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Asia Pacific 24_feature.

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ASIA PACIFIC

Oil trends in the east


The Asia Pacific region is one of the fastest growing edible oil
markets globally with producers using claims related to health and
wellness, religious and cultural differences, and being natural and
organic to capture consumers. Siddharth Agarwal writes
sia is one of the fastest growing edible
oil markets globally. A growing population, rising disposable incomes and
a shift towards branded packaged oil
are some of the major factors driving
the growth of edible oil consumption in the
region.
The Asia Pacific edible oil market is characterised by wide variations in terms of regional
tastes and preferences. For instance, while olive
oil accounts for almost 50% of total edible oil
consumption in Australia, it is still a niche segment in most of the other Asian countries. In
India, retail sales of olive oil are less than US$1M
compared to overall edible oil market sales of
more than US$2.3bn in 2009.
On the other hand, palm oil, soyabean oil and
rapeseed oil have a universal appeal in Asia
along with a large variety of traditional oils such
as mustardseed oil (rapeseed variant), coconut
oil and groundnut oil (see Figure 1, right). At the
same time, new healthier oils, such as corn oil,
rice bran oil, sunflower oil and cottonseed oil,
are gaining popularity.
With their large populations, India and China
together control nearly 60% of the total edible
market in Asia. However, per capita consumption in India at 1.1 litres is lower than the consumption levels in most of the developed
countries.
The edible oil market in both India and China
is highly unorganised and packaged consumption is limited mainly to urban populations. For
instance, the total edible oil market in India is
estimated at US$17bn; but the branded retail
market is estimated to be only about US$2.3bn.
However, hygiene factors and health consciousness are driving the growth of packaged foods in
India. As a result, the packaged edible oil market
in India has recently witnessed high growth.
While loose and unpackaged oils are growing

FIGURE 1: ASIA PACIFIC EDIBLE OIL


MARKET BREAKDOWN FOR 2009

Religious and cultural differentiation

SOURCE: DATAMONITOR LTD

at 5%/year, packaged oil sales are growing by


20%/year in urban households. With more and
more consumers shifting to branded products,
unpackaged oils should continue to decline.

Health and wellness targeted


Rising income levels and growing consumer
awareness around health concerns have resulted
in an increasing number of product launches in
the health and wellness segment.
Developed markets, such as Japan and South
Korea, have already seen a 100% growth in product launches with these claims in the last two
years, while almost 40% of the new product
launches in Australia have included some kind of
health claim.
Countries such as India and China, which have
largely remained unaffected by the global economic crisis, have also seen impressive growth in
the health and wellness segment.
In India, the number of new product lauches
with health and wellness related claims has
increased from 14% in 2008 to more than 50% in
2010. The health and wellness segment now

FIGURE 2: ASIA PACIFIC TOP CLAIMS FOR EDIBLE OILS (2008-2010)

SOURCE: DATAMONITOR LTD

accounts for around 6% of the total edible oil market in India. Similarly, almost one-third of the
total product launches in China over the last three
years have been in the health segment.
Companies are also coming out with products
featuring functional claims to market their products (see Figure 2, below). While such products
are already available in the developed regions, it
has been able to capture a significant share of the
shelf space in most of the developing countries.
Some of the key functional claims are cholesterol
reduction, high antioxidant levels and high
Omega-3, and vitamin/mineral-fortified products.
In the case of India, consumers are prone to
heart-related diseases because of their eating and
living habits. Due to this, products with functional
claims are gaining favour among consumers.

With increasing competition, global edible oil


companies are coming out with products targeting
specific sections of the local population. A key
trend in the Asian market is the use of religion and
cultural ethnicity by manufacturers to differentiate their products. For instance, India has the
largest vegetarian population in the world and 80%
of all new product launches in India in 2010 have
come with a vegetarian claim.
Similarly, in Islamic countries such as
Indonesia and Malaysia halal certified products
are being introduced in the market specially catering to the Muslim population. For instance, PT
Incasi Raya launched its Gurih vegetable oil brand
with a halal claim in Indonesia earlier this year.
Similarly, kosher certified products are available
in many countries targeting Jewish consumers.

Going natural
With various concerns being raised regarding the
impact on health due to the consumption of genetically modified food, products with no genetic
modification claims are catching the attention of
the modern consumers. In China, products with
no genetic modification claims have increased by
over 50% in the last two years.
Recent food scandals, such as the high levels of
melamine found in dairy products in China has
resulted in consumers taking a closer look at the
products they consume. This has also resulted in
consumers demanding products that are natural.
This has caught the attention of the industry
players, and companies are launching new products with organic and natural claims. For instance,
in Japan, 10% of total product launches in 2010
claimed to be either organic or natural, while in
Australia the figure was slightly less than 10%.
However, the number of product launches in Asia
with the above claims have increased by almost
50% in 2010 when compared to similar claims in
2009 (see Figure 2, left).
In terms of future market prospects in Asian
markets, Datamonitor believes that health and
wellness will be the key driver for the growth of
the edible oil industry in Asia. While low cholesterol claims will be the most popular claim due to
growing health concerns, consumers will also
favour oils with functional benefits, and natural
and organic claims.

Siddharth Agarwal is a senior analyst for


Datamonitor Ltd, based in Hyderabad, India

24 OFI JANUARY 2011 www.oilsandfatsinternational.com