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Branded edible oil reaches only a few retailers, prices up as stocks fall

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April 16, 2020

Even as production of packaged cooking oil continues uninterrupted, players are finding it hard to reach consumers at the retail level.

From not enough workers to pick up stock from distributors and transport grinding to a halt to dearth of packaging material, several factors have contributed to the essential commodity not reaching retail store shelves, forcing consumers to buy inferior variants.

“Only 20-25 per cent retailers are being reached. To a large extent, issues around supply chain from factory to the distributor have been addressed. Distributors aren’t able to find enough labourers to take the product to the retail stores. Moreover, several retailers are also not opening stores. The ones that do quickly down shutters during the day,” said Anghsu Mallick, deputy chief executive officer at Adani Wilmar, which manufactures and the Fortune brand of in several variants.

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According to Mallick, while the issue is relatively less severe in metros and major towns, it’s the the smaller ones who are facing a supply crunch.

“Our production has improved from 35 per cent to 75 per cent. We are also reaching more distributors. Hopefully in the next 15 days, hiccups at the retail level will get ironed out,” added Mallick.

“Stocks had depleted due to non-availability of trucks and constraints in reaching retail outlets. But situation is showing signs of improvement,” said a Mother Dairy spokesperson on Dhara

On the other hand, edible oil is reaching retailers who are able to arrange transport to pick up the shipment, said Priyam Patel, vice-president-sales and marketing at NK Proteins, manufacturer of the Tirupati brand of edible oil. The company has a distributor channel strength of over 50,000.

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“We are running at full capacity of 1,000 tonnes per day at our plant and serving 1.25 times more volume to distributors. But vehicles from distributors are not reaching all retail stores. The retailers who can are trying to pick up products directly from distributors,” said Patel, adding that industry players are working together to solve supply and logistical bottlenecks.

There is also the scarcity of packaging material. According to B V Mehta, executive director, Solvent Extractor’s Association of India, with oil mills usually holding packing inventory of roughly 15-20 days, most of them are fast running dry.

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“Most oil mills are functioning, but supply chain is still not robust. With hotel and food processing industries shut, and no let-up in labour and logistical hurdles, edible oil availability in April has been around 1.5 million tonnes (mt), against the usual 2 mt,” added Mehta.

Annually, India sees edible oil availability of 23 mt. Retailers are also taking advantage of the by charging 15-20 per cent higher price on edible oil products.

“If the maximum retail price is Rs 90, it is being sold anywhere between Rs 115 and Rs 120. Transport charges have also increased. Hopefully, with the latest guidelines by the government, which look to ease several services, retail availability of branded edible oil should improve,” said Mehta.

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