SCALE, TRENDS AND DEVELOPMENT PROSPECTS OF THE ANIMAL AND VEGETABLE OIL & FAT INDUSTRY (BRIEFLY)
Cooking oil is a daily consumption product, even considered an essential product, widely distributed, so price competition is still an important criterion, especially in the context of inflation and consumer purchasing power around the world being affected.
Market size and characteristics by February 2023
- The cooking oil market (or cooking oil for short) includes vegetable oil and animal fat. In which vegetable oil currently accounts for a large proportion and is increasingly diversifying its raw material sources such as palm oil, peanut oil, coconut oil, etc. Vegetable oils are extracted from seeds, nuts and fruits, serving as a source of nutrients for humans and as raw materials for a number of industries.
According to Statista's latest updated data in February 2023, vegetable oil production in the 2021-2022 crop year exceeded 200 million tons worldwide. Among the main vegetable oils, palm oil has the highest output, reaching 73.83 million tons.
- The main factors determining the position of market participants are still quality factors, outstanding product advantages, the most limited levels of preservatives and the ability to deliver all-natural products worldwide.
The general trend of the edible oil and fat
- Cooking oil consumption has increased in developing countries to meet the demand for fried foods. Recently, with the recommendations of health authorities, cooking oil manufacturers have focused more on applying advanced processing technologies to provide cooking oil that is healthy and reasonable in price such as packaging and usage.
- These products are now being distributed more diversely, possibly in supermarkets and specialized stores for children, and especially promoted quite strongly on social networks as well as e-commerce channels.
- Regarding the dietary and healthy oil segment based on the criteria of reducing the amount of calories and fat absorbed into the body, recently it is not only sought after by female consumers but also tends to be chosen for general use in family meals. Some types can be found on the Vietnamese market such as spray coconut cooking oil (only spray a small amount on food for shine and ease of processing), cold-pressed organic virgin coconut oil to minimize fat, MCT coconut oil,...
- Product innovation is one of the most adopted strategies by industry leaders in the global edible oil market, followed by partnerships, with the purpose of meeting demand and withstanding increased competitive pressure from both businesses and trade protection policies of countries.
Some market development prospects in medium-term
- Fast lifestyle leads to unbalanced nutrition and the billion people lacking vitamins has skyrocketed in recent years. To compensate for the lack of vitamins in daily food, many people are forced to supplement their bodies with vitamins by taking multivitamin capsules. This pushes the functional food and pharmaceutical industries to use vegetable oils or fish oils to take advantage of the rich source of Vitamin E.
- In addition, the cosmetic industry is also increasing the use of healthy oils to help users improve skin texture. Typically, crude coconut oil and refined coconut oil are increasingly used, replacing palm oil in the production of soaps, skin and hair care products.
- Domestic cooking oil businesses are also researching and developing production in these segments with higher-end product lines than the current popular or affordable product lines.
- Therefore, it is forecast that the market will witness stronger competition from domestic products instead of the completely dominant imported products as at present.
- On June 28, 2010, the Ministry of Industry and Trade issued Decision No. 3388/QD-BCT approving the Development Plan for Vietnam's vegetable oil industry to 2020, with a vision to 2025. It can be seen that in Vietnam, the vegetable oil production industry has certain advantages and development opportunities.
- Accordingly, the period 2021-2025: average growth rate reaches 3.98%/year. By 2025, refined oil output will reach 1,929 thousand tons. However, according to VITIC's preliminary statistics, up to now refined cooking oil output has reached over 1,900 thousand tons and will even continue to increase in the near future.
- Hower, it is forecast that the barrier to market entry will become increasingly more difficult. Because this segment is still quite narrow, the conditions for quality, food safety are high and consumers are picky, and it requires distribution channels with specific expertise.
Collected and summarized by Kara
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