Fear is the key. Mustard oil, mostly consumed loose, will lose loyalists to other edible oils, and most of the shift is expected to be to branded, packaged, credible refined edible oils. States from New Delhi to Mizoram have been affected by deadly dropsy, and the deaths number close to 50.

The unorganised sector will either have to stay out of business, or incur higher costs in branding and packaging, which will close the gap in pricing with the organised sector.

"The outlook is positive. The conversion rate is expected to go up to 8-10 per cent this year, and to as high as 15 per cent in the subsequent year leading to a volumes growth of almost 10 per cent this year," according to Inquire Indian Equity Research equity analyst AyazMotiwala. The conversion will be largely on account of the "fear" factory feel analysts which will play a major role in shifting consumers to branded packs.

"It was supposed to have been a year of flat growths with the rising price levels. We expect things to change for the better now. The branded packaged segment is now expected to post a reasonably good growth of 8-10 per cent this year," said Godrej Foods deputy general manager (marketing) Monila Kothari.

The packaged branded edible oils market is expected to rule the roost in the future, with the deadly dropsy attack turning out to be a boon in disguise for this market where the conversion rate from loose oils to branded is as low as 5 per cent per annum.

Analysts and industry observers say that the fear psychosis attached with the dropsy panic will lead to consumers shifting to the branded segment which was moving at a slow pace of growth even as strong brands like Sweekar and Sundrop recorded double-digit volumes growth in 1997-98.

The growth inthe consumer pack branded edible oils market, which forms a measly 20-25 per cent of the total Rs 3,500 crore edible oils market, was in fact heading for a flat-to-negative growth in 1998-99. This conclusion was made largely because of the escalating prices in the branded segment which had hit the roof. The price of one litre branded edible oil in consumer pack has risen to Rs 63-65 now from Rs 44.50 last year.

The total volumes of the packaged branded edible oils is close to 1.77 lakh tonnes per annum, valued at around Rs 800 crore. The loose oils market in India is huge and forms 70-80 per cent of the total market.

The price differential between loose oil and branded being substantial (almost Rs 15-20 per litre), the conversion factor from loose to branded had taken a beating.

Retail prices witnessed a steep hike during the year on account of a rise in input costs which necessitated the price increase. The price markups in edible oils were to the tune of 40 per cent during the period.

Major playersin the branded packaged edible oils market which will benefit are ITC, Marico Industries with its brands Sweekar and Saffola, Hindustan Lever with Flora and Godrej Foods with Godrej Sunflower and the latest launch of Cooklite.

The sunflower is the fastest growing category in the branded edible oils market. This category recorded a growth of almost 8 per cent when the total branded segment grew at 5 per cent.

Analysts said that the industry will witness a rapid increase in the conversion rate from loose to branded in the northern areas of the country and even the eastern than in the south which is predominated by coconut oil. Nevertheless, the branded category as a whole will benefit in the post-dropsy phenomenon.

Marico Industries posted a 6 per cent growth in volumes in refined edible oils despite the fact that Saffola sales were adversely impacted by the shortage in safflower supplies during the first quarter of fiscal 1998-99. Saffola and Sweekar contribute 18 per cent and 16 per cent to the salesof Rs 490 crore.

In the consumer packed refined oil market, the combined market share of Saffola and Sweekar increased to 16.4 per cent from 15.7 per cent in March. Godrej has a combined market share of 11 per cent in the market. ITC's Sundrop sunflower oil is the single largest selling brand.

Mustard oil use risky

The recent outbreak of dropsy has little to do with the consumption of non-branded loosely-sold mustard oil. Adulteration of mustard oil was caused due to the use of mustard seeds in which some argemone seeds had somehow found their way. Samples taken from packs of popular mustard oil brands have also been found to be adulterated. Therefore, the consumption of mustard oil in the current scenario, whether packed or not, is a risky proposition.

However, the consumption of other oils like groundnut oil, sunflower oil, palmolein and soyabean oil is safe. While argemone seeds and mustard seeds are similar and it is difficult to distinguish one from the other, this is not the case withother oil-seeds. Hence, argemone adulteration in other oils, whether in packed condition or not, is highly unlikely. Shifting to packaged branded oils could mean higher costs without adequate value.