Due to the recent outbreak of the deadly "dropsy" which has led to over 50 deaths in India, polarisation of a large number of small manufacturers of loose oil is expected to take place considering that the sale of loose oil is banned.

Loose oil constitutes around 90 per cent of the total oil consumption in the country. The size of the industry is roughly Rs 3,500 crore.

According to Godrej Foods managing director NR Dixit, the company is planning to launch edible oils in sachets of 50 gm, 100 gm or even 250 gm which would be priced reasonably matching the affordability levels of a large number of loose oil consumers.

With packaging cost amounting to 10 per cent of the total cost, there is a need to bring in technological innovations to bring about economically cheaper packaging material which would at the same timeensure credibility and quality of the oil.

"A shift towards the use of branded and packaged edible oils, which can guarantee purity of the product, is expected. There is a possibility of big units supporting the smaller ones considering that the involvement of packaging costs and quality control expenses would be difficult to meet for a number of smaller units," said Dixit.

Dixit said that any step to ban the sale of loose oil, which is expected to take some time, and compulsory packaging of oil is a welcome step as this would attach more credibility to the product and accountability for the manufacturer.

"It would be a challenge to provide consumers with affordable packaged edible oils in a situation where 90 per cent of the oil consumed is sold loose. As a step towards making this possible, Godrej Foods would be coming up with smaller pack sizes and even tetrapaks of edible oils," he said.

INSIGHT: packaging sector to gain

Apart from the branded edible oil companies being the obviousbeneficiary of compulsory packaging and branding, the other sector that will benefit is packaging. With 90 per cent of the market to be tapped, there exists a huge potential for existing players as well as new ones.

However, ensuring that the products reaching the market will only be branded ones will be a tough job. Further, the price differential will be quite high between branded and loose products, which should be reason enough for majority of the population living in rural areas to stick to their old supplier.