The Big Fight To Glory

Remember Dalda? It came in a yellow, round metallic tin with the name in green under picture of a palm-tree. In existence since 1937, it remained the most preferred cooking medium for Indians for the longest time, before fading away towards the turn of the century.

Marketed earlier as a vegetable ghee, Bunge India’s Dalda — armed with a new perspective and a strategy — is keen to find its way back into Indian kitchens that are crowded with a variety of local and exotic oils.

Brand Dalda was acquired by Bunge India from Hindustan Unilever in 2003 . Analysts say while acquiring the iconic brand seemed like a masterstroke, Bunge India suffered for not first developing a large and vibrant distribution system to reach India’s vast network of retail outlets. That hit its sales and pushed the brand to the back. What added to Dalda’s further decline were negative perceptions with regard to the cholesterol levels in the ghee.

“Sometimes people get excited with labels, but should consider whether the label is relevant at the time of acquisition and for the future,’’ says brand-expert Harish Bijoor, founder of Harish Bijoor Consults Inc. “It is important to assess how future-insulated old brand-labels are. They probably committed a mistake. But time alone will tell.”

Bunge India doesn’t think like it. Its managing director Samir Jain and Dalda’s vice president Dinesh Agarwal, who have made serious re-launch efforts since 2012, are working like Trojans to change the negative perception and put Dalda back in the game.

The biggest challenge for the brand, however, is to get visibility among over a dozen oils available in the market. To turn the game around, Dalda is targeting the health-conscious generation that’s less emotionally attached with brands and doesn’t hesitate to experiment with recipes and the way food is cooked. But it won’t be easy to get back in the race as a variety of cooking oils have increased their share including palmolene, cottonseed, olive, soybean, canola, corn, in addition to the traditional mustard, coconut, sesame, peanut, sunflower and other variants.

So what makes Jain and Agarwal hopeful?
“The country’s per capita consumption at 15 kg per annum is 60 per cent of the global average. Given the low income levels, as India moves towards the path to prosperity, a higher proportion of the additional disposable income will be spent on food. This coupled with the move to consume more branded oil versus loose oil will lead to a stronger growth in volume for branded oils in India,’’ says Jain who believes India is a very exciting market to be in.

In terms of share in the cooking oil market, palmolene — the cheapest variety of oil— leads with 42 per cent, followed by soy with 17 per cent, mustard 13 per cent, sunflower 9 per cent, and cottonseed 7.6 per cent, say the Solvent Extractors’ Association of India (SEA). India consumes 19 million tons of edible oil, of which two-third is imported. SEA projects consumption to rise to 25 million tons by 2023. Consumption is growing 4-5 per cent per year and a large part still use loose oil. So there’s a huge scope for Dalda.

The young generation of Indians like to eat out at restaurants or get their food delivered at home more than cooking at home. But this only means higher oil consumption as unlike Chinese or continental food, a liberal dose of oil is intrinsic to popular Indian dishes.

Analysts say the less-affluent usually spend a set portion of their income on edible oil sold loose irrespective of the quantity it fetches for a price. Any significant increase in income levels could see them graduating to packaged oil.

While this is good news for the industry, the question is will Dalda be able to claw back a noticeable share of the oil market? Looking at recent statistics, perhaps, it can. The brand’s turnover of Rs 1,400 crore has doubled in the last four years at the retail level, says Jain, a former HUL official.

“We have set an aim to double our business in the next three to five years,’’ says Jain pinning his hopes on old users and attracting new ones. He cites surveys that show Dalda as still one of the most trustworthy brands in India, enjoying high unaided awareness among consumers.

Helping his effort is the brand’s steady following in the northern states. Jain expects Dalda to emerge among the top three brands in all the categories it sells in the organised market.

Some brand experts, however, remain apprehensive. Dalda was considered a first-generation vegetable oil for a third-world country, which India was then, but things have changed now.

“Today, we are a ‘first-world’ country used to the third-generation of cooking oils,’’ says Bijoor. “The issue is how will Dalda re-establish itself as a third-generation oil that’s healthy and poses no risk to health and wellness at large.’’

In the past, Dalda was only available in the vanaspati category. It is now available under mustard oil, sunflower oil, soya bean oil, in addition to vanaspati. It repackaged itself with floral pictures, in a manner similar to what Hindustan Unilever did with a sagging but iconic brand Lifebuoy, which now has more than half a dozen variants. This move will help the brand to reach out to many more potential buyers.

Jagdeep Kapoor, brand guru and chairman of Samsika Marketing Consultants says, “Dalda has a chance to re-establish itself if it uses nostalgia and promotes the brand consistently over a considerable period of time.”

“Going forward, brands would be favoured over loose commodities,” says Kapoor. “There is still a huge potential for increasing consumption in India, and Dalda has the advantage of being known through generations.”

“In 2013 we revamped our distribution system to directly reach 1.80 lakh retailers,’’ says Dinesh Agarwal, head of food business Dalda. The company added 700 new distributors taking the total figure to 1,700. The brand is now present in 1,100 towns.

To cash in on nostalgia, the company has pegged its sales pitch on mother’s love with the tagline: “dabbakhaali, pet full”. The latest television commercial shows school children returning home with empty lunch boxes, thanks to Dalda which makes food tastier. The brand is also using more economical direct awareness methods such as cookery shows, food festivals, social media and Dial-D, an initiative it started in 2014 to create a crowd-sourced recipe platform through phone calls that boasts of over one lakh members today.

“They can’t depend alone on nostalgia and the old familiar brand. We are an evolved market in cooking oils,’’ says Bijoor. “Its old nostalgia is negative in this category. With the same brand it will be tough but fresh creative marketing can change its image and perception.”

Of the 19 million tons edible oils and fats sold, the largest players from the organised sector include Adani Wilmar, Ruchi Soya with a major market share followed by Bunge India and Cargill India.

That said, Bunge has the advantage of being part of the largest global supplier of soybean oil to India. But will it be able to push Dalda anywhere close to its past glory is something yet to be seen.

sumit@businessworld.in
@mediasumit

(This story was published in BW | Businessworld Issue Dated 14-12-2015)