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  • Q1 demand has contracted due to high prices in April and May, he said Adani Wilmar CEO to edible oil sale.
  • Demand in rural areas will remain sluggish in the second quarter, company says
  • Consumers are relegating to smaller packaging and cheaper brands, the company says.
  • Adani’s own King’s brand, which is cheaper than Fortune, has outperformed in some rural areas.

Adani Wilmar witnessed subdued demand from rural India in the first quarter, despite the edible oil price cut at the end of June.

“Demand in the first quarter has not grown. In fact, it has shrunk due to very high prices in April and May, which partially fall in June and then in July,” Angshu Mallick, CEO, Adani Wilmar told https://londonbusinessblog.com/ India.

The sale of refined oil, below the Fortune Oil brand, was 5.6% lower than last year.

Adani Wilmar had even announced a second sticker price reduction in July by up to ₹20, but question in the countryside has not included. Probably not in the second quarter either. However, this has more to do with the purchasing power of rural India than with prices.

“Rural demand will remain sluggish in the second quarter, also because they are looking forward to a better harvest, which they will only harvest from October. So from a money point of view, farmers will not have much money. I don’t think the demand will be strong in rural areas,” Mallick told https://londonbusinessblog.com/ India.

Smaller packaging, cheaper brands

Because oil is essential to the household, consumers are relegating, the company says, to smaller packaging and cheaper brands. Adani Wilmar’s own lower-run edible oil brands, such as King’s and Aadhar, have outperformed in some pockets nationwide.

“In every FMCG category, we’ve seen consumers move to massive brands or popular brands instead of premium. From premium they have been degraded and we’ve seen that in edible oil,” said Mallick.

Masstige brands are mass-market brands that are priced lower than premium, yet retain a ‘brand’ value. In addition to massive brands, Adani also saw more demand for mustard oil from the Indian countryside.

“When it comes to mustard oil, we’ve seen Fortune mustard oil have much stronger shares than the massive brands because consumers are afraid of counterfeiting. So here our Fortune has fared much better,” said Mallick.

However, the trend of smaller packs has boosted volumes as consumers now buy four to five times a month.

“If a one-time payment is 150 per liter, consumers will have to pay almost ₹2,500 for a 15-litre pack. So, paying a total of ₹2,500 by a rural or small town consumer is definitely cramped and heavy. As against that, they can always pay 100 and buy a half liter bottle or ₹200 for a liter,” Mallick said.

Also, after two price cuts in two months, they don’t want to buy large quantities, because they hope for another price cut.

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