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"We wantto triple turnover from 10 to 30 mn euros"
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Monday, 05 December, 2016, 08 : 00 AM [IST]
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Harcha Bhaskar
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Borges India Pvt. Ltd is a commercial producer of products like olive oil, pasta, nuts, olives, sauces, andbalsamic cream. The products are prepared with quality ingredients creating healthy and delicious dishes. The company is being a catalyst in bringing Mediterranean food products, across relevant product categories in India. Rajneesh Bhasin, MD, Borges India, and president, Indian Olive Association, in an email interaction talks about olive oil market in India, the pricing policy and setback in an email interaction with Harcha Bhaskar.Excerpts:
Tell us about the company. What are the various products segments in your portfolio?
Borges India was set up as a 100% subsidiary under the Borges International Group headquartered in Spain which today has a turnover of about billion US dollars. Borges Group operates in over 100 countries spread across five continents. Started by the Pont family in 1896, the group enjoys a strong brand lineage. As the largest exporter of branded olive oil from Spain, it has distribution centres in the US, France, Russia, Brazil and Australia among others.
Borges India came into inception in the year 2009 and commenced commercial operation in 2010. In the six years of operation, Borges India has crossed 10 million euros in turnover and has turned profitable.
As a Mediterranean food specialist, the company’s range of successful products spans across product categories, which include olive oils, pastas, table olives, California range of nuts, seed oils, pasta sauces andpopcorns.
Where is the processing facility located for oil? What is the USP for Borges oil? Is there a new launch planned by the company?
All our products i.e., olive oils, seed oils, olives except pastas, pasta sauces and nuts are processed and packaged in Spain, while nuts are from California, our pastas and pasta sauces are processed and packaged in Italy.
Borges is a 100% subsidiary of the Borges International Group, which means that we manufacture, pack, distribute and market our products. Plus, with that comes the end-to- end involvement and stringent international quality standards being adhered to. This is an assurance for the consumers that they get the best quality product with international standards.
When we entered in India the only variant of olive oil which was popular amongst the Indians was Pomace. Basis our consumer insights we realised that the Indian consumer was in an outlook for olive oil which is not only healthy but also matches the taste & style of Indian cooking. That is when we launched our Extra Light Olive Oil, an olive oil which involved no chemical extraction and was ideal for all kinds of Indian cooking. Since then we have been known to be the pioneers of olive oil in India and till today command 80% share in the Extra Light category. Having seen the consumers moving from Pomace to Extra Light Olive Oil many of our counterparts have also launched Extra Light variant.
We have recently relaunched our range of Manzanilla Green Table olives in six exciting varieties with three of them being new – Lemon, Jalapeno, Pepper Stuffed Olives.
Earlier to this, we had introduced California Walnuts In shell with an innovative value add for the consumers in the form of a Nut Cracker key. In addition to this, we introduced California Almonds Roasted & Salted with Black Salt in our California Range of Nuts. With our California Range of Nuts hitting the stores, Borges is aiming to establish in the Nuts Category, as they are one of the only few brands with pan- India presence across MT chains with branded nuts to offer.
Howmuchismarketshareof the company in Edible Oil Consumption category? Do you cater to B2B clients?
We today command a 35% market share across modern trade chains and Borges is No. 1 olive oil brand in India and also, the first olive oil brand to have undertaken a 360° marketing campaign for olive oil focussed towards health and wellness.
Borges does cater to B2B clients. The Horeca space is more price-centric than quality- centric and is predominantly driven by Pomace which is the cheapest form of olive oil. The restaurant QSR bit is growing but unfortunately because the consumer do not get to touch or feel the product it only goes as the product that they consume. Then there is Extra Virgin, Pure, Extra Light. Most of the Horeca space is consuming the Pomace, which is not really growing. The real growth that you see despite the pedigree not growing is in the Extra Light space.
What are the health dominating properties of olive oil? Explain various grades of olive oil.
Olive oil, which is the main source of dietary fat in the Mediterranean diet, is associated with a low death rate from cardiovascular diseases as compared to other parts of the world. Olive oil which gained popularity for external usage purposes not only nourishes the body from outside but is loaded with essential components that are responsible for holistic body development. Olive oil is a boon for heart health as is rich in MUFA which are considered as the healthy dietary fat. Olive oil comes in various grades and each one of them has the goodness of olives stored in them. Mainly the grades comprise Extra Virgin, Refined and Pomace Olive Oil. The Extra Virgin Olive Oil which is the raw juice of the fruit is the richest variant of olive oil. The oil with its sharp aroma and pungent taste is the healthiest type of olive oil. The oil being extracted with the first pressing of olives preserves natural antioxidants and the "good" MUFA or monounsaturated fat that promotes healthy cholesterol levels. Another variant of olive oil which is known as Pure/Classic Olive Oil falls between the category of Extra Virgin and Extra Light Olive Oil. It has the same health benefits as the other variants of olive oil. But this type of olive oil does have a more neutral flavour so it's great for cooking and only a hint of olives can be felt when consumed. The Extra Light variant of olive oil is the one apt for Indian cooking. Indian cooking which involves a lot of deep frying, sautéing and tempering should adhere to Extra Light Olive Oil which is specially created keeping in mind the needs and methods of Indian way of cooking. The Extra Light Olive Oil has high smoking point, is apt for cooking methods like deep frying. It has no aroma and has got no pungent flavour of olives which further retains the dish in Indian character. The Extra Light version of olive oil without being heavy on the platter is still packed with all the goodness of the usual olive oil that can be consumed daily.
How is the B2B segment response to olive oil? Who are the other key players in the segment?
The B2B segment response to olive oil has been welcoming and we expect a substantial growth from it. Few years ago there were hardly any MNCs as competitors but today serious players like Leonardo, Figaro, Del Monte, Rafael Salgado have stepped up. Though Borges still commands 30-35% market share in (modern trade)and with the other competitors is helping grow the category.
How has the consumption of olive oil evolved over the years and how much is the current consumption? What does the future hold for the olive oil industry?
The overall olive oil imports in India today stand at 11,106.75 MT, a major percentage of which was Pomace Olive Oil around 55%. The trend this year has been further uplifting, the imports between January and June 2016 stood at 3,062 tonne which marked a growth of about 19% over last year. So, we foresee the olive oil category to see an upward graph with a growth rate of around 15-20% as against last year.
Our Extra Light Olive Oil, which we introduced in India six years back, is currently our highest selling olive oil variant owing to it being specially crafted and catering to Indian cooking. Also, the Extra Light variant has helped the category evolve and there is paradigm shift that can be noticed in the category with the consumers switching from Pomace to Extra Light olive oil. The olive oil category across the world is witnessing a healthy growth.
Though the olive oil category in India is still in a nascent stage, as the awareness about the category and the reach is limited but the future of the category is still bright. As Indians are increasingly getting exposed to the Western culture there is curiosity and willingness to try out and bring home diverse range of products from across the globe.
Indian edible oil industry is highly dominated by palm oil, in such a scenario how can olive oil gain trust of consumer according to you, what makes it different from other oil?
Product-wise olive oil is a far superior product as far as nutritional content is considered. There have been times when the nutritional benefits of olive oil have been compared to the mentioned oil. Many of those have come out in public through the means of TV advertisements, digital marketing mediums etc. That is when the Indian Olive Association with the help of ASCI has upheld such false comparisons and communications like we did with Saffola. Such false communications only mislead the consumers about olive oil and benefits.
Olive oil is the ‘Gold Standard’ when it comes to edible oils whether it comes to the composition or the nutritional benefits it offers. There is no means in which it can be compared to cooking oils mentioned above. Yes, price-wise it seems a bit expensive, but with only 1/3rd the amount of oil being used in a single go, olive oil is price just a notch higher than the normal oils.
What are other restraining factors of olive oil in India? How do you plan to sort it?
I think the trend is changing, though it will take a long time as we all know these are eating habits that change overtime. I think the trend is towards it becoming a household regular consumption item, so it’s a matter of time, so the last year or two we had a setback because of prices being abnormally high but otherwise the trend was extremely positive, from the first four years of our launch the category grew almost four times, so from 2-3,000 tonne when we met first time in 2010 to 2012-2013 the category has touched 12,000 tonne so in four years the category grew four times, it is also been aided by global campaign. We expect the prices to go down by atleast 15-20% this year, while the conversations are still on the import duty reduction, and with the price reduction, I am sure the category will be able to revive itself once again.
How have other Asian countries adapted to olive oil?
Countries like China today have a 45 to 50,000 tonne olive oil category while even the likes of Brazil have approximately 30k tonneolive oil category. The category has seen exponential growth over these years in most of the nations. With the edible category of around 11-12 million tonne in India, there is huge opportunity for growth for olive oil in our nation too. So, I am certain in the four to five years to come, even India will have an olive category of around 30 to 35,000 tonne.
How much areolive oil imports?Which is the country that we import from and how much is the value and volume?
The maximum import is done from Spain though Italy and Greece are others that follow.
Overall, the annual olive oil import was about 11,106.75 tonne in the year 2015-16 which witnessed a decline of 12% over 12,591.28 tonne in the year 2014-15, however, there has been an upward trend that has been seen since Q2 last year in overall olive oil imports in India. Last quarter (Q1 of 2016-17), recorded the imports of 3062.34 tonne, which is much 19% higher than Q1 of last year, which stood at 2,583.01 tonne.
The numbers have been encouraging and we hope to similar growth rates in the following months.
What are the various factors that affect the pricing of imports? How the fluctuation in rupee and euro affects the pricing and what is the situation this year?
Firstly the olive oil cross in the last year has been very suboptimal and adding on that the INR has constantly been depreciating vs the euro and has depreciated over 15 – 20% in the last two years. The compounded impact of the above factors has been that price to consumer for olive oil has practically doubled.
In addition to both of these, the frequent import duty hike has led the category take a hit. With four import duty hikes in just two years, on both Extra Virgin and Refined variants of olive oil, the import duties are at a staggering value of 12.5% and 20% respectively. The impact of the same has been consumer price rise which is an issue of concern for all the stakeholders in the olive oil industry, from the consumers to the retailers.
What is your India targeted turnover for the next 4-5 years?
We are already a 10 million euros brand in India and and we aim to triple turnover from 10 mn euros to about 30 mn euros in the coming 4-5 years. We are already in the way of diversifying our business into many more health offerings like California range of nuts, table olives among many others that would get us the much desired recognition of a responsible, trusted health foods brand from the Mediterranean region.
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