It is worth roughly Rs 190 crore in annual revenues.
Harish Damodaranm Businessline
Virudhunagar (TN), Sept 9
The country's branded vegetable oil market is today dominated by the likes of Ruchi Soya, Adani Wilmar, Cargill, Bunge, Agro Tech Foods and KS Oils, dealing largely in imported material — palm, soyabean and sunflower — sold as refined oil or vanaspati.
The deluge of imported oils has led to the marginalisation of costlier traditional oils (mustard, groundnut, coconut, sesame), which are marketed mostly by regional and local players struggling against the onslaught of ubiquitous national brands.
There are exceptions, though, such as ‘Idhayam' — a brand synonymous with sesame (gingelly) oil, particularly in the South.
“We sell about 1,200 tonnes every month, of which, 80 per cent is within Tamil Nadu (TN) and 10 per cent in other States. The balance is exported, mainly for the Tamil diaspora in the US, Canada and Australia,” says Mr V.R. Muthu, CEO of V.V.V and Sons Edible Oils Ltd, which owns the brand.
Market share
According to him, ‘Idhayam' has a 60 per cent share of the branded sesame oil market in TN, where there are also others such as ‘VVS', ‘Anandham', ‘Sastha', ‘Anjali' and ‘Pashumark.' At an average ex-factory price of Rs 120 a litre , ‘Idhayam' rakes in roughly Rs 190 crore in annual revenues. V. V. V. and Sons also sells 300 tonnes a month of groundnut oil under the ‘Mantra' label, which is worth Rs 30 crore at Rs 80/litre.
“Our business is only in traditional oils that are expeller-pressed and filtered. We are not into solvent extracted and refined oils,” emphasises Mr Muthu.
‘Idhayam' retails upwards of Rs 130 a litre in TN, compared with RBD palmolein (Rs 45-50), refined soyabean (Rs 55-60) or sunflower (Rs 65-70) oils.
“Refined oils are a field where we cannot compete with the big names. It is better to be in a niche segment and target consumers who prefer oils having natural flavour and aroma that is lost during refining. They know the taste of oil that is physically extracted and filtered after crushing sesame-seeds along with 2 per cent palm-jaggery,” notes Mr Muthu.
Regional Popularity
Sesame oil is especially popular with Tamilians, “who, wherever they are, cannot do without it in their fish, brinjal, tomato or potato kuzhambu (gravy).”
One reason, then, why ‘Idhayam' sells predominantly in TN.
“We even source 45 per cent of our sesame-seed from the State, with 40 per cent coming from Karnataka and Andhra, and the rest from other regions,” says Mr Muthu.
In traditional oils, the manufacturer must have the patience to build volumes, while investing in one's brand and maintaining consistent quality.
For ‘Idhayam', the test came in late 2007, when a crop failure in China generated a spurt in export of sesame-seeds, pushing up domestic prices from around Rs 3,450 to Rs 4,850 for a 75-kg bag.
“As a result, our ex-factory price, which had never crossed Rs 100, soared to Rs 151/litre. But our brand's strength ensured that sale volumes fell by just 15 per cent,” recalls Mr Muthu.
Even today, the product moves fast enough so that “we keep not more than five days' stocks at our plant.”
Moreover, “nobody, including Reliance Retail, is supplied on credit.” Distributors get their delivery only after they had submitted their draft the previous morning.
CONFIDENT
Mr Muthu is confident of raising monthly sales of ‘Idhayam' by 50 per cent to 1,800 tonnes in the next two years.
“We are now promoting the use of sesame oil for improving oral health. Oil-pulling (rinsing the mouth with oil for 10-15 minutes) is a known folk remedy for preventing tooth decay and oral malodour. A Business Line article on an American Heart Association study, linking gum disease to cardiovascular problems, led me to sell Idhayam in 10 ml sachets at Rs 2 purely for oil-pulling,” he adds.
Marketing in sachets is also a way to make expensive oil more affordable.
Thus, while a one-litre ‘Idhayam' pouch costs Rs 136, a 30 ml sachet is available for Rs 4 and 100 ml for Rs 14.
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