Ahmedabad: The edible oils market in India today is seeing a ding-dong battle between soyabean, long considered the fishy oil on account of its fish-like smell, and sunflower oil, which has been promoted mainly on the health plank.
Now an ORG-Marg survey has thrown up surprising results. Sunflower oil, which was growing at 56 per cent per quarter, has decelerated to a 20 per cent growth and the hiatus has been filled by soyabean oil, which was growing at 10 per cent but has now leapfrogged to 174 per cent.
Much of the credit for putting soyabean right up there goes to the Ahmedabad-based Rs 1,165 crore refined edible oil trader and manufacturer Adani Wilmar (AWL). Its Fortune range of refined edible oils has beaten the odds and emerged as the single largest brand in the refined edible oils segment, within a short period of 16 months from the date of its launch, as per the latest AC Nielsen ORG-Marg Retail Audit Report 2002.
Says AWL managing director Rajesh Adani: ''Fortune today owns 10 per cent market share in the refined oil segment. What we have achieved is something to be justifiably proud of, considering that in 16 months flat we have toppled several leading players from their position of leadership. The product was first launched on 24 November 2000 in Jaipur. In January 2002, it was launched in New Delhi and in March 2002 in Gujarat.''
The larger picture
Being part of the Rs 4,200-crore Adani conglomerate (www.adanigroup.com), which has interests in trading, refining, retail, information technology and ports, has certainly helped Fortune's cause, as has association with globally leading players in the fields of oil trading and refining. The Adani group signed a joint venture pact with Wilmar Holdings Pvt Ltd, the world's second largest player in the edible oil trade in 1999.
The technology was sourced from the American group Archer Daniel Midlands, the world leader in edible oils processing technology, which has a 2 per cent stake in Wilmar. ''Thus AWL, the 50:50 joint venture, was born with good credentials,'' beams Adani.
AWL has, accordingly, set up India's largest edible oil refinery, with a capacity to refine up to 800 metric tonnes (MT) of refined oils per day and manufacture 100 mt of vanaspati per day at Mundra Port, at a cost of Rs 100 crore. The entire refinery has been imported from Desmet, Belgium, which is the world leader in refining technology.
''The oil is shipped on our own fleet to Mundra Port, which incidentally is owned by the Adani group in collaboration with the Gujarat state government. The refinery is the largest in the country and refines all kinds of edible oils ranging from sunflower, soyabean, groundnut and cottonseed,'' says Adani group chairman Gautam Adani.
The crude oils for refining are sourced from both international and domestic locations such as Indonesia, Malaysia, Brazil, Argentina, Canada, the US, and Madhya Pradesh, Gujarat and Rajasthan in India. Says Adani: ''Keeping in mind the tremendous sales volumes, we made a conscious decision to set up in-house manufacturing facilities. So, today we have a state-of-the-art PET bottle manufacturing plant.
''Besides this, AWL has its own HDPE container manufacturing as well as its own multi-player polyfilm manufacturing plant. The economies of scale derived from backward as well as forward integration from the port-based refinery to in-house manufacturing facilities of packing materials have allowed us to have a cost advantage and we have passed on the benefits derived to the consumer.''
Adds AWL general manager (sales and marketing) Angshu Mallick: ''Making Fortune the No1 brand has involved a lot of hard work - setting up the right kind of infrastructure, dealer conferences, launch conferences, a well-calibrated ad and promotion policy, and a lot of thought going into simple things like naming the brand and deciding the packaging design.''
AWL has a strategic network of 43 offices and stock points, which in turn feed a chain of 1,100 distributors, 600 super-stockists, numerous brokers and other trade associates. ''The entire structure services an expansive retail network of about 2,00,000 outlets spread across the entire country,'' explains Mallick.
AWL has spent Rs 25 crore on a major brand-building exercise, involving advertising and other communications. ''We intend to maintain and further consolidate our brand leadership position in India through ad spend and communication exercises. Any long-term player who wants to become the market leader has to focus on brand building, and this market is evolving. The future trend shall be of large branded players like us, who can afford to deliver quality and convenience to the consumer,'' says AWL director Pranav Adani.
''Packaging has played an important role in our success,'' says Mallick. ''Our packaging is integrated with our refinery so that the refined oil is packed at source, eliminating the chances of any contamination through human contact. Moreover, we were the first edible oil company to go in for printed cartons and convenient spout caps on printed tins for pouring convenience.''
The going has been good for AWL. In the very first year of its operations, it grossed a turnover of Rs 1,165 crore. ''We are projecting a turnover of Rs 1,300 crore in the financial year 2002-03,'' Adani is confident.
''Apart from clocking an impressive turnover in the very first year, the real strength of AWL has been its sheer profitability,'' says an industry insider. ''In the first year, the profits stood at Rs 11 crore; in 2001-02, the figure was again Rs 11 crore. In FY 2002-03, the company is looking at profits in the range of Rs 15 crore.''
That, indeed, is good fortune.