Disruption in the Ukraine-Russia sunflower oil exports is impacting the flourishing edible oil market in India.
The Ukraine-Russia battle has brought the exports of sunflower oil from the two countries to India to a standstill. Consequently, panic-stricken shoppers are stocking their pantries, leading to a spike in sunflower oil prices. Given the high consumption of sunflower oil in the country, the price rise will have a ripple effect on the booming edible oil market in India, says GlobalData, a leading market research company.
With India being a major global consumer of edible oil, its sales have grown by a compound annual growth rate (CAGR) of 5.9% from 7.4 million kilograms in 2016 to an estimated 9.8 million kg in 2021. Additionally, the consumption volumes are expected to soar by 5.9% CAGR over 2021–2026 surpassing value growth at 4.3% CAGR during the same period.
Bobby Verghese, the Consumer Analyst at GlobalData, comments: “The high demand for edible oils also resonates with the findings of a recent GlobalData consumer survey, wherein 44% of Indian respondents claim their spending on oil and fats is quite/very high. India meets most of its domestic demand for edible oils through imports. Sunflower oil accounts for a significant share of overall edible oil imports in India, with Russia and Ukraine contributing the overwhelming bulk of shipments.”
Consumers anticipate that the rally in global crude oil prices will escalate the transportation costs for consumer-packaged goods, including edible oils. Also, due to the impact of COVID-19 and climate change, global supplies of soybean and palm oils have tightened, leading to a price rise.
Additionally, with festivals around the corner, consumers, retailers and wholesalers typically stock up on edible cooking oil and other consumer goods, the bulk purchase of cooking oil by consumers and vendors will have a compounding effect on prices, further straining the household budgets that are already under pressure due to high inflation.
Verghese concludes: “As household consumers and foodservice operators switch from sunflower oil to other cheaper edible oil varieties, the surge in demand will temporarily squeeze supplies and elevate the prices of the latter. However, prices will subside as the government, manufacturers, and exporters move to raise production of substitute oils.”