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OLIVE OIL IN INDIA

A Report
Presented to:

Prepared By:
Johnson Dhanraj
For
CONTENTS

OBJECTIVE

EXECUTIVE SUMMARY

SLOW RISE THROUGH COMBINED EFFORTS

OLIVE CULTIVATION AT HOME

INDIAN IMPORT SCENARIO

INDIAN CONSUMER BASE

PRICE SENSITIVITY

SUPPLY CHAIN

MARKET ENTRY STRATEGY

CONCLUSION
OBJECTIVE
The objective of this report is to introduce to California Olive
Ranch, henceforth addressed as COR, the Indian market scenario for the
import of olive oil. It is also the focus of this report to acquaint COR with
the wide array of marketing opportunities that have been set in place
through numerous efforts of various olive oil players across the world.

A diligent effort has been made to provide an elaborate summary of


all the aspects involving the import. It is anticipated that through a report
such as this, COR will be in a position to strengthen its decision to see
itself in the list of top players in the olive oil industry in India.
EXECUTIVE SUMMARY
India has now joined the ranks of a trillion dollar economy, with a
total population in excess of 1.21 billion, based on the Indian official
Census of 2011 which is 17.7 percent more than the last decade.
India ranked 141st by nominal GDP and 130th by GDP (PPP) in
2012, on a per-capita-income basis, according to the IMF. India is
the 19th-largest exporter and the 10th-largest importer in the
world.
India's GDP grew by 9.3% in 201011; GDP growth rose marginally
to 4.8% during the quarter through March 2013, from about 4.7% in
the previous quarter. The government has forecast a growth rate of
6.1%-6.7% for the year 2013-14.
India ranks fourth in consumption of vegetable oil in the world and
is a leading importer of this produce making it the third in total
imports of edible oil in the global economy, totaling its import to 5.4
million tons.
Over the past five years (2008-2012), the Indian Olive Oil Market
has been showing a tremendous growth.
Until recent years the usage of olive oil was largely confined to
body massaging, cosmetic and medicinal preparations and is not yet
widespread as a cooking medium, with the exception of 5 star
luxury hotels and stand-alone restaurants to enhance the flavor of
pastas and other continental dishes.
Despite the fact that India does not produce a single drop of olive
oil, the demand for olive oil has been growing day by day. There is
enough room for each and every olive oil brand in the Indian market
as the market has registered even more than 100 per cent growth in
terms of volume, in recent years.
The strong economic growth of the last few years and increasing
health consciousness among the new wealthy Indian middle class
combined with a greater exposure to western lifestyle has created
hunger for health and wellbeing food alternatives and olive oil is
well positioned to be a leader in this category.
Owing to the opening of Indias economy and increasing exposure to
world trends in cuisine, the olive oil industry is growing at a rate of
90% and is expected to reach a growth rate of 150% in the near
future.
Olive oil imports to India rose 66% in 2012-13 to 11,916.8 metric
tons (MT) compared to 7163 MT in 2011-12. With this growth India
is ranked No. 1 in the world for olive oil import growth. Data for the
last six months of the last fiscal (October, 2012 - March, 2013)
shows India outstripping Japan placed at No.2 with 29%, China at
No.3 with 17% and Brazil at No.4 with 16%.
The growth rate comes despite a price increase of more than 40%
during last year in producer countries. Prices remain on historical
highs even today despite the expectation of a reasonable crop this
year. Demand is estimated to increase to 42,000 tons by 2017, with
the growing middle class affluence and concerns about health and
fitness.
Large scale ignorance of the beneficial health effects of olive oil
vis--vis conventional edible oil as a cooking medium in Indian
households coupled with the relative price differential {prices in the
domestic market ranges from Rs.200 (US $ 3.39) to Rs.900 (U S $
15.25 ) per liter for different grades} are primarily responsible for
the abysmally low consumption rate in this market.
In the absence of the domestic commercial production of olive oil,
Indias current limited requirements are met by imports, largely
from Italy and Spain. Leonardo, Borges, Musa & Figaro, are some
common brands.
To boost Indian consumption of olive oil, the International Olive
Association has drawn up ambitious promotional campaigns
highlighting the health benefits of using olive oil for edible purposes
in lieu of the traditional edible oil.
The Indian import duty exemption effective 19 February 2009,
following vigorous representations to the Indian Finance Ministry,
from the high rate of 45% augurs well for olive oil suppliers to
consider market entry.
Italy and Spain are currently deeply entrenched in the Indian market,
accounting for more than 90% of the total imports and are well-
positioned through their association with Indian firms to canvas in
strategic market places in India covering the cities of New Delhi,
Mumbai, Bangalore, Hyderabad, Ahmedabad and Chennai.
As India is the single largest importer of edible oils, in the vicinity
of 5 million tons each year, olive oil has a huge potential once it
receives consumer acceptance by making it affordable and within
reach of the Indian masses.
With increasing lifestyles amongst Indias middle classes there is at
present a great preference for healthy oils, making it necessary for
olive oil brands positioning themselves on the health plank and
emphasizing the need to keep various lifestyle diseases such as
heart diseases and diabetes at bay by using olive oil in lieu of the
traditional edible oils.
With an anticipated increase in olive oil consumption in the coming
years, suppliers are well placed to take advantage of the growing
potential in this region due to the geographical proximity and
market reputation.
THE SLOW RISE THROUGH
COMBINED EFFORTS
The highly fragmented Indian olive oil market is still in its infancy. The
majority of Indian consumption is in the beauty industry with a small share in
luxury hotels and stand-alone restaurants where it is used for enhancing flavor
of pastas and other continental dishes. In a market where olive oil was merely
used as a cosmetic aid massive efforts had to be undertaken to bring the
average consumer to understand the use of olive oil beyond beauty. This task
was jointly undertaken by several international organizations after being initiated
by United Nations.

International Olive Council

International Olive Council (IOC), a UNDP-promoted intergovernmental


organization based in Madrid, Spain, in 2007 initiated a campaign which
snowballed into what can be termed as a New Era in the Life of the Health
Conscious Indian Consumer. The primary focus of IOC was to persuade the
Union Government to reduce import duty on olive oil. This helped the price per
liter to be brought down by around 20 percent per liter on an average that it was
selling at, at that time. The IOC has also advised the government to amend
certain food laws to bring the current olive oil standards in line with
international norms, which helped in the increase of consumption.

The IOC launched a promotion and awareness campaign in India in 2007 to


promote olive oil as a medium of cooking and concluded that India, with its
burgeoning economy and traditions of natural and vegetarian cuisine, is aptly
positioned to accept olive oil as a cooking medium. The IOC in its promotional
campaign has organized seminars with food writers, workshops with leading
chefs and promotional activities in Mumbai, New Delhi, Hyderabad and a few
other major cities.

President of the Indian Olive Association, V.N. Dalmia said recently In


India, the consumption of olive oil was somewhere around 1,500 tons in 2006.
As a result of IOCs rigorous campaigning, the consumption of olive oil rose to
2,300 tons in a years time. And look at the number today.

In an effort to disprove the misconception that olive oil is unfit for spicy
and multi-flavored Indian cuisine celebrities have been roped in like the famous
chef and food writer Sanjeev Kapoor and film maker and foodie Prahlad Kakkar,
for demonstrations of fine Indian cooking with olive oil. These events were held
in Pune, Ahmedabad and other Indian cities and were well-attended with medical
and health professionals explaining the varied benefits of olive oil as a cooking
medium.

Indian Olive Oil Association

Then came the Indian Olive Oil Association (IOA), the brain child of V.N.
Dalmia. Th IOA was established to promote, protect and safeguard the interests
of olive oil industry in India. It is the national apex association of olive and olive
oil producers, growers, distributors, importers, users and consumers. The
Association aims at promoting the consumption of olive oil and expanding its
market. It is also committed to representing the industry before the union
government, circulating information and statistics to members and obtaining the
removal of grievances affecting the industry.

Consortium of Guarantee of Quality Extra Virgin Olive Oil

The Consortium of Guarantee of Quality Extra Virgin Olive Oil is an Italian


organization comprising of people from the olive oil industry, who aim to
propagate the unique properties of extra virgin olive oil. The promotional
activity has involved reputed chefs, food critics, nutritionists and restaurateurs,
besides journalists, importers, culinary schools and consumers who were
interested in knowing about olive oil and how to incorporate it in Indian cuisine.

As a result of the leading Italian (Bertolli and Leonardo brands) and


Spanish suppliers (Agro Sevilla) promotional campaigns, supplemented by the
International Olive Oil Council, dissemination of information on the health
benefits of olive oil usage such as the presence of Vitamin A, D and E,
prevention of coronary diseases, and the beneficial effects on diabetes control,
hypertension, bone structure, digestive system, brain and nervous system
amongst the potential consumers has gradually started yielding results, with the
Indian middle classes in the metros opting for it despite the higher prices.

Taking note of all the positive signs and the projection by the Indian Olive
Association (IOA) that olive oil consumption would increase 12-fold by 2015, the
Spanish Embassy has launched a promotional campaign in India.

The campaign which is restricted to the capital, New Delhi, for now has
included working with health and fitness specialists, dieticians, chefs and
cardiologists to introduce olive oil to the Indian consumer. Spanish olive oil
currently has a 60 percent market share in India and producers keen to
capitalize on this positive trend, are said to have allocated around 30,000 (USD
39,000) for generic promotional activities, according to Jose Antonio Bretone,
Economic and Commercial Counselor at the Spanish Embassy.

Efforts are on to make it cheaper; we have written to the Government to


reduce the import tariff from 40 to 7 percent. Also consumers will have to look
at it as an investment in health, says Ruth Abad, Commercial Attach at the
Spanish Embassy in New Delhi.

The Consortium also organized a national contest for the best budding
chef was recently held at the Banarsidas Chandiwala Institute of Hotel
Management and Catering Technology, New Delhi. The competition was the
culmination of 3-day training program in the use of European olive oils held at
the leading hotel management institutes in the cities of Delhi, Mumbai and
Chennai. Each institute selected 5 winners to take part in the national contest,
where each chef had to cook an original Indian dish with extra virgin olive oil.

The entire program was implemented with the objective of familiarizing


the future chefs of the hospitality and catering industries with accurate
information about European extra virgin olive oil.

Turkish Olive and Olive Oil Promotion Group

Turkish producers wish to market their olive oil under their own labels,
since Anatolia in central Turkey is considered to be the ancient homeland of the
olive tree. Looking at India as a market with potential, the Turkish Olive and
Olive Oil Promotion Group with 450 members has initiated a marketing project
for Turkish olive oil in 2007.

We want to tell the people that olive oil from Turkey is of high quality and as
good as in Italy, Mrs. Canan Inanc, one of the members, said.

The Group is aware that olive oil is yet to make a serious dent in the
Indian edible oil market and is used in small quantities when compared with
other cooking oils. But Mehmet Aytek, Chief Commercial Counselor of the
Turkish Embassy in New Delhi is optimistic about future prospects, with the IOC
from Spain financing a promotional campaign and also the concerted efforts to
persuade the Indian government to reduce the customs duty on olive oil.

Oliveitup

A 3-year promotional campaign for European olive oil, Oliveitup is being


financed by the European Union in collaboration with Italy. The campaign
conducted and coordinated by the Consortium of Guarantee of Quality Extra
Virgin Olive Oil (EVC), has included training and information seminars to
disseminate accurate data about the olive oils of European origin. A wide range
of activities have been planned and some implemented, which includes
workshops, tour programs, participation in food/trade fairs and exhibitions,
tasting and cookery sessions and advertising in print, television and other major
media. The objective is to highlight the health benefits of olive oil and the need
to include it in a balanced diet.

Thus, with the Indian consumer market booming with the launch of several
reputed retail chains, companies producing olive oil are preparing to take
advantage with the health and fitness trend. Organizations, both international
and home grown, have been successful, though not stunningly so, in setting the
stage for olive oil industry players. The efforts of these organizations can be
termed highly successful in that awareness and interest has been substantially
generated that is anticipated to subsequently impact consumption patterns.
OILVE CULTIVATION AT HOME
Apart from a lack of knowledge of the beneficial health effects of using
olive oil in lieu of conventional edible oils, the price differential (with olive oil
costing nearly four times that of traditional edible oil) is also inhibiting Indian
consumer acceptance. Thus, India saw local cultivation of olives as the probable
solution to the price problem.

During his visit to India, the Director of International Olive Oil Council met
with the Indian Agriculture Ministry officials to discuss the possibilities of
increasing the acreage under olive cultivation in this country. As a result, in
2007, the Rajasthan State Government has formed a co-operative arrangement
with an Israeli firm for growing olives. As the Negev desert was cultivated and
is now blooming, it is hoped that the arid land of Rajasthan will come alive with
the success of this project. In addition, the Italian Government is assisting the
Indian Agriculture Ministry in an olive plantation project. It is a 3-year plan and
ultimately, 25 million hectares are expected to be planted with olive trees, but it
will take another five years for oil to be produced.

The Punjab and Himachal Pradesh governments have also initiated similar
projects to cultivate olive trees in over 300 hectares. The Indian Olive
Association is optimistic about the growth of olive oil consumption in the country
and the cultivation plans if successful, can definitely make this healthy cooking
medium more affordable and within the reach of the average Indian.

The challenge, however, will be to modernize the traditional farming


community and encourage small farmers to come together to farm and manage
olives on larger, more efficient plots. Experts say Indian agriculture is in poor
shape due to low standards and practices, and has suffered from cost-saving
shortcuts. But olives need great care, so management and the state's role
will have to be robust.

Although determined efforts are being made by some Indian State


Governments, there is little commercial olive cultivation in India as yet.

Meanwhile, in the absence of significant local production, Indian olive oil


requirements are entirely met by imports from a number of sources, with Spain
and Italy as major suppliers.
INDIAN IMPORT SCENARIO
As local edible oil production is not sufficient to meet the entire domestic
requirements palm oil, sunflower oil, soya bean oil and rapeseed oil are imported
in vast numbers into India. Annual edible oil imports average more than 7 million
tons through public sector trading organizations. The following are the existing
cooking mediums.

Coconut Oil
Palm Oil
Safflower Oil
Sunflower Oil
Corn Oil
Groundnut Oil
Rice Bran Oil
Sesame Seed Oil
Soya Bean Oil
Mustard Seed Oil
Canola (Rapeseed) Oil

Imports have jumped despite a sharp jump in prices. "Prices of olive oil have
jumped by almost 40 % in producing countries. It is now at a record high," said
Dalmia, who is also chairman of Dalmia Continental, one of the biggest importers
of olive oil in India.

SOME OF THE MORE POPULAR OLIVE OIL BRANDS IN THE INDIAN MARKET

Brand name Country

Leonardo (olive pomace oil, extra virgin Italy


olive oil and olive oil )
Colavita (extra virgin olive oil) Italy
Agro Sevilla (extra virgin olive oil) Spain
Bertolli (extra virgin olive oil) Italy
Figaro (olive oil) Italy
Olitalia (olive oil) Italy
Hojiblanca (extra virgin olive oil) Spain
Borges (olive oil) Spain
Shrine (virgin olive oil) Italy
Fillippo Berno (olive oil) Italy
INDIAN OFFICIAL IMPORT STATISTICS

According to the data sourced from Ministry of Commerce, Government of


India, in 2011, Indian extra virgin olive oil imports grew by 42% in volume and
nearly 90% in value. The market for other categories of Olive Oil (excluding
Virgin) also grew by over 49% in value and over 26% in volume. The chart
below reflects the growth achieved after the EVC launched its campaign in India.

Olive Oil Imports in India (Value in US $ Mn)


16 15.2

14

12 11.4
10.6
10

8
6.8

6 5 4.9
4.2 3.9
4 3.4
3
1.8 1.8 1.6
2
0.8
0.25 0.4
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Virgin Olive Oil HS Code 150910 Other Olive Oils and its Fractions
Olive Oil Imports in India (Volume in MT)
4500 4200

4000

3500 3250

3000
2650
2500
2100
1900
2000
1500
1500 1300
1150
1000
1000 800 750 650 650
500 200 300
100
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Virgin Olive Oil HS Code 150910 Other Olive Oils and its Fractions HS Code 150990

INDIAN IMPORT DUTY

As mentioned earlier, repeated representations by the International Olive


Council, with wide on-ground support from the Indian Olive Oil Association and
industry members, the Indian Finance Ministry totally exempted imports of all
grades of olive oil from customs duty effective 19 February 2009. Industry
experts predict l5% reduction in the retail price of olive oil following the
customs duty exemption.

IMPORTS CLEARANCE PROCEDURE

The Indian importer is mainly responsible for ensuring that a certain food
product is permissible for importation as well as for the clearance of the
container from Indian customs at the port of entry. It is common practice for
importers to engage the services of a clearing and forwarding agent. The normal
clearance procedure through the Indian customs is given below in proper
sequence:

On consignment arrival at the port, the customs authorities check the


relevant documentation such as the Bill of Lading and other certificates to
ensure the imported product is in fact a permissible import.
The container is opened and checked to ensure that the Indian packaging
and labelling comply with the importation requirements as stated.
The Port Health Officer collects samples for testing by the Food and Drug
Administration (FDA) or any Government approved testing laboratory. The
product must comply with the Prevention of Food Adulteration Act.
On receipt of the No Objection certificate from the Port Health Office
customs officials determine the rate of basic import duty and other levies
applicable.
Exporters should preferably use Harmonized Tariff Codes for olive oil to
avoid any confusion with the Indian customs. The customs officials
allocate the correct category depending upon the constituents of the food
products. They also compare prices of similar products imported
previously from other sources of supply to safeguard against any under-
invoicing.
(Experience indicates that it normally takes 7-10 days for customs clearance from date
of arrival at the port, bar during the rainy season, and dislocation due to port workers
strikes and go slow agitations.)
INDIAN CONSUMER BASE
India is undergoing significant demographic and socio-economic shifts
which are impacting the make-up and nature of its consumer base.

With a population of a little over 1 billion and 1.7 % annual growth, India is
not only the second largest population in the world next to China, but is also one
of the youngest.

According to the Indian Governments recent estimates, 20% of the total


population is under 25 years of age and just 6% consists of people over 55 years
of age. It is significant that the age of nearly three fourth of the population
ranges from 13-30. As the youthfulness of the population continues to grow in
the context of an annual population increase of 1.7%, the size of the working
population in the age group of 16-25 years will increase at an estimated 15
million workers per annum. Almost one quarter of the total Indian population
falls in the age group of 20-34 years and rising consumer spending is being
driven by sustained economic development

Age groups
55+ years
6%

13 to 17
35 to 54 14%
24% 18 to 24
20%

25 to 34
36%

13 to 17 18 to 24 25 to 34 35 to 54 55+ years

Indias sustained economic development since early 2000 and rapid


urbanization over the last ten years has resulted in the emergence of a middle
class urban population with a surging disposable income and propensity to
spend. Although predominantly a rural country, with 70% of the people living in
villages, 330 million people (about 30%) live in cities, with this growing by 30%
each year. The Indian middle class, target consumers for many companies, is
expected to swell up to 267 million people in the next five years, up 67% from
the current levels, thus providing a great market opportunity for firms..
Consumer spending is rising at 11% per annum.

The affluent urban population will be largely concentrated in the south and
west of the country in the states of Tamil Nadu, Karnataka, Andhra Pradesh,
Kerala, Goa, Gujarat, and Maharashtra. Cities around Delhi have also developed
due to land saturation in the capital. These cities such as Noida, Gurgaon and
Jaipur are well connected with the capital.

INDIAN CONSUMER CLASSES BASED ON INCOME

The Indian consumer market can broadly be classified into four main
classes as per the following table, based on household income. They vary in size
and their different characteristics will impact on the growth and preferences of
each class.

Consumer Class Characteristics


Less than 2% of Indian households.
Mainly work in metros as senior
employees/professional managers in
multi-national companies, government
and private business houses, or
entrepreneurs. Live in moderate sized
Rich and affluent houses or apartments and own cars,
computers with broadband internet
accessibility, color televisions, and
other white goods similar to western
counterparts. Large disposable income.
Geographic spread and smallness of
the group make them difficult for
retailers to target excepting through
television media channels.
Middle class Just under 20% of Indian households.
Mainly graduates who are now middle
level managers or owners of SMEs.
Live in apartments and own white
goods such as CTVs, refrigerators,
washers, PCs, scooters/motor cycles,
small cars, telephones etc. Enjoy
shopping in modern retail outlets,
although are loyal to their neighborhood
stores and are relatively well informed
about the quality and pricing of
international products due to overseas
travel and media publicity. Ready to try
new products. Moderate disposable
income, discerning buyers.
Aspiring middle class About 40% of Indian households.
Occupations include shop workers,
drivers and farmers. Live in small flats.
Some own refrigerators, CTVs. All of
them have mobile telephones. Very
price-conscious and shop in traditional
retail outlets (known as Kirana
merchants) who extend credit facilities
or quasi super markets.
Poor 40% of Indian households. Mainly
farmers in rural areas. No proper
housing but a few own televisions and
mobile phones. Frequent traditional wet
markets and neighbourhood stores who
provide credit facilities. Very low
disposable income.

Consumer classes based on income


2%

18%
40%

40%

Rich And Affluent Middle Class Aspiring Middle Class Poor


The growth projections in the above categories by 2015 are given below:

Rich/affluent 10 million households


Middle classes 80 million households
Aspiring middle classes 100 million households
Poor 50 million households

The middle class segment of the market offers the most growth potential
for relatively high value imported products such as olive oil.

CONSUMER AGE GROUP

The various age groups within the Indian population represent different
sectors of the Indian market, with different characteristics and consumer
preferences for the various generations.

The 25-50 year old group constitutes the main income earners and
grocery shoppers in the household. They look for value for money, shop in the
traditional retail outlets and like to visit modern malls and retailers. They place
high priority on the health aspects and nutritional value of their products for
their families and are open to trying foreign products if reasonably priced.

As this age group consists of IT, finance and other professionals with
fairly high incomes and overseas exposure, they may be potential consumers of
olive oil.
PRICE SENSITIVITY
Generally speaking, Indian consumers are highly price sensitive. They
enjoy haggling with traditional retailers to get a low price, value for money and
secure a bargain.

Indian consumers price expectations for new imported products are


generally based on the equivalent locally produced product in the same
category. In the case of imported products, price comparisons for identical
products from other sources of supply are always made before arriving at a
purchase decision.

In the current market the consumer is flooded with options. Brand name or
the grade of oil is not as much of a concern as the price, followed closely by a
concern for the origin of the product. The latter simply means that the Indian
consumer is more inclined to buy and try American products as opposed to
European and Asian products. This may be largely due to the general consensus
among Indians that American goods are far more authentic than any other. The
following is a list of various existing brands:

Figaro Extra Virgin Olive Oil 500 ml


Price in Indian Rs.: 459.00
Price in US $ : 7.77
Leonardo Olive Pomace Oil 1000 ml
Price in Indian Rs.: 595.00
Price in US $: 10.08

Leonardo Extra Virgin Olive Oil 500 ml


Price in Indian Rs.: 485.00
Price in US $: 8.22
Figaro Olive Oil 1000 ml
Price in Indian Rs.: 708.00
Price in US $: 12.00

Nature Fresh Olive Oil - Pomace 5000 ml


Price in Indian Rs.: 885.00
Price in US $: 15.00
Borges Extra Light Olive oil 1000 ml
Price in Indian Rs.: 742.50
Price in US $: 12.59

Borges Pure Olive Oil 1000 ml


Price in Indian Rs.: 735.00
Price in US $: 12.46
Filippo Berio Extra Virgin Olive Oil 750 ml
Price in Indian Rs.: 455.00
Price in US $: 7.72

Cesar Olive Pomace Oil 1000 ml


Price in Indian Rs.: 410.00
Price in US $: 6.95
Leonardo Olive Pomace Oil 5000 ml
Price in Indian Rs.: 2695.00
Price in US $: 45.68

Leonardo Pure Olive Oil 1000 ml


Price in Indian Rs.: 765.00
Price in US $: 12.95
Nature Fresh Olive Oil - Pumace 1000 ml
Price in Indian Rs.: 199.00
Price in US $: 3.38

Figaro Refined Olive Oil 500 ml


Price in Indian Rs.: 438.00
Price in US $: 7.43
Filippo Berio Olive Oil 1000 ml
Price in Indian Rs.: 510.00
Price in US $: 8.64

Nature Fresh Extra Virgin Olive Oil 500 ml


Price in Indian Rs.: 349.00
Price in US $: 5.92
Nature Fresh Pure Olive Oil 1000 ml
Price in Indian Rs.: 479.00
Price in US $: 8.11

Borges Extra Light Olive oil 250 ml


Price in Indian Rs.: 247.50
Price in US $: 4.20
Leonardo Olive oil for Western C... 200 ml
Price in Indian Rs.: 230.00
Price in US $: 3.90

Musa Extra Virgin Olive Oil 500 ml


Price in Indian Rs.: 490.00
Price in US $: 8.30
Filippo Berio Extra Virgin Olive Oil 5000 ml
Price in Indian Rs.: 2100.00
Price in US $: 35.60
SUPPLY CHAIN
A typical supply chain involving imported food products, including olive
oil, generally consists of:

OVERSEAS EXPORTER

INDIAN IMPORTER

LOCAL DISTRIBUTOR

SUPER MARKET/FOOD STORES

CONSUMER

The Indian market acquires supplies of many prominent overseas brands


through a consolidator instead of the manufacturer directly. This situation is
gradually changing with the establishment of many supermarkets by Indian
corporate conglomerates and overseas companies such as Metro. As brand
volumes reach a critical size with growing demand, the overseas manufacturers
themselves are taking an interest in developing the Indian market through direct
supplies and brand building.

Indian importers generally appoint city specific or regional distributors


and leave it to them for supply and payment collection. Nevertheless, brand
promotion is carried out by the Indian importer in association with the
distributors in situations of in-store promotions. The overseas suppliers
generally reimburse part of the brand promotional costs incurred by the Indian
firms in the initial stages.

Distributors generally have access to little storage space and delivery


vehicles for door delivery of the goods to the supermarket and food stores.
They hire both storage space and delivery vehicles in a large number of cases.
A distributors strength lies in his reach to the point of sale and ability to
manage an efficient and smooth delivery mechanism.

Critical aspects of the supply chain consist of:

Logistics
Vendor Management
Organized food retailing is evolving in India with the entry of big players such
as Walmart (in association with a local partner), Metro Cash and Carry, Tesco,
and Reliance Retail. Most of the supermarkets have developed criteria for
evaluating vendors to be included in their approved supplier lists. Depending
upon the size of the operation, supermarkets on an average have about 300
vendors, including olive oil suppliers. Close contacts are maintained with the
vendors by organizing vendor conferences from time to time. Visits to vendors
offices and storage warehouses are undertaken as often as possible.

LOGISTICS

Indian importers generally store goods in warehouses in close proximity


to their centralized operations (head offices). Supplies are transported to
distributors in their respective locations. Some large importers have warehouses
in cities other than those of their head office and use a hub and spoke model for
distribution.

In India, supermarkets work on a minimum inventory level varying from a


fortnight to a month. In the event of shipments of food products, including olive
oil by sea up to 6 weeks (depending on the source of supply) is generally
provided for in normal circumstances for movement of products as illustrated
below:

Movement of Food Products Minimum Time Frame Required


Shipped
Overseas suppliers to Indian port of Up to six weeks
discharge
Unloading Indian port to the importer One week to ten days
Importer to the distributor Five days
Distributor to the supermarket One or two days

Clearance of a consignment at an Indian port involves about 5-8 days,


assuming the importer is based in the same city where the container is berthed.
Otherwise, further inland transportation by road may involve another week (eg.
consignments for Delhi from the port of Mumbai).

India is a large country with poor but high density road infrastructure.
Hence, interstate transportation by road can take 3-5 days. Traffic jams are
frequent on the highways. Heavy rains affect mobility as roads are sometimes
waterlogged. Expansion of national highways linking Mumbai, Delhi, Chennai,
Hyderabad and Kolkata under the Golden Quadrilateral Project is an added
advantage after 2012, when it was announced completed.

Some importers own dry warehouses and lease their cold storage
requirements. Transportation is usually outsourced with logistics companies for
transportation of products such as olive oil. The refrigerated container/cold van
transportation industry is still in its infancy.

MARGINS AT DIFFERENT LEVELS

The MRP (Maximum Retail Price) is printed on the label of the package
and is known to all the players in the value chain. Importers negotiate markdown
profit with supermarkets and distributors.

The general consensus in the industry is that supermarkets operate on a


20% profit margin. Major stores operate on around 15 -17% margin.

The distributors markdown profit generally ranges from 10-12%


depending on the food product and mutual negotiation between the importer and
distributor.

LABELLING REQUIREMENTS

Overseas exporters are required to comply with the following Indian


labeling requirements on individual packs to facilitate easy clearance of the
container through the Indian Customs:

Printing of the company name and contact details of the


manufacturer/producer.

Green/red sticker a green dot indicates the product is vegetarian. A red dot
denotes non-vegetarian contents.

A label mentioning

full name and contact details of importer


month of import
MRP (maximum retail price)
Use before date (or expiry date)
The month of manufacturing and weight should be printed on each packaged
item.Each packet should have details of the ingredients as per the Prevention of
Food Adulteration Act & Rules (PFA).
MARKET ENTRY STRTEGY
In view of the vast size of the Indian market and regional market
diversities, it is recommended that California Olive Ranch consider appointing a
local distributor with a network of branches in major metropolitans such as New
Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Ahmedabad etc. al., to promote
the said product in the region. Considerable brand promotion is required in this
market in conjunction with the local distributor through media publicity and
through aggressive campaigns from time to time. Joining the fray of events that
are organized within the country, from time to time will acquaint the consumer
with the brand.

(Since the scope of this report is to introduce the current Indian olive oil scenario to California
Olive Ranch, only a gist of the required marketing strategy is being submitted. A detailed
strategy will be part of the business plan.)
CONCLUSION
With widespread dissemination of information on the beneficial health
effects of olive oil following the aggressive education campaign of the
International Olive Council in India, coupled with the expected improvement in
Indian standards of living - at least for the middle income group - in the future,
the export potential for COR olive oil in this market seems to be quite promising.
Due to the political proximity of both the countries, coupled with the general
psyche of the Indian consumer that American goods are of better quality that
any other countrys goods and finally and most importantly the advantage of
associating with someone that is very well acquainted with the grass root details
of the Indian market, COR is sure to emerge a winner if it enters the olive oil
race in India, at this juncture.