Well-oiled strategy

The commodity market of edible oil is slowly on the boil? Am I right?

Kolkata

Preeti, this is a boil that has been on for long now. The country's edible oil players have typically been operating in a commodity-oriented market. The commodity has been perennially in the grip of international prices and has always seen a see-saw trend of supply and demand. Most players have been grappling with the inability to cater even to existing demand. In the bargain, they have continued launching newer variants and have continued to look at blends of every mix as options.

Players who have, however, sorted out the supply side of the market dynamics carefully, are now seriously looking to brand the category for their offerings. It is here that the efforts of players such as Adani Wilmar figure on the brand-endorsement spectrum. I do believe players in the edible oil industry are just about finding their feet and are becoming aware of the existence of the highly competitive space that is emerging. Every player now wants a brand footing in the market. The brand endorser is a good start.

Having said that, I believe it cannot stop there. Players in this space need to invest in brand-strategy work relating to consumers, their existing tastes, their emerging preferences, and, of course, the largest issue of them all: the possibility of edible oils emerging as a socially ostracised category in the future as the issues such as trans-fats and cholesterol hit the fan.

The space of edible oil will, therefore, see a lot of action in the present and in the long run. This action will revolve around aggressive branding, employment of brand endorsers, walking into people’s lives with brands and their appeals, sponsorship of events, green branding and most importantly health-oriented branding initiatives. Wait for lots more!

While most of the Indian FMCG companies have forayed into international markets through acquisitions, a few of them have taken the organic route. Isn’t acquisition a better way to enter a foreign market?

Madurai

Ravikiran, acquisition is most certainly a better way to enter the overseas markets. There are strengths in the acquisition route that cannot be under-estimated. When one acquires a foreign company, one acquires not only their brands and manufacturing capacities, but also the deep knowledge of markets alien to the foreign mind. The people acquired through the acquisition are more important.

Knowledge-harvesting mechanisms are the first that one normally puts in place in the case of such acquisitions. The moment a company is acquired, one should typically go for the jugular, its people, who are the most important resource out there.

It is easy to overlook this and fritter away decades of knowledge harvested under their wings.

The other big advantages in acquisitions are the distribution channel, the distributorships, the transportation chains and the people controlling it all. Distribution is the cutting edge in overseas markets. It cannot be mastered overnight. Such acquisitions in overseas markets provide decades-old distribution networks that are quite like the commercial nervous system of the organisation. This is vital and valuable to the acquiring company.

Acquisition, therefore, have an inherent advantage over starting from scratch in overseas markets.

Harish Bijoor is a business strategy expert and CEO of Harish Bijoor Consults Inc. Mail your questions to >cat.a.lyst@thehindu.co.in

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