Navigating a New Terrain in Edible Oil Sector during COVID -19 Pandemic

P Chandra Shekhara Reddy, Vice President Sales & Marketing, Gemini Edibles & Fats IndiaHolding around three decades of experience, Chandra has strong expertise in media planning, supply chain, marketing strategy, integrated marketing, procurement, and several others.

COVID 19 is an unprecedented event in our times. The outbreak of this pandemic has brought the entire world to a standstill. Physical distancing is the only known measure to control the outbreak. Most of the businesses have faced disruptions and started working remotely & few businesses have shut their operations temporarily. In this scenario, Social Distancing, personal protection, maintenance of hygiene & sanitization, healthy eating, and living a healthy life are emerging as the new buzz words in society. We are forced to adopt the new Normal to stay safe and relevant.

With, humanity in lock-down, the essential commodities like wheat, rice, pulses, edible oils, cleaning products, hand sanitizers, masks, and others are in demand. It has always been a challenge to ensure the last mile availability of the product and the customer preference for the same. With the coronavirus crisis intensifying the situation, the cycle of food production to processing to marketing and consumption have faced even greater challenges. The pandemic has created awareness of the fact that our food systems are vulnerable & the producers & marketers, need to upgrade technology and innovate to stay available and relevant to the customers.

Consumption Trends in Edible Oil
Edible oil is an essential commodity, used for every day cooking in households and all F&B outlets. People have different preferences for edible oils, governed by their preferences for health, flavor, aroma, and more. In Southern India, the preferred edible oil is Sunflower besides specific preference for Mustard, Groundnut, and Coconut oils, where-as commercial outlets prefer Palmolien Oil. Soyabean Oil is preferred in North India.

On average, the per-capita consumption of edible oil in India is about 15-16 lakh/year almost 1.25 lakh per person per month. This consumption is irrespective of the environmental factors. Therefore even during the COVID – 19 pandemic, the demand for edible oils got effected only marginally. However, a significant shift was observed in the
edible oil consumption pattern, particularly in the geographies that we operate in.

The edible oils are consumed primarily by these three segments:
1. Hotels/Restaurant/Events & Catering Institutions (HoReCa Segment) – Absolutely zero demand since lockdown. Now with unlock 1.0, the business is beginning to pick-up. However, it is too early to comment on the trends.

2. Industry Demand (Bakery & Snacks) – it has started getting normal post 1st week of April 2020

3. Both these segments form the commercial side of edible oil consumption. There is a drop in demand (primarily Palm Oil) as all hotels, the restaurant is closed. Also, there is no demand for catering and weddings, and others. as they are not allowed/ allowed with restrictions during the COVID-19 pandemic lockdown. Some industries like bread & bakery products and more. are functioning normally.

4. Home Segment – This sector has seen an increase in demand by 15 percent due to the lockdown. This increase in demand is essentially triggered by the fact that people are preferring to cook at home. The dine-out option is restricted and food home deliveries are restricted, encouraging people to cook at home. This has triggered increased demand for Sunflower Oil in the markets we operate in. In AP, Karnataka, Telangana & Odisha Freedom Refined Sunflower oil is the most preferred edible oil used at home. In Odisha, both oils Mustard and Sunflower oil are consumed at home. Hence, Sunflower demand has gone up.

The pandemic has created awareness of the fact that our food systems are vulnerable & the producers & marketers, need to upgrade technology and innovate to stay available and relevant to the customers

As 90 percent of hotels & restaurants use only palm oil, so palm oil sales are down. We see over-all demand for edible oils has dropped by 10-15 percent during COVID-19 lockdown.

Essential Steps & Change Taken by the Organizations
Food & essential commodities companies have deeply concerned about the pandemic and its fall out. Most of the companies have implemented strict measures and protocols to ensure that all employees, stakeholders & partners remain safe from COVID-19. Food Industries has taken the responsibility to protect and safeguard its members, workers & employees at the plant, who will help fulfill the social commitment, by ensuring the production line to supply the essential commodity - edible oil, amidst the crisis. Organizations are ensuring proper hygiene and safe working conditions for the workers as per the guidelines issued by the government.

Future of Food Industry
Due to COVID -19, the food issues are already on the radar because of their social and environmental impact. It is more urgent and important for businesses to rethink the future of the Food Industry. The organizations must work towards the future where there should be enough food for the global population. The only key to overcome the challenges is adopting FoodTech, digitization, and ecosystems. These trends are going to shape the future of the Food Industry. New technologies like artificial intelligence, robotization, and precision farming will help the organizations to boost their productivity and reduce the costs. In the transformation ahead, every organization will be able to make good decision making in the food value chain, from suppliers to farmers to processors to retailers & restaurants, will be faced with new challenges, but also new opportunities & that will lead to minimal operations and productivity improvements.