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Cooking Oil Price Strategy Analysis

By Chris Elliott

Asda announced on 19 May that it’s like-for-like first quarter sales declined by 3.9 percent compared to the same period last year. The latest figures from Kantar Worldpanel show that Morrisons, Sainsbury’s and Tesco have also all seen drops in sales in the first quarter of 2015 compared to last year.

Asda CEO Andy Clarke described this year as the “most challenging yet” for the big four supermarkets and highlighted that poor performance was predominantly due to the ongoing “price wars”.

One category that has been particularly affected by the price wars is Cooking Oils.

According to The Grocer’s recently published Oils category report, the value of cooking oil sales have fallen 2.8 percent over the past year. However, the volume of cooking oils purchased has risen 2.5 percent in the same time period. The drop in value of the category can be attributed to the cost cutting associated with the highly competitive pricing strategies in the marketplace.

Price of standard cooking oils

Brand View has reviewed the average price per litre of standard cooking oils in Asda, Morrisons, Sainsbury’s and Tesco from 20 May 2014 to 20 May 2015.

The results show that all five standard oil types have dropped in price since last year.

Extra virgin olive oil saw the greatest drop in price, with the average price per litre falling by 14.2 percent. This is predominantly due to all four retailers promoting these products, however the delisting of some premium extra virgin olive oils has also contributed to this reduction.

Standard olive oil saw the smallest reduction in price at 3.9 percent. While standard olive oil products were heavily promoted, the introduction of branded olive oils, from manufacturers such as Filippo Berio, resulted in this smaller reduction in price.

price cooking oil

Product listings of standard oils

The total amount of extra virgin oIive oil products was reduced from 129 products listed on 20 May 2014 to 107 on 20 May 2015.

The number of standard olive oil products also decreased – down from 73 to 68. Some 14 standard olive oil products were delisted during the review period but nine products were added, all but one of which were branded.

There were a consistent number of sunflower and vegetable oil products listed throughout the year at an average of 34 and 33 respectively. The number of rapeseed oil products increased towards the end of the year, however Asda and Tesco began to delist some products in 2015.

product listings oil

An increasing number of shoppers are growing concerned with the calorie content and health implications of cooking with standard oils and are looking to healthier speciality oils as an alternative. Retailers and manufacturers are catering for this demand which is helping to soften the effects of the downward pressure on pricing of standard cooking oils.

Growth of speciality oils category

The number of speciality oils listed has increased by 32 percent in the last year, having grown from 50 products on 20 May 2014 to 66 on 20 May 2015. The majority of these additions occurred before September 2014; Asda added a number of lines from brands such as KTC.

Coconut oil is the fastest growing speciality oil with 11 products listed on 20 May 2015, up from four on 20 May 2014. This increase in products is to meet the growing demand from shoppers; coconut oil has been heavily promoted in the media as a multipurpose oil which can be used both as a healthy cooking alternative and for health and beauty purposes.

specialty oil listings

The number of palm oil lines has decreased greatly, presumably as a response to increasing publicity about the sustainability of palm oil. A number of manufacturers, including Kellogg’s and Unilever, have made commitments to use only sustainably sourced palm oil. As the number of sustainable palm oil suppliers grows shoppers could see more speciality palm oils listed in the big four supermarkets.

Most listed specialty oils

On 20 May 2015 we see that coconut and sesame oil are the most listed oils ahead of groundnut and mustard oil. Rice bran and grapeseed oils followed with five lines listed across the four retailers.

Nut based oils are relatively new additions. There are three listings for both almond and walnut oils, as well as one listing each for hazelnut and peanut oils (included in the Other category).

most listed specialty oils

Flavoured and spray oils

Retailers and manufacturers are also looking to flavoured and spray oils to boost spending in the category. Spray oils have been heavily advertised as a lower calorie alternative to standard oils.

The number of flavoured oils listed has decreased by almost 40 percent since 20 May 2014. All of the delists come from Asda and Tesco; the large decrease in the number of listings suggests both retailers over-estimated the demand for flavoured oils.

As expected spray oil listings have increased since 20 May 2014, rising from 27 products listed last year to 40 on 20 May 2015, a near 50 percent increase. It is likely retailers are increasing lines to meet the demand of the growing number of health conscious shoppers.

flavoured oil listings
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