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

While production of continues to be in full swing due to its being an essential commodity, manufaturers are finding it hard to reach consumers at the retail level.

Lack of workers to pick up stock from distributors, transport problems and shortage of packing material are among several factors that have led to branded edible oils struggling to reach retail stores, forcing consumers to opt for unbranded ones.

“Only 20-25 per cent retailers are being reached. This is because While supply chain issues from factory to distributor level have largely been sorted, the wholesalers are not getting labourers to take the stock to retail stores. Moreover, several retailers are also not opening shops and the ones who do, shut early in the day,” said Anghsu Mallick, deputy chief executive officer at Adani Wilmar, which manufactures and ‘Fortune’ brand of in several variants.

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According to Mallick, while the issue is relatively less severe in metros and major cities, smaller towns are facing supply issues. “Our production has improved from 35 per cent to 75 per cent. We are also reaching more number of distributors day-by-day. Hopefully in the next 15 days things should get sorted out at retail level,” he added.

On the other hand, oil is reaching wherever retailers are able to manage transport to pick up branded products, said Priyam Patel, vice president-sales and marketing, at N K Proteins Pvt Ltd., manufacturer of ‘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 distributor. But distributors’ vehicles aren’t reaching at all retail shops. Those retailers who can, are picking up products themselves from distributors,” said Patel, adding that industry players are working together to solve supply and logistics issue.

There is also a scarcity of packing material which has been hit following the lockdown. According to B V Mehta, executive director, Solvent Extractors’ Association of India (SEA), with oil mills usually holding packing inventory of roughly 15-20 days, most are running out of stock.

“Most of the oil mills are functioning but the supply chain still isn’t robust. With both industries like hotel and food processing still shut, and with labour and logistics hiccups, edible oil availability in April has been around 1.5 million tonnes as against the usual 2 million tonnes,” Mehta added. Annually, India sees edible oil availability of 23 million tonnes.

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Retailers are also taking advantage of the scenario by charging 15-20 per cent higher price on edible oil products. “If the MRP is Rs 90 then it is being sold at Rs 115-120. Transport charges have also increased. Hopefully, with the latest guidelines by the government which looks to ease several services, retail availability of branded edible oil should improve,” said Mehta.

  • Annual edible oil availability of 23-25 million tonnes

  • Availability in April every year around 2 million tonnes

  • April 2020 availability due to lockdown constraints at 1.5 million tonnes

  • Retailers raise edible oil prices by 15-20{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}

  • Packing material inventory of 15-20 depleting fast