SALALAH, MAY 7 –
Oman’s leading cooking oil producer and supplier, Omani Vegetable Oils and Derivatives (OVOD), is ready to meet the challenges of time in terms of demand and supply and quality control by adopting the best business practices.
In an interview with the Observer, PS Kumar, Chief Executive Officer (CEO) of the company, spoke about the challenges and opportunities of the sector and the company’s line of sustainability.
Commenting on the key focus of the company Kumar said, “Sensing the spurt in the demand for edible oils, the company has introduced several brands under popular names such as Al Safa, Salalah, Taibah, Sahi, Bahjah, Diyah, Sun Drops, Sunlife, Zain, Zain Gold and Noof — marketed both domestically and across the Middle East and North Africa (MENA) region.”
The management felt that this was one of the ways to get some market space and it also helped the company register big growth in terms of increasing its sales in the last seven years, he said.
He cited a report by Transparency Market Research, which suggests that the value of the cooking oil market in the GCC (Gulf Cooperation Council) including Qatar, which stood at over $988 million in 2015, is expected to grow at a compound annual growth (CAGR) of 6.6 per cent to reach $1.71 billion in 2024.
“Such robust future demand obviously bodes well for internationally thriving operations like OVOD, and accordingly we are investing to ramp up our capabilities.”
Sustainability is an important policy of the company. A volume-driven business company the OVOD finds shelf space becoming a costly affair. “To meet this we started private labelling for the edible oil products of many retail majors, hypermarkets and supermarkets in 2010. Today, we are the second largest private label of edible oil products in the GCC region with around 90 private labels.”
The company was formed ten years ago and today it has its presence in 20 countries across the MENA region. The company’s export volume is 75 per cent, which is increasing year on year basis.
Commenting on broad industry trends and developments taking place in the sector, Kumar said the prices of oilseeds and products were generally under pressure in the first half of November 2017 from improved weather conditions in Brazil, spill-over weakness from grains, increased selling in the futures and cash markets and rising stocks of vegetable oils.
“Surplus in world production of oilseeds is likely in 2018, resulting in a further increase in world stocks to 113.3 million tonnes, up 3 million tonnes from a year earlier. Vegetable oil production surplus of roughly 2.7 million tonnes is expected, resulting in sizeable recovery of stocks.”
Thus, according to Kumar, 2017/18 would be the fifth consecutive season of above-average growth in world soya meal output requiring prices to stay competitively low.
“The greatest uncertainty on the demand side is seen in Chinese purchases on the world market. Timing and magnitude of Chinese purchases will be important price-determining factors in the near to medium term,” he said.
Due to recovery in crude oil prices, Oman, according to Kumar, “is in a better economic position than 2016. Oman’s economic environment has improved significantly in the last two years which is evident from the muted market reaction to the recent sovereign credit rating downgrade. Some of the drivers of this change is cyclical (oil price recovery) and some structural/secular (government policy/fiscal reform and regulatory/tax changes).”