Price goes up, but oil market remains high

After years with falling prices and increased sales, the oil market began 2013 in another context in Brazil. Important yields broke in the last harvest in Europe, the price of raw materials has risen, the dollar has strengthened against the real and the product was more expensive for the consumer.
According to the Nielsen consulting, in the first quarter prices rose 9.2% category. But the scenario does not discourage companies. Bunge, which sells brands such as swallow, Cocinero, and Cardinal, will raise in 30% investment in the marketing category this year. Supermarkets and importers estimate that sales continue in double-digit expansion, with percentages ranging from 10% to 25%, depending on the type of product and target audience.
"For another five years, maybe in smaller level, growth will continue", says Sérgio Mobaier, Director of marketing of foods and ingredients of Bunge Brazil. In 2012, despite the country's economic slowdown, the oil market grew 16.3% in volume and, according to Nielsen, was one of the few food categories to display rates in excess of 10%. The sector was worth $ 934 million. The expectation of Bunge is that the market advance 11% by volume this year, and that its brands sell more than that.
The Mobaier strategy to grow despite the high prices-Bunge made readjustments of 15% on average over the last six months-is focused on product launches, distribution in small retail expansion and strengthening of communication, with ads on TV, printed media and actions in points of sale. The plans involve the three brands marketed by Bunge in Brazil. Cocinero, imported from Argentina (of Molinos) is cheaper, costs around $ 10; the Portuguese, Sovena group, competes with Gallo, in the range of $ 14; and Cardinal, his own brand of the group, is the most expensive ($ 15 to $ 22).
For retailers, the premium oil-less acidity and prices above $ 20 for 500 ml packaging-goes through a process similar to that raised sales of special beers, with the appreciation of flavors and brand diversification. Is what says Hasdrubal Rao, Director of the importing party town of Arouca.
"The market is changing, perhaps not with the speed we would like. But generally you note a satisfaction when the client can have access to a higher quality product, "says Rao. With prices between $ 15 and $ 40 for 500 ml bottles, the village of Arouca sells about 4 thousand boxes of oil per month-2.4 thousand liters. This year the importer expects growth of 25% in volume on 2012.
To Humberto Cárcamo, Rio de Janeiro Branch Manager of importer Home Flora, based in São Paulo, the crisis in conventional oil industry in Italy, which raises the prices of cheaper labels, favors expensive bottles. "For those who work with special oils is an opportunity, because the nearest price and inventory rupture causes the big customers have to prove new brands," he says. Casa Flora works with 11 premium brands at prices between $ 12 and $ 70 and has among its clients large chains such as Grupo Pão de açúcar and the South zone.
In 2012, the Zona Sul supermarket chain, with 33 stores in Rio, sold an 11% greater than oil in 2011. In values, sales totaled about $ 12 million. This year, the South zone estimates Bill 15% more with the thread, above the projected increase in Network revenue, of 11.5%. Of the 80 labels sold in stores, about 60 cost above $ 20.
The key differentiator of a special olive oil is to low acidity, but the lack of consumer knowledge is still obstacle to increased consumption, say the importers. To circumvent the problem, the South zone has the special oils for tasting in the pizzerias from its stores.
"We do a job with oil for more than ten years," says Pietrangelo Leta, commercial Director of the Southern Zone. "It is a niche in which we work much like the beers. Our challenge is to grow this market with variety and higher added value. "
Other supermarket chains also have achieved good results in the segment. But the concussion of the sector in Europe should have impacts. So says the sales manager of Grupo Pão de Açúcar (GPA), José Izildo. He designs 10% advance to 15% in sales in 2013-high that could be higher if there were no crop failure.
Walmart provides 18% increase in sales of cheaper labels and 15% in the special. "There is still a great space to work in more traditional extra virgin category, up by price levels in Brazil at the beginning of the year. When the price is a little $ 12 the growth is not the same ", says the commercial Director Rodrigo Pothin.