Professional Documents
Culture Documents
A Report
Presented to:
Prepared By:
Johnson Dhanraj
For
CONTENTS
OBJECTIVE
EXECUTIVE SUMMARY
PRICE SENSITIVITY
SUPPLY CHAIN
CONCLUSION
OBJECTIVE
The objective of this report is to introduce to California Olive
Ranch, henceforth addressed as COR, the Indian market scenario for the
import of olive oil. It is also the focus of this report to acquaint COR with
the wide array of marketing opportunities that have been set in place
through numerous efforts of various olive oil players across the world.
In an effort to disprove the misconception that olive oil is unfit for spicy
and multi-flavored Indian cuisine celebrities have been roped in like the famous
chef and food writer Sanjeev Kapoor and film maker and foodie Prahlad Kakkar,
for demonstrations of fine Indian cooking with olive oil. These events were held
in Pune, Ahmedabad and other Indian cities and were well-attended with medical
and health professionals explaining the varied benefits of olive oil as a cooking
medium.
Then came the Indian Olive Oil Association (IOA), the brain child of V.N.
Dalmia. Th IOA was established to promote, protect and safeguard the interests
of olive oil industry in India. It is the national apex association of olive and olive
oil producers, growers, distributors, importers, users and consumers. The
Association aims at promoting the consumption of olive oil and expanding its
market. It is also committed to representing the industry before the union
government, circulating information and statistics to members and obtaining the
removal of grievances affecting the industry.
Taking note of all the positive signs and the projection by the Indian Olive
Association (IOA) that olive oil consumption would increase 12-fold by 2015, the
Spanish Embassy has launched a promotional campaign in India.
The campaign which is restricted to the capital, New Delhi, for now has
included working with health and fitness specialists, dieticians, chefs and
cardiologists to introduce olive oil to the Indian consumer. Spanish olive oil
currently has a 60 percent market share in India and producers keen to
capitalize on this positive trend, are said to have allocated around 30,000 (USD
39,000) for generic promotional activities, according to Jose Antonio Bretone,
Economic and Commercial Counselor at the Spanish Embassy.
The Consortium also organized a national contest for the best budding
chef was recently held at the Banarsidas Chandiwala Institute of Hotel
Management and Catering Technology, New Delhi. The competition was the
culmination of 3-day training program in the use of European olive oils held at
the leading hotel management institutes in the cities of Delhi, Mumbai and
Chennai. Each institute selected 5 winners to take part in the national contest,
where each chef had to cook an original Indian dish with extra virgin olive oil.
Turkish producers wish to market their olive oil under their own labels,
since Anatolia in central Turkey is considered to be the ancient homeland of the
olive tree. Looking at India as a market with potential, the Turkish Olive and
Olive Oil Promotion Group with 450 members has initiated a marketing project
for Turkish olive oil in 2007.
We want to tell the people that olive oil from Turkey is of high quality and as
good as in Italy, Mrs. Canan Inanc, one of the members, said.
The Group is aware that olive oil is yet to make a serious dent in the
Indian edible oil market and is used in small quantities when compared with
other cooking oils. But Mehmet Aytek, Chief Commercial Counselor of the
Turkish Embassy in New Delhi is optimistic about future prospects, with the IOC
from Spain financing a promotional campaign and also the concerted efforts to
persuade the Indian government to reduce the customs duty on olive oil.
Oliveitup
Thus, with the Indian consumer market booming with the launch of several
reputed retail chains, companies producing olive oil are preparing to take
advantage with the health and fitness trend. Organizations, both international
and home grown, have been successful, though not stunningly so, in setting the
stage for olive oil industry players. The efforts of these organizations can be
termed highly successful in that awareness and interest has been substantially
generated that is anticipated to subsequently impact consumption patterns.
OILVE CULTIVATION AT HOME
Apart from a lack of knowledge of the beneficial health effects of using
olive oil in lieu of conventional edible oils, the price differential (with olive oil
costing nearly four times that of traditional edible oil) is also inhibiting Indian
consumer acceptance. Thus, India saw local cultivation of olives as the probable
solution to the price problem.
During his visit to India, the Director of International Olive Oil Council met
with the Indian Agriculture Ministry officials to discuss the possibilities of
increasing the acreage under olive cultivation in this country. As a result, in
2007, the Rajasthan State Government has formed a co-operative arrangement
with an Israeli firm for growing olives. As the Negev desert was cultivated and
is now blooming, it is hoped that the arid land of Rajasthan will come alive with
the success of this project. In addition, the Italian Government is assisting the
Indian Agriculture Ministry in an olive plantation project. It is a 3-year plan and
ultimately, 25 million hectares are expected to be planted with olive trees, but it
will take another five years for oil to be produced.
The Punjab and Himachal Pradesh governments have also initiated similar
projects to cultivate olive trees in over 300 hectares. The Indian Olive
Association is optimistic about the growth of olive oil consumption in the country
and the cultivation plans if successful, can definitely make this healthy cooking
medium more affordable and within the reach of the average Indian.
Coconut Oil
Palm Oil
Safflower Oil
Sunflower Oil
Corn Oil
Groundnut Oil
Rice Bran Oil
Sesame Seed Oil
Soya Bean Oil
Mustard Seed Oil
Canola (Rapeseed) Oil
Imports have jumped despite a sharp jump in prices. "Prices of olive oil have
jumped by almost 40 % in producing countries. It is now at a record high," said
Dalmia, who is also chairman of Dalmia Continental, one of the biggest importers
of olive oil in India.
SOME OF THE MORE POPULAR OLIVE OIL BRANDS IN THE INDIAN MARKET
14
12 11.4
10.6
10
8
6.8
6 5 4.9
4.2 3.9
4 3.4
3
1.8 1.8 1.6
2
0.8
0.25 0.4
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Virgin Olive Oil HS Code 150910 Other Olive Oils and its Fractions
Olive Oil Imports in India (Volume in MT)
4500 4200
4000
3500 3250
3000
2650
2500
2100
1900
2000
1500
1500 1300
1150
1000
1000 800 750 650 650
500 200 300
100
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Virgin Olive Oil HS Code 150910 Other Olive Oils and its Fractions HS Code 150990
The Indian importer is mainly responsible for ensuring that a certain food
product is permissible for importation as well as for the clearance of the
container from Indian customs at the port of entry. It is common practice for
importers to engage the services of a clearing and forwarding agent. The normal
clearance procedure through the Indian customs is given below in proper
sequence:
With a population of a little over 1 billion and 1.7 % annual growth, India is
not only the second largest population in the world next to China, but is also one
of the youngest.
Age groups
55+ years
6%
13 to 17
35 to 54 14%
24% 18 to 24
20%
25 to 34
36%
13 to 17 18 to 24 25 to 34 35 to 54 55+ years
The affluent urban population will be largely concentrated in the south and
west of the country in the states of Tamil Nadu, Karnataka, Andhra Pradesh,
Kerala, Goa, Gujarat, and Maharashtra. Cities around Delhi have also developed
due to land saturation in the capital. These cities such as Noida, Gurgaon and
Jaipur are well connected with the capital.
The Indian consumer market can broadly be classified into four main
classes as per the following table, based on household income. They vary in size
and their different characteristics will impact on the growth and preferences of
each class.
18%
40%
40%
The middle class segment of the market offers the most growth potential
for relatively high value imported products such as olive oil.
The various age groups within the Indian population represent different
sectors of the Indian market, with different characteristics and consumer
preferences for the various generations.
The 25-50 year old group constitutes the main income earners and
grocery shoppers in the household. They look for value for money, shop in the
traditional retail outlets and like to visit modern malls and retailers. They place
high priority on the health aspects and nutritional value of their products for
their families and are open to trying foreign products if reasonably priced.
As this age group consists of IT, finance and other professionals with
fairly high incomes and overseas exposure, they may be potential consumers of
olive oil.
PRICE SENSITIVITY
Generally speaking, Indian consumers are highly price sensitive. They
enjoy haggling with traditional retailers to get a low price, value for money and
secure a bargain.
In the current market the consumer is flooded with options. Brand name or
the grade of oil is not as much of a concern as the price, followed closely by a
concern for the origin of the product. The latter simply means that the Indian
consumer is more inclined to buy and try American products as opposed to
European and Asian products. This may be largely due to the general consensus
among Indians that American goods are far more authentic than any other. The
following is a list of various existing brands:
OVERSEAS EXPORTER
INDIAN IMPORTER
LOCAL DISTRIBUTOR
SUPER MARKET/FOOD STORES
CONSUMER
Logistics
Vendor Management
Organized food retailing is evolving in India with the entry of big players such
as Walmart (in association with a local partner), Metro Cash and Carry, Tesco,
and Reliance Retail. Most of the supermarkets have developed criteria for
evaluating vendors to be included in their approved supplier lists. Depending
upon the size of the operation, supermarkets on an average have about 300
vendors, including olive oil suppliers. Close contacts are maintained with the
vendors by organizing vendor conferences from time to time. Visits to vendors
offices and storage warehouses are undertaken as often as possible.
LOGISTICS
India is a large country with poor but high density road infrastructure.
Hence, interstate transportation by road can take 3-5 days. Traffic jams are
frequent on the highways. Heavy rains affect mobility as roads are sometimes
waterlogged. Expansion of national highways linking Mumbai, Delhi, Chennai,
Hyderabad and Kolkata under the Golden Quadrilateral Project is an added
advantage after 2012, when it was announced completed.
Some importers own dry warehouses and lease their cold storage
requirements. Transportation is usually outsourced with logistics companies for
transportation of products such as olive oil. The refrigerated container/cold van
transportation industry is still in its infancy.
The MRP (Maximum Retail Price) is printed on the label of the package
and is known to all the players in the value chain. Importers negotiate markdown
profit with supermarkets and distributors.
LABELLING REQUIREMENTS
Green/red sticker a green dot indicates the product is vegetarian. A red dot
denotes non-vegetarian contents.
A label mentioning
(Since the scope of this report is to introduce the current Indian olive oil scenario to California
Olive Ranch, only a gist of the required marketing strategy is being submitted. A detailed
strategy will be part of the business plan.)
CONCLUSION
With widespread dissemination of information on the beneficial health
effects of olive oil following the aggressive education campaign of the
International Olive Council in India, coupled with the expected improvement in
Indian standards of living - at least for the middle income group - in the future,
the export potential for COR olive oil in this market seems to be quite promising.
Due to the political proximity of both the countries, coupled with the general
psyche of the Indian consumer that American goods are of better quality that
any other countrys goods and finally and most importantly the advantage of
associating with someone that is very well acquainted with the grass root details
of the Indian market, COR is sure to emerge a winner if it enters the olive oil
race in India, at this juncture.