EDIBLE OILS MARKET ANALYSIS

Edible oils are fatty liquids that are widely used in the preparation of food and are derived from various vegetable sources. Edible oils possess various health benefits due to its nutritious constitute. For example, an omega-3 fatty acid present in the edible oil offers anti-inflammatory properties which reduce the risk of various chronic diseases.

The global edible oils market is estimated to be valued at US$ 112.6 Billion in 2021 and is expected to exhibit a CAGR of 5.1 % over the forecast period (2021-2028).

Recent Developments:

1. 17th November 2021, keeping in view the commercial importance of oil seed crops and the heavy dependence of imports for edible oils from other states of the country, the Department of Agriculture, Government of India, this year has organized a campaign to introduce oil seed in almost all the districts of Kashmir division.
2. 22^nd October 2021, to reduce the dependency of India on the other countries for palm oil and lower its imports costs. India Plans to drastically increase its palm oil production in the northeast of the country, where the weather conditions are favourable .The government is investing US$ 1.5 Billion over the next five years to expand palm oil plantation by 6500 square kilometres across the country, over the half of this expansion take place in north eastern states.
3. 20^th July 2020, Amul has forayed into the edible oils category in Gujarat and Rajasthan, after Indian Prime Minister’s call for Atma Nirbhar Bharat or self-reliant India. With the launch of Janmay range of edible oils, the company looks to reduce India’s edible oil dependency while also helping local farmers. The farmers from which Amul sources its milk are not just dairy farmers but some of them also cultivate oil seeds like groundnut, cottonseed, mustard etc. in Gujarat, giving Amul a headstart in the edible oils category. 

Asia Pacific region held dominant position in the global edible oils market in 2020, accounting for 41.91% share in terms of value, followed by Europe and North America, respectively.

Figure 1. Global Edible Oils Market Value (US$ Bn), by Region, 202 0

Drivers:

The growing demand for organic edible oil due to rising health concerns among consumers is driving the market growth of edible oil. Increasing demand for edible oils with low calories, cholesterol, and fat content is propelling market growth. This is attributed to the growing prevalence of various lifestyle disorders such as diabetes, obesity, and cardiovascular disease. Thus, the growing demand for organic edible oil is projected to foster market growth in the near future.

Increasing consumption and demand for edible oil especially across the APAC region is escalating the market growth. According to the Coherent Market Insights analysis, growth of the edible oil market in APAC is significantly driven by demand rising from markets in India and China due to increasing per capita consumption of edible oils in both countries, which collectively account for over 40% of total global edible oils consumption. Also, an increase in the population in this region is again driving the consumption of edible oils. 

Market Opportunities

Emerging industrial application of corn oil is projected to provide lucrative market opportunities in the near future. High production of corn oil is increasing its use in biofuels plants and the animal feed industry. According to the Coherent Market Insights analysis, corn oil demand will increase and its industrial usage will continue to drive revenue growth of the corn oil markets in various regions. Thus, the growing demand for corn oil is across industrial applications will favor the market growth of edible oil.

Growing demand for economical healthy oils is driving demand for canola oil. This is expected to bring new market opportunities. For example, canola oil is a cheaper and healthier alternative to olive oil, owing to its lowest fat content (6%) among all other type of edible oils, and is also rich in omega 3, 6, and 9. Such health benefits offered by canola oil has increased imports of canola oil across developing regions. Growing demand for economical healthy oils is supporting market growth.

Market Trends

Capacity expansion by key manufacturers in order to cater to growing demand around the globe is one of the emerging trends in the market. For instance, in August 2019, Emami Agrotech plans to invest Rs 700 cr capex to expand edible oil capacity. The company's edible oil capacity would be 10,000 tons per day from 6000 tons per day, after the expansion. Therefore, increasing capacity expansion of the edible by the key manufacturer will favor the market growth over the forecast period.

The expanding foodservice industry is promoting the growth of the edible oils market. It is one of the key consumer of edible oils and is on a high growth path due to the increasing demand for food around the globe and the rise in the agriculture industry. Also, the expansion of the retail industry across developed as well as developing countries is increasing the sale of edible oil. Moreover, increasing shelf space for specialty blended oils and olive oil in retail industry across developed countries is again fostering market growth.

Figure 2. Global Edible Oils Market Share, By Type, 2020

Key Takeaways of the Graph:

• The Palm oil held dominant position in the market and accounted for 30.3% share in the global edible oils market in 2020. The segment is expected to reach US$ 52.2 Billion in 2028.
• According to the report by ‘The Conversation ‘Published on June 24^th 2021,The world uses more palm oil than any other vegetable oil over -73 million tons in 2020 that’s because its cheap and the plant that produces it, the African oil palm can produce 10 times more oil per hectare than soybean oil .

Market Restraints

Evolving consumer preference while choosing edible oils has forced major companies to opt for competitive positioning in order to sustain in the market. Moreover, this also leads to severe cost impacts. This factor is expected to hinder the market growth of edible oil.

Growing changes and additions to food safety policies across various countries are compelling manufacturers to adopt these changes in the manufacturing processes in order to remain compliant with the new food safety regulations. This may lead to various complications in the production process and can increase the overall cost, thereby hindering the market growth.

Regulations

North America

U.S. Regulations: In June 2015, The Food and Drug Administration, USA (FDA) ruled that trans-fat is not "generally recognized as safe" and prohibited its use in edible products. The FDA allowed food manufacturers three years to change their processes and avoid using trans fats or PHOs in an edible product. While the companies can petition the FDA for special permits to use transfats, no PHOs can be added to edible oils or food products, unless approved by the FDA.

Competitive Section:

Company Names 

1. Adani Wilmar Ltd.
2. Ruchi Soya Industries Ltd
3. Associated British Foods plc
4. Archer Daniels Midland Company
5. Beidahuang Group
6. Bunge Limited
7. Borges Mediterranean Group
8. Cargill Incorporated
9. Fuji Vegetable Oil, Inc.
10. Adams Group
11. American Vegetable Oils, Inc.
12. Olympic Oils Limited