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The vegetable oil market and ways of its promotion

 

At the present time there is a slowdown in growth in the vegetable oil market, which experts are attributed not only with the financial crisis, limiting consumption, but with a saturated market as well. The description of a real situation in the vegetable oil market can be found in the latest issue of the magazine “Food Promotion. Prod&Prod” in the article “The Plant Business” in detail.

Due to the large planted area Russia is considered to be a leader in the production of sunflower. 5.6 million of tonnes of sunflower’s seeds are produced in Russia every year, 4.6 million of tonnes – in Argentina, 4,2 million of tonnes - in the Ukraine, 1,3 million of tonnes – USA and also 1,3 million of tonnes in France. Almost quarter of the total world’s production of the sunflower oil is in Russia, but at the world market share of a domestic production is less than 8%. The country’s share in the vegetable oil market is only 2%. According to the Federal Customs Service (FCS), a volume of the vegetable oil exports has decreased by 53% in 2010.

This fall was due to crop failure caused by droughty summer. As a result – a rapid price advance in the food oils market. Chances are that in the near future this trend will not change. If in the fall of 2009 the sunflower oil had been cheaper than rapeseed and soy, then a year later there was an absolutely opposite situation. To date, there is a trend of price advance for soybean oil; it is connected with increased production of biodiesel based on soy.

According to the preliminary estimates, growth of oil’s world consumption by 7 million of tonnes is expected in 2011. Whereas, production of vegetable oils will be increased by 6 million of tonnes only, and this will reduce the reserves, which are at a critical level already.

Several key leaders can be identified in the vegetable oils market - 1) The agricultural holding “Yug Rusi”, which produces 22% of the total volume of the vegetable oil in Russia; 2) The holding “Sun Products”, which controls 13% of the vegetable oils’ market share; 3) The group of companies “Efko”, which retains 8% of Russian oil market. An ordinary consumer at once recognizes the brands “Sloboda” and “Altero”; 4) The company “Aston” which occupies 7% of the vegetable oils market; 5) The company WJ “Russian oil”, which occupies 3% of the market. The other manufacturers occupy 44% of vegetable oil’s output in Russia.

In general, the vegetable oils market is characterized by high competition among its major players. In such conditions, the main tool for combating acts is the various marketing activities aimed to increase customer’s loyalty to the brand. A television advertisement is highly effective here. After all, the advertising has a broad impact on to the number of potential customers. Only in many cases the television advertising’s amendments are much higher than the resulting benefit. Another version is the promotional events on the points of sale. Here while evaluating the promotions in retail outlets brand’s position, investments and event’s organizing must be taken into account.

If sales at the time of organizing promotional events rose by a quarter, the result can be considered successful. Almost half of the vegetable oil is sold through a network of shops, a third of production is sold on the market, and only every tenth bottle is sold through the halls. Every producer should determine the scheme of work with points of sales independently. In general, vegetable oil’s promotion on to the market is somewhat monotonous, which manifests itself in the same style of advertising materials’ presentation among the market leaders as well as among the main mass of the players.

To promote the vegetable oil it is necessary to develop the distribution, representation of a brand on the market. A bonus payment system, the discounts for volume purchases can become a good incentive for distributors.

At the present time the Russian Health Ministry recommends applying not less than 13.5 kg of the vegetable oil. Therefore, in the future, the Russian manufacturers will be continued their real hard battle for the consumer.