the consumption of palm is nearly 6.75 million tons butthe core demand for the oil is st ill around 4.60 to 5 mill ion tons.So palm is catering to this big switchable demand of India.


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SeasonPatternofPalmOilConsumption

Summers Highest

consumption

SummersarefromMarchtoJune,thehightemperaturesarehigh(35

to45degreeCelsius)andsoPalmdoesnotbecomehazy.

Monsoons ReasonablyHigh

It

is

from

July

to

October,

the

high

temperatures

are

between

(30

to

40

degreeCelsius),stilltemperaturesfavour Palm.

Winters Lowconsumption

The high temperature are between 1530 and low are from 5 to 15

degree Celsius. The low temperatures specially in North and Central

India make Palm hazy and semi solid, this discourages usage. For

Indiansoilhastobeinliquidform.


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QuarterwiseImport

Generally India imports more oils in 3rd & 4th quarter

as the domestic production of oils is less and festival

demandismore.

-

0.5

1.0

1.5

2.0

2.5

3.0

2006-07 2007-08 2008-09 2009-10 2010-11

Year

Qty(mlT

) 1st Qtr

2nd Qtr

3rd Qtr

4th Qtr


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RegionalPattern

of

Consumption


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NorthIndiaPopulation293.8ml

(23.9%)

EastIndiaPopulation358.5ml

(29.1%)

SouthIndiaPopulation257.3ml

(20.9%)

WestIndiaPopulation321.4ml

(26.1%)

Indias4Zonesforconsumptionpattern


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NorthIndia

Delhi,Punjab,

J&K,

H.P

&

U.P

etc.

Traditionally a Mustard oil & Groundnut oil Market but has some shift to Soy

oil for house hold consumption and Palm oil for out of home consumption(HORECA).

This market is a perfect mix bag of all oils. It has the lowest share inpercentage terms of Palm oil as it is the colder region of India.


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SouthIndia

Karnataka,

Tamil

Nadu,

A.P,

Kerala

etc.

The highest consumer of Palm oil both in absolute andpercentage terms. It is also the biggest market for Sunoil in India. There is a small share of Soya oil and verylow other oil consumption


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WestIndia

Gujarat,Maharashtra,Rajasthan&M.Petc.

This is the most prosperous region of India having the highest per capitaconsumption of edible oil. Acceptability of Palm oil has improved and it has

nearly 37% share. But even with 37% share this region is the second highestconsumer of Palm oil on account of high per capita consumption.

This is the highest Soy oil consuming region as the major domestic soybeancrop is grown and there is a good house hold demand of this oil.


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EastIndia

West

Bengal,

Orissa,

Bihar

etc.

This is the lowest per capita consuming region due to lower

income levels. This has 40 % share of Palm, but this is thesecond region after south where broadly the whole of theregion has accepted Palm oil in the house hold.

This is the biggest market of Mustard oil (29% share).


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StateWisepercapita

ConsumptionComparisonfor2010/11

State Per Capita State Per Capita

AndhraPradesh 13.2 MadhyaPradesh 10.4

Assam 10.7 Maharashtra 18.3

Bihar 10.6 Orissa 7.7

Chhattisgarh 10.3 Punjab,J&K,

HimachalPradesh 14.5

Delhi 17.3 Rajasthan 11.9

Gujarat 22.3 Tamilnadu 12.5Haryana 9.6 UttarPradesh 10.5

Jharkhand 12.4 WestBengal 14.1

Karnataka 13.0 Otherstates&

Unionterritories

12.4

Kerala 10.1 AllIndia 12.8The per capita is very low in Orissa, Haryana, Kerala, Chhattisgarh, M.P., Bihar,Assam etc. at 8 to 11 kgs.

The per capita is highest in Gujarat & Maharashtra at 22 and 18 kgs.


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OutOf

Home

Consumption


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OutofHome HouseHold

Out of Home consumption of edible oil in USA Vs China Vs IndiaThe annual consumption of edible oils in OHC was 4.5 mln mt in 2009/10

The out of Homeconsumption covers users

like Manufacturers ofChips, Snacks, Biscuits,

Restaurants, Hawkers,Bakeries & non edible

uses like Paints, Hair oiletc.

Out of Home Consumption

50% 50%

30%

70%

40%

60%


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Indian Biscuit industry is Growing above 14 % from 2003

Growth Rate of OHC v/s HHC

Out of HomeConsumption is

growing at a fasterpace than House

Hold Consumption.


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White Paper Survey Indian Restaurant

White Paper Survey done on Indian restaurant industry(Urban area) has revealed some fact which are as follows :

40 % is the rate at which the fast food industry is growing

in the country

80 % of urban Indians eat out seven times a month, up

from thrice in 2003

2 out of 3 families order food from outside at least once a

month.

55 % kids are served chips and Kurkure as munch- ons in

between meals.

80 % of visitors to a shopping mall end up visiting food court

The growth rate in Out of Home sector is 2 to 3times more than the home consumption rate.


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Growth RateofConsumption

We have categorized the Out of Home Consumption in theBelow Categories & Sub Categories


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CategoryOHC

Shareml T Sub- Category

Share in

Category

OHC

Shareml T

Food

Outlets 40% 1.80

SnackShop/Hawkers 50% 20% 0.90

Restaurants/

Canteen 30% 12% 0.54

Banquets/Caterers 20% 8% 0.36

FriedFood 28% 1.26 IndianSnacks 70% 20% 0.88

WesternSnacks 30% 8% 0.38

NonFried

food 20% 0.90

Bakery Products

(Outof

which

50%

is

Biscuit)65% 13% 0.59

Others* 35% 7% 0.31

Nonedible

uses 12% 0.54

HairOil 60% 8% 0.32

Others** 40% 4% 0.22

Total 100% 4.50 100% 4.50

* Confectionary, Pickles, Tables Margarine & Mayonnaise, Deserts, Ice cream, Dairy

** Soap, Cosmetics, Paints


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Observations

Difference Between Urban & Rural OHC ?

Rural OHC is quiet low in front of URBAN consumption.

Restaurants are the biggest sub category in Urban India, where

as Snacks shop are the biggest category in Rural India

Consumption of Bakery (other than BISCUITS), confectionary,

Chips is much lower in Rural India.

Because 70 % of population in India is Rural population, henceour depiction has more weightage to the Rural Trend

F t Sh t f I di id l S b C t


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FactSheetofIndividualSubCategory

Categories

Oil

Preference Why ?

Growth

Witnessed

Restaurant/

Canteen

Palm CostBenefit Highsmokepoint

Reusability HighGrowth

inallregions

Soya BetterFinish

Lowcloud

point

Snacksshop

&

Hawkers


Reusability HighGrowth

inallregions

Soya Whenno

alternate

is

available

Caterers

Marriage

Banquets

Vanaspati

(Palm)

CostBenefit Crispierfinish

UseinSweets

Avg.growth

inallregionSoya

BetterFinish

Lowcloud

point

Groundnut

Sunflower

Usedonlyinupperclassbanquets

BetterAroma Bettertaste

F t Sh t f I di id l S b C t


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CategoriesOil

PreferenceWhy ?

Growth

witnessed

Snacks

Sweets

Chips


ReusabilityHighGrowthinWest

LowGrowthinRest

ofthe

regions.

(exceptchips)

Cotton BetterFinish Lowcloudpoint

ShelfLife

RiceBran BetterFinish HealthBenefit

BakeryProd

Bakery

Shortening

(Palm)

Specializedrequirement

forbakery HighGrowth

Confectionery PalmProduct Specializedrequirement

forChocolates

HighGrowth

Pickles Mustard Aroma PungentTaste

Pickles ModerateGrowth

Icecream Palm

Kernel

Coconutoil Very

Low

Melting

Point

High

Growth

HairOil Coconutoil Traditionaluse

ModerateGrowthSEGNoil* Odorless Lesssticky

SoyaOil

FactSheetofIndividualSubCategory


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House

Hold

Consumption House Hold Consumption in India is about

70%andinabsoluteterms10to11mlT.

Indianhouseholdearlierpreferreddomestic

oils

like

Groundnut,

Rapeseed

&

Cotton

but

arenowshiftingtoPalm,Soya&Sun.

But

acceptability

of

Palm

in

household

isdrasticallydifferentindiff.regionsofIndia.

H H ld C ti f P l


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HouseHoldConsumptionofPalm

in4Zones

South : Palm has a major share in this area in house

hold. The South Indians already had acceptability for

Coconutand

smoothly

shifted

to

its

lower

priced

cousin

Palm.

East:Palm

has

made

in

roads

and

there

is

aincreasing

acceptabilityofPalmspeciallyincoastalareas.


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Futureof

Indian

Edible

Oil

Scenario

Past&ForecastedGrowthRateofFactorsaffectingConsumptionofOils.


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g p

YEAR Population

(inMln.)

Consumption PerCapitaConsumptionGDP

GrowthRate

(in%)InmlT

%Change

againstPrev.

Yr.In

Kg.

%Change

againstPrev.

Yr.

2001/02 1078 10.1 9.391 0.0% 4.6%

2002/03 1096 9.6 5.0% 8.78 6.5% 6.9%

2003/04 1113 10.3 7.3% 9.278 5.7% 8.1%

2004/05 1130 10.9 5.8% 9.636 3.9% 9.2%

2005/06 1148 11.4 4.6% 9.895 2.7% 9.7%

2006/07 1165 11.8 3.5% 10.152 2.6% 9.7%

2007/08 1181 12.4 5.1% 10.491 3.3% 9.2%

2008/09 1198 14.1 13.7% 11.735 11.9% 6.7%

2009/10 1215 14.8 5.0% 12.209 4.0% 8.0%

2010/11 1231 15.7 6.1% 12.786 4.7% 8.3%ProjectionForNext5Years

2011/12 1247 16.7 5.9% 13.362 4.5% 8.0%

2012/13 1266 17.7 6.1% 13.963 4.5% 7.8%

2013/14 1282 18.7 5.8% 14.591 4.5% 8.2%

2014/15 1299 19.8 5.9% 15.248 4.5% 8.1%

2015/16 1316 21.0 5.9% 15.934 4.5% 8.1%

Population:AsestimatedbyIMF

GDP:AsestimatedbyIMF(Projectionfor2011/12to2015/16)

Considering a promising forecasted GDP above 8% and the expected population growth wefeel the Indian edible oil demand will continue to grow at 6% or above average rate for next 5

years and so the Indian consumpt ion may reach 21.0 Million MT by 2015/16.*Projection based on general GDP growth of between 7-9 %

Availability of Domestic Oils


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AvailabilityofDomesticOils

But the domestic production may not be able to keep pace with the fast growingdemand.

The availability of domestic oil will just increase by only 1.25 million tonnes duringnext five years.

The scope for a big increase in oilseed area doesnt seem possible and the increase in area is

estimated by 3 ml hectares in next five years.

Though we see an increase in the production of oil seed but th is may not result in a big rise in oilproduction, as major contribut ion seems to come from the low oil content oilseeds in next 5 years.

There will be a very gradual increase in Yield of oilseeds and the average yield may increase

approximately by (7%) 70 Kg/Hectare in next 5 years

0

1

2

3

4

5

6

7

8

9

10

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

(in ml T)

B C V/ W C A l i f


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BestCaseV/sWorstCaseAnalysisof

DomesticOil

supplies

(FiguresinmlT)

Edible Oil

2010/11 2015/16

Current

Scenario

Worst

Case

Normal

Case

Best

case

DomesticSupply 7.2 8.0 8.5 9.0

DomesticDemand 15.7 21.0 21.0 21.0

ImportRequirement 8.5 13.0 12.5 12.0

As the availability of domestic oil will just increase by only 1.25million tonnes to 8.5 million tonnes whereas the demand willphenomenally increase by 5.3 million tonnes to 21 million tonnes,the imports of India will increase to 12.5 million tonnes from 8.5million tonnes just now.

I i D d I


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IncreasingDependenceonImports

YearDomestic

ProductionImport Total

Domestic

Production

Import

Dependence

% %

2001/02 5.64 4.42 10.06 56.0% 44.0%

2002/03 4.32 5.12 9.44 45.8% 54.2%2003/04 6.07 4.40 10.47 58.0% 42.0%

2004/05 5.54 5.04 10.58 52.3% 47.7%

2005/06 6.90 4.42 11.32 61.0% 39.0%

2006/07 6.80 4.71 11.52 59.1% 40.9%2007/08 7.00 5.61 12.61 55.5% 44.5%

2008/09 6.34 8.18 14.53 43.7% 56.3%

2009/10 6.20 8.82 15.02 41.3% 58.7%

2010/11 7.24 8.54 15.78 45.8% 54.1%

2015/16 8.50 12.50 21.00 40.5% 59.5%

The Import dependence of India will further increase to 60% from 54 %currently.

(in ml T)


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21.0 million tonnes15.7 million tonnes

CurrentV/s

Forecasted

Share

of

DifferentOilsinConsumption

*Composit ion of import will depend on pr ice difference between different oils.

SHARE IN CONSUMPTION OF EDIBLE


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SHAREINCONSUMPTIONOFEDIBLE

OILSIN

2015/16

V/S

LAST

10

years

YearGN SBO RAPE SUN CSO PALM OTHER TOTAL

% % % % % % % ml T %

2001/02 12.0% 22.3% 17.0% 3.1% 4.4% 29.1% 12.2% 10.1 100%

2002/03 7.5% 19.1% 12.3% 5.2% 4.3% 39.4% 12.2% 9.6 100%2003/04 8.7% 18.1% 16.6% 4.7% 4.8% 33.4% 13.8% 10.3 100%

2004/05 8.0% 26.2% 12.6% 4.1% 6.1% 28.3% 14.9% 10.9 100%

2005/06 7.0% 25.0% 19.7% 5.1% 6.6% 22.8% 13.9% 11.4 100%

2006/07 5.0% 22.5% 17.7% 5.7% 7.8% 26.9% 14.4% 11.8 100%2007/08 5.6% 17.5% 14.6% 4.4% 8.6% 35.8% 13.5% 12.4 100%

2008/09 4.2% 15.0% 11.5% 6.0% 6.9% 45.5% 11.0% 14.1 100%

2009/10 2.6% 19.1% 11.5% 6.4% 7.7% 42.9% 9.8% 14.8 100%

2010/11 3.1% 16.5% 14.5% 6.5% 7.0% 42.9% 9.5% 15.7 100%

2015/16 1.3% 17.6% 12.4% 7.2% 6.1% 45.5% 9.8% 21.0 100%

Opportunities For Palm In India


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OpportunitiesForPalmInIndia

1. Share in House Hold consumption is very low except South & CostalKarnataka & Orissa.

2. As Palm oil solidifies, people feel there is something wrong in i t.

3. There is perception in middle & upper class people that Palm oil is nota good oi l.

4. Palm oil is sti ll considered a poor mans oil.

1. Marketing of the Brand Palm needs to be done.

2. Propagating usage of higher quality oil Like Double Fractionated.

3. To make consumer aware that Palm oil contains low Trans-fatty Acidin comparison with Soybean oil .

4. Low cloud oil should be marketed.

Drawbacks

What can be done


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MajorOils(PalmOil,SoyOil,MustardOil)

PalmOil

Mustard

Oil

SoyOil

SoWhatwillbe2015/16


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CottonseedOil Sunflower

Oil

MinorOils(SunflowerOil,CottonseedOil)

SoWhatwillbe2015/16


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ggpatel presentation pipoc 2011

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