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Jivo Canola Oil eyes Rs 100 crore turnover: More than a drizzle?

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JIVO

With the advent of healthy cooking oil pitching a minimum health risk, consumers have taken to brands that offer heart health, low cholesterol and saturated fat-free oils in the market. Canola as an oil category is more popular in the Western part of the world and on the contrary a nascent category in the Indian market. Can it survive the competition coming from existing players and create its own space in the Indian market? Pitch finds out.

“Canola oil was launched in September 2010 as the Indian market looked very positive to us. Plus, people are getting more and more health conscious, they have realised that dietary prevention is the need of the hour, it’s simpler than paying hospital bills and this has given our product a word of mouth publicity,” says Ravinderpal Singh Kohli, Managing Director, Jivo Canola Oil.

Canola was initially pegged as premium and was priced at Rs 365 a litre, but the model of marketing Jivo followed was that it was bought in bulk and then packaged and sold in India. Thus, the company brought down the price to Rs 165 a litre trying to expand its consumer base.

Ravinderpal Singh Kohli, Managing Director, Jivo Canola Oil

Ravinderpal Singh Kohli, Managing Director, Jivo Canola Oil

Mixing the right ingredients?
The oil is betting big on the middle class and upper middle class of consumers in tier 1 and 2 cities to push consumption, however it has not yet had a pan India launch. It has been launched in the Northern and Eastern markets with maximum share lying in the former. For the company maximum of sales happen in Punjab, Delhi NCR, Calcutta and North East, with Delhi in the lead as the company has a sale of 100 tonnes per month in the city.

Moreover, it has also entered Mumbai and South and plans to go national in the next one year. Commenting on the company’s market share Kohli divulges, “The overall market of edible oil in the country is 15 lakh tonnes, and Canola has a very small share as it being a new kind of oil, the challenge was to make consumers aware of it.”

The USP of the brand revolves around the fact that it has the lowest saturated bad fats, the highest unsaturated good fats and the highest content of Omega three. The brand claims to have the best ratio of Omega three and six. Kohli also says that as Indians we have a lot of Omega six rich diet, which is not good for the body we need to balance the Omega three and six and Canola pitches that to its consumers.

Fat of the matter
But will the high price range vis-a-vis established brands like Saffola and Sundrop affect consumer purchase?

Shushmul Maheshwari, Chief Executive, RNCOS

Shushmul Maheshwari, Chief Executive, RNCOS

“As Indian consumers are becoming health-conscious, they positively greet any such launch. Enriched in Vitamin-E, presence of Omega 3 and being cholesterol free is already enough to trigger the health conscious Indian mindset, though price sensitiveness still remains an issue,” says Shushmul Maheshwari, Chief Executive, RNCOS.

One of the competitors in the healthy edible oil segment is Saffola that has positioned itself as heart healthy oil. Will brand recognition and trust with the brand name not create a threat to Jivo’s marketing ambitions? “While Saffola has a high content of poly unsaturated fat and less of mono unsaturated fat, Canola is a high mono unsaturated fat content which is good for the body,” claims Kohli.

In addition, Professor of Marketing, Dr Sharad Sarin, XLRI, believes that edible oils like groundnut, peanut and mustard are available in the country and are very well known. “Marico was the first company to exploit the sector of heart healthy edible oils when they came out with Saffola. It was an expensive product and served only the niche. Since India is a large market for edible oils the big players did not find it economical in investing large amounts since the market share was very minimal.”

Sharad Sarin, Prof - Marketing, XLRI

Sharad Sarin, Prof – Marketing, XLRI

“India is also the hub of diseases especially heart and cancer, when the brand comes up with a proposition through whichever method of publicity they still can’t deliver bulk and the demand is more for bulk. Branded oils take up 15 percent of the market share in the edible oil industry. The brand that are coming in today need deep pockets, a good distribution chain, and volume demands to make a space for itself in the market. Edible oil market has a low margin but is a high volume market,” he adds.

The company is promoting the brand through PR and one to one interaction with consumers. “We started advertising when we realised that the brand does not need a push but the product needs awareness,” Kohli adds.

Jivo Canola oil has invested around Rs 10 crore in the market and the challenges that it is facing is mainly from the financial side as the dollar rate is in flux, “80 per cent of India’s oil is imported since we cannot generate our own oil it becomes a concern for all the importers if the foreign currency rate starts fluctuating,” Kohli appends.

In another four years Jivo Canola oil targets to have a turnover of Rs 100 crore as it is planning a pan India launch, the brand is focused on targeting the modern retail as it is present in the traditional stores as of now.

Tall claims?
The brand has already started creating a buzz with effective PR activities supported by international research on the benefits of the oil. Kolhi says, “The research done by North and South Dakota Universities states that Canola is rich in the chemicals that help in fighting cancer, in relation to other oils Canola retards the growth of tumours, whatever we eat becomes accelerators for the tumours but Canola retards that growth. In Punjab we have seen a cancer wave sweeping the state; we picked up the topic of Punjab and brought out the study.”

Dr O P Yadava, CEO & Chief Cardiac Surgeon, National Heart Institute

Dr O P Yadava, CEO & Chief Cardiac Surgeon, National Heart Institute

However, specialists in the health sector are not convinced by the claims made by the study. With this regard Dr O P Yadava, CEO and Chief Cardiac Surgeon, National Heart Institute, says that in generic terms such claims are superfluous; all are conjectural and are based on one or two anecdotal studies. “They are not categorical, we came out with the notion of dark chocolates, red wine etc but nothing came out to be a definitive answer for a product that actually fights diseases. If a research is spread across all the five continents and has a unanimous answer then it can be banked on. If a research reaches the press and not the medical journal then it is claimed to be backed by industries,” he says.

Dr Yadava also says that the large companies filter out what is unwanted and extract what can be used as a sales pitch to draw the consumers. In India there is a market for such products as the people go for a lot that is published in the press but doctors can’t bank on something that has not gone through extensive research.

Routing it right
On the other hand, according to RNCOS’ Maheswari, Jivo Canola Oil already holds a loyal customer base in India. “The features including Cholesterol-free, Vitamin-E, and Omega 3, have already gained trust of people as evident from its share, and trustworthiness achieved through tie-ups with renowned cooking partners like Radisson Hotel, The Big Chill’s Café, BTW, Kaleva, Spaghetti Kitchen, Bengali Sweets, Peter Cats, The Park Hotel, Kolkata Club and many more will help the company gain a strong foothold in the Indian market,” The oil is being manufactured in Canada and packaged in India.

Maheswari appends that Jivo Canola Oil has a minute share in the Indian packaged branded edible oil market and being a new entry has to go a long route. Indian consumers are tradition oriented and regionally, there is a lot of variation in food habits. Indian consumers are also price sensitive. The company is required to take into consideration for creating a space in the Indian market.

Canola is a different product, its pitch is in the health sector but players like Saffola are already present in the industry, similarly olive oil is also losing out on the sales because it is pitched at a very high price. Until the prices come down to compete with the volume players, branded products will remain small no matter how healthy they claim to be.

About the author / 

Abhinav Mohapatra

Correspondent, Pitch & Pitchonnet

1 Comment

  1. Harsh July 6, 2012 at 5:25 PM - 

    Mr OP Yadava should search for the studies: The first study by Dr Dwivedi and his team published their journal article on the topic, “Chemopreventive Effects of Dietary Canola Oil on Colon Cancer Development,” in the February 2011 issue of the journal Nutrition and Cancer.

    The second study conducted in 2011 by Dr Chung Park & researchers in North Dakota State University shows that Canola Oil May Reduce Risk of Breast Cancer. This research was published in the September issue of the journal LIPIDS.

    You cannot writeoff humongous studies with the whiff of ignorance.

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