Impact of Increasing Oil Prices on the Namkeen Industry

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Oil prices have more than doubled in the past few months in India, the world’s biggest consumer of edible oil, and importing most of its requirements.

Namkeen Industry, fried snack food, in particular, is facing challenges because of the price hike. The snack food makers are cutting down on edible oil consumption by reducing the weight of standard pack sizes or passing on the cost increase to their customers through price hikes. Of course, they are doing so by using their brand power and being selective in the pack sizes

Inflation of food items, including that edible oils, has become a big worry for the snack food industry today.

Smaller pack sizes (₹5, ₹10, and ₹20 categories) are key to market dominance and driving volumes for the snack makers and hence it’s difficult for any company to move away from them. Even among the fried snack items, salty snacks are the worst affected as they consume edible oils the most. Given the current global environment, edible oil prices are not expected to come down any time soon. Therefore hike trends may continue for a long time. It is going to be a tightrope walk between price escalations and volume growth for snack makers.

Government action towards preventing this potential threat  (Hike in crude oil pricing)

 A rise in global rates caused domestic edible oils to surge last year, but the federal government managed to bring down prices through several measures, including duty rationalization. India is working on medium- to long-term plans to cut its dependence on imported edible oils. Longer-term options for the government include building up reserves, boosting domestic production, and allowing commercial cultivation of genetically modified oilseed crops, according to traders and analysts. India is trying to boost domestic production to overcome its dependence on imports. The government launched a $1.5 billion initiative called the National Mission on Edible Oils-Oil Palm last year to improve self-sufficiency.

Automation & Oil filtration technology: Why it can be a game-changer for SMEs by upgrading their Retro machinery

 Most snack makers are trying to leverage automation opportunities and stay afloat today. The traditional Indian snack industry has been no exception. Technology is being adopted to perform manual tasks and minimize human errors. This way people are also less fatigued and able to carry out their tasks for longer hours with greater ease.

 By adopting technology and automation, snack makers can cut down on both skilled and unskilled manpower-related costs and increase profits significantly, with a guaranteed assurance of reliability and consistency of the methods adopted.

CONCLUSION

Indeed the soaring prices of edible oils and prevailing global environment of distress are challenging and pose a great threat to businesses. But, with challenges come opportunities. The prevailing times are a wake-up call, especially for the small and medium enterprises (SMEs). This is the right time to look out, upgrade technology and adopt automation. This is the right time to challenge the status quo, reduce heavy dependence on human effort and still get a snack product hitherto available only through traditional methods.