Curtis CordThe health benefits of olive oil have been a driving force in its rising popularity throughout the world, including the one and a quarter billion people who live in India. Heart disease accounts for a staggering 40% of all deaths among Indians, an unfortunate result of genetic predisposition, cultural influences, and many believe the unhealthy seed oils used in the high-heat applications of traditional Indian cuisine. Indians could use more olive oil in their diets, and Borges, a 120-year-old Spanish company that is one of the world’s largest producers, would love to provide it for them. Here to discuss that is Rajneesh Bhasin who is the managing director of Borges India, and president of the Indian Olive Association.
Rajneesh, welcome.
Rajneesh BhasinThank you Curtis.
Curtis CordWhen did you get started in the olive oil business Rajneesh?
Rajneesh BhasinWe started in India the subsidiary in 2009, and as we speak in 2015, we are six years old, or six years young, as you can call them. That’s how long we have been in India in the olive oil business.
Curtis CordOnce in a while I dig into the readership statistics of Olive Oil Times, and what I have found is that 10% of our readers are in the major cities of India, and they are researching the health benefits of olive oil. That probably doesn’t surprise you does it?
Rajneesh BhasinNo it does not, because in India, while we are a country with over 1 billion people, a large part of the urban consumers, and especially consumers who are facing these health hazards like cardiovascular diseases, diabetes, cholesterol, many, many other health problems, they are predominantly the people who live in the urban conglomerates, as we call them, which are about 55, one-million-plus population towns, or if you have to narrow them down even further, they live in the top 7 or 8 metropolitan cities which are namely Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Pune, Calcutta; these are the 7 or 8 big cities where people like us live a really really hectic lifestyle.
We start work early in the morning at 7, 8, and by the time we get back home, it’s 7, 8 in the evening, so most of us live a fairly sedentary lifestyle, spending most of the days staring at a laptop or at a computer, and there is very little time for physical exercise. That’s where a lot of these health concerns are growing, and they are coming in fairly young, so a lot of people in their early 30’s, late 30’s, early 40’s are beginning to get these problems because of the lifestyle that we are living in.
That’s where the oil olive culture is really catching up, because a lot of these people have traveled abroad, they’ve gone to U.S., Europe, traveled to Spain, Greece, and they’ve experienced olive oil and they know the health benefits of olive oil are immense. A lot of these people, even when they started going to foreign countries like Spain, Italy, France, they used to get these oils back for their parents who might be, a couple of decades back, would face or would be having a cardiovascular problem, diabetes or cholesterol, kids used to travel abroad and get back for their parents, to say, “Hey look, why don’t you cook your food in this oil, it’s very healthy, and it’ll help you in some of those health hazards.”
Now since a lot of us ourselves are plagued with these cardiovascular and other health disorders, it’s the category that’s really really catching up in the urban towns, because what a lot of these people are beginning to realize is, “If I cannot spend a good one, one and a half, two hours in a workout on a daily basis, at least one thing that I can change is change my oil and move to a healthier oil.” Especially the people in higher socioeconomic classes like SCC, A1, A2, affordability is not an issue. The amount that it costs to get a 5-liter bottle of olive oil is the amount they spend on a weekend just going to a mall or watching a movie, and stuff like that.
I don’t think money is a concern. One of the big concerns for them definitely is health, and that’s where olive oil culture is really spreading like wildfire as we speak.
Curtis CordUntil recently, most of the olive oil imported into India was used in cosmetics, now there is an emergence, as you said, of the product in the edible oil market, but it is slow going. Why is the average consumption only on the order of one-half of a teaspoon per year, or just one-tenth of 1% of the cooking oil market?
Rajneesh BhasinYou are right, while the category of olive oil has been in India for more than 2, 3 decades, all of us as kids have grown up seeing a bottle of Figaro in our house, and that’s typically been used for massage or when you have a … You break your knee or something, you are recovering, you are advised by the doctor, “Why don’t you apply some olive oil when your joint is healing,” and stuff like that. Until about a decade back, most of us only knew olive oil is good for massage or external applications because of vitamin E and other health benefits of olive oil which are more external to the body than internal.
Then suddenly companies like Borges and a couple of other companies got serious about the market like India, and we started creating a culture of really talking about the health benefits of olive oil and how it’s good for internal consumption. Whether it’s cooking Indian food or marinating food in olive oil, that we started cultivating a habit among consumers that it’s good for health.
Before Borges came in, and most of the Indian consumers used to feel that olive oil is good for health, good for eating, but it’s typically for the Mediterranean dishes which is Italian, pastas, or pizzas, and stuff like that. It’s not for Indian cooking. The other thing was that most of us are not great at cooking Mediterranean food, so most Indian housewives, or traditional Indian ladies used to find it convenient to cook Indian food because that’s what they’ve grown up doing, but the Mediterranean diet was something a little alien to them, and most of us were comfortable ordering a pizza or a pasta rather than cooking it at home because the lady of the house would have this concern that I might get it wrong, or I would overcook it or under cook it, and stuff like that.
That’s where the culture has really taken a lot of time to catch up on, but as soon as companies like Borges came into India, we started creating a culture where we talked to consumers. We understood what the need is, and based on the demand for olive oil for Indian cooking, we launched an extra-light olive oil which was predominantly refined and a little bit of extra virgin in it. We started advertising that product and telling consumers that, “Look, here’s the product, here’s an olive oil which is good for Indian cooking.” That’s where the culture began catching up really fast.
Curtis CordRight. I have heard, I think it was VN Dalmia who said many traditional Indian dishes are prepared by adding cooking oil to a very hot pan, and for that reason, olive oil is seen by many Indian households as an inappropriate choice. Is that how it is?
Rajneesh BhasinYes. Traditional Indian households don’t just pour the food that they cook and toss it in the pan and stuff like that. That’s beginning to happen now more in urban, nuclear families, because we don’t want to cook too much food in oil, but traditionally, he’s right. What use to happen is we used to eat food, we just fried. A lot of frying use to happen, and that’s a big impediment to consuming olive oil because the seed oils which are used to cook food in, used to be smoking practically, and used to be really hot at 250 degrees plus, I would say. At those temperatures, olive oil will typically burn, so it’s not recommended to do that. That’s definitely a challenge.
What is progressively happening in India is a lot of eating habits of the Indian consumers are changing. Now we live in metropolitan cities with more and more families living as nuclear families rather than joint families, so those kinds of lavish lounging and having two, three hour meals is completely out of the question; that does not happen anymore. That’s where, because of the change in cooking habits of consumers, olive oil is really beginning to catch up, so people are beginning to cook differently, and hence, olive oil is finding a place in the kitchen, whether it’s a primary or a secondary, or tertiary cooking oil.
Curtis CordPeople are beginning to cook differently?
Rajneesh BhasinPeople are beginning to cook differently. They have experienced olive oil and products like this because a lot of people today, because of the IT boom in India, a lot of people travel internationally, so a lot of our people who used to live in small towns are looking for better carrier opportunities and moving to big towns like Delhi and Mumbai, Bangalore, Chennai, as I told you. These guys are getting opportunities because they work in IT companies, they are beginning to get opportunities to do client visits and travel abroad quite often, and when they are traveling abroad very often, they experience categories like olive oil and they’re beginning to feel, “Wow, this could be healthy, and this is good.” They come back with these … as change agents and hence the change in character that is beginning to happen. We’ve seen it happen over the last decade, a couple of decades.
It’s very apparent because you see a lot healthy food categories really beginning to shine which practically were nonexistent a couple of decades back. I can give you multiple examples like Kellogg’s is beginning to do very well, and that’s not a breakfast habit that we grew up, no. Similarly, there’s Quaker Oats that’s caught up, and there are a lot of oats that people are bringing to consume; again, that’s not a breakfast habit that we’ve grown up on.
These are changes that are very, very visible, and I think olive oil is a similar change that is there to stay.
Curtis CordOne of your strategies at Borges has been to develop olive oil products such as your extra-light olive oil that can stand higher heat and extend many of the health benefits olive oil affords, and then to educate consumers on its use, is that right?
Rajneesh BhasinYes, absolutely. When we did consumer research, when we came into India and we were putting together a global market strategy, there were two things that the Indian CEO Mom as we call them, told us, okay? She said, one, she thought olive oil was an alien oil and it was typically for Mediterranean dishes as I told you sometime back. The second thing she told us was that, she had read, or she had experienced that olive oil had a flavor to it, a fruity flavor, and they felt that it would interfere with the food that they cook because Indian dishes are typically cooked in refined oil or any of these products which have no taste, so they are tasteless, odorless oils.
There was a fear in the Indian CEO Mom who’s the boss of the kitchen, that there might be an issue with the taste and flavor of the oil. When we presented to them an extra light, we told them that, one, it had no taste or flavor, and the second, it had all the health benefits of an olive oil because it was olive oil, it’s refined, but it’s olive oil at the same time. This is something that really worked beautifully to the consumers, and that’s where they started picking it off the shelves and that’s when the category began to boom four years back.
In the last five years, the category is growing four-fold as we speak, yeah.
Curtis CordHow much is being invested in promotional campaigns?
Rajneesh BhasinA lot, as we speak. In the last three, four years, there are a lot of serious players that are there in the market now, so there is Cargill which owns the Leonardo brand now; that’s one very serious player in the market. Second is a company called Del Monte, though internationally they are known for fruit juices and fruit slices, but in India, they have a partner with whom they’ve created a whole Mediterranean range and they seem very serious. There are quite a few others who are entering the market and seem to be serious about the market.
The good thing is a lot of serious players are there in the market today. All of them are going for a wide audience of consumers. All of them are essentially doing a lot of sampling in modern-trade stores. So modern trade is where the premium or the higher SCC consumers shop in India today. They are able to experience the product through samplings that are going on, and every leading brand, every serious player in the market is doing it.
I think all these things are really good because once consumers experience the product, that’s when they will begin to get hooked onto the category, and that’s where there are huge opportunities for the category to grow in, meaning short-term and long.
Curtis CordYeah. Speaking of promotional campaigns, I know there has been some hand slapping in the past with questionable claims that were made on olive oil advertisements. I’m talking about Leonardo’s claim a few years back on the bottle of its olive pomace oil that said it, quote: Helps fight cholesterol and heart disease, lowers blood pressure, controls and prevents diabetes and fights cancer. More recently, you went after Saffola Total, which is a rice brand and soybean oil mix for saying in it’s advertisements, that it was healthier than olive oil, and your complaint was upheld by the Advertising Standards Council of India. Is there a war of misinformation going on there? It wouldn’t be the only place people are being utterly confused by big companies spreading hyperbole about competing cooking oils.
Rajneesh BhasinYeah, so there have been concerns on misleading the consumer. As I took over from Mr. Dalmia, became the president of the Indian Olive Association, we put together a charter where one of the key things that we want to do is to stop misleading the consumers. We’ve taken it up very strongly that we will not allow any of our members or any of our competitors, whether in the category or outside the category to mislead the consumer. We are taking it up very strongly. We’re working on a charter which is very clearly laying down that we stand for right communication, okay? What we need to do, and this is a work in progress as we speak, but very soon we shall have a first draft out where we want to put together a charter, a set of deliverables on, if it’s extra virgin, it’s good for this, and these are the health benefits, and these are the kinds of dishes you can use it for. Similarly, this is refined, refined extra light, this is the health benefit, and this is what you could use it for. These are definitive subcategories and their user locations and their health benefit.
We want to agree on it within the association, because we are trying to get in both olive oil importers and retailers, and any other stakeholders, whether it’s importing companies, et cetera, countries, et cetera. We are trying to get everybody into the association and agree on a baseline denominator beyond which is what we should all then follow as a prescribed set of things that we can say about olive oil.
This will help all the olive oil players have one standard communication around the health benefits of the various subcategories. I think it will iron out a lot of issues because we are facing a lot of challenges of our miscommunication happening across the branch, okay? That’s one part of the issue.
The second part of the issue, as you rightly said, is happening with brands like Saffola, which is one of the leading blended sunflower oils that sells in India, claiming that it’s two times better than olive oil and stuff like that on antioxidants, et cetera. We’ve taken it up very strongly with them. We’ve took it up very strong a year or so back when they claimed this up front in the advertising, and we complained the Advertising Association in India, and they upheld our claim, and they pushed Saffola to withdraw. It happened again very recently, and this time we are going to debate on this very soon in the association. We are looking at a very aggressive PR campaign where we’ll really nail them down.
We, again, complained to the Advertising Association and they upheld the claim of Saffola again, but I think it’s too little too late, and this time we in the association would want to actually take over the task of taking these guys … Taking the bull by the horn and telling them that this is not done. We have a whole set of activities which we have planned in the next few months around this where we want to send a message out, not to Saffola, but to any other brand or any other edible oil that wants to claim that they are better than olive oil, it better be something that can be substantiated with data, otherwise they have no right to go around and claim this and confuse the Indian consumer.
Curtis CordSure.
Rajneesh BhasinHaving said all of this, there’s a silver lining in this whole episode which is, at least we know that olive oil is the gold standard in edible oil, and that’s proven with a lot of serious, large-category players, in the edible oil space wanting to claim as good as olive oil, so you are the gold standard. In that sense, there is a benchmark that is there that’s set.
Curtis CordLet’s talk for a minute then about olive pomace oil, the lowest-priced oil, made by chemically extracting oil from the leftover pits and pulp which, in most of the world, is relegated to food service applications; you rarely see it on the store shelves. VN Dalmia, the founding president of the India Olive Association, and your predecessor, viewed pomace oil as the lowest hurdle for price-sensitive households to adopt a mono-unsaturated fat. I don’t see your advertisements at Borges touting pomace oil, and on your website, I couldn’t find it listed. Yet on the Leonardo site, it’s the featured product placed above all others. Is that a fundamental difference in strategies? It looks like you are ceding the pomace oil market to Leonardo uncontested, is that how it is?
Rajneesh BhasinYeah, so in the association we have debated this quite often that, should we allow sale of pomace olive oil in India? We know internationally in a lot of European countries like Italy, Spain, et cetera, it’s only used for industrial application, for [inaudible 00:20:06] as an edible oil. Having said that, a lot of companies have different strategies. We respect each other on what we are doing, but at the same time, in Borges, it’s not part of our strategy. We are very clear that we don’t believe fundamentally that we want to give consumers an opportunity to consume olive oil by getting them started with something like pomace because it’s, as you said, it’s chemically extracted, and might not be the best experience from a consumer standpoint for him or her to come back to this oil.
We want them to get a credible experience of olive oil when they taste olive oil, hence our strategy hovers around refined and extra virgin, and that’s the culture that we want to spread.
Having said that, different companies have different strategies, so while our strategy where we want to create an authentic olive oil experience with extra light, moving to pure, maybe graduate to extra virgin. Some of our competitors believe that … At least believe till a couple of years back by pricing pomace just maybe at a 20% premium over the blending sunflower oils like Saffola, Sundrop, they felt that it might be a good way to upgrade the premium seed oil consumers to pomace and get them started in olive oil and then maybe they will go up the value chain and graduate to maybe a refined or an extra virgin, as the case may be.
Curtis CordThe former general manager of the Leonardo brand, Himani Dalmia, said one of the biggest challenges in the market was, and I’m quoting here: “A tribe of food purists who do not understand the concept of olive oil for Indian cooking. In their zeal to promote only extra virgin olive oil, they fail to understand Indian realities.” Do you think there is a tribe of olive-oil snobs that are ruining the fun for pomace oil marketers there?
Rajneesh BhasinNo, I don’t subscribe to that philosophy, and what we have been able to do in India in the last five years is a testimony of the fact that if you stand for the right communication, if you tell the right things to the consumer, we are talking to a very discerning set of consumers. We are talking to consumers who are on the Net, on their phones; they have extremely high information sensitivity because they are very IT savvy. They are able to Google whatever they want to try. They have traveled across the globe. We are not talking to the [SCCBC 00:22:50] or the lower strata of society who could be lured into a story which might not be credible in the long term.
There’s data to show it today that the numbers, as the category has grown four fold, the pomace oil consumption in India has not grown four fold. What has really grown, or what is driving the category in India today is the refined olive oil, and within refined, it’s the extra light that’s really defining the category today. As we speak, when we started four years back, we are the ones who created the subcategory extra light, but as we speak today, even Leonardo has been forced to launch an extra light a couple of months back, or less than a month back. It talks volumes about the fact that there’s a lot of merit in what we have been doing and reinforces what I said.
Curtis CordLast year, the Leonardo brand was acquired by Cargill, bringing the muscle of a 120 billion dollar multinational to the local olive oil street fight in India. How has that changed the competitive landscape for Borges and others?
Rajneesh BhasinTill now, in the last five years, the entire category development task in terms of educating the consumers on health benefits of olive oil, et cetera, et cetera, was completely on us, on Borges, because we are the ones who started television advertising, we had a celebrity chef, who was endorsing our brand, and we started creating an olive oil culture in India which is what caused a huge ripple in the market, and consumers started a lot of fence sitters on the category of … The olive oil category started jumping into the category.
Curtis CordOkay.
Rajneesh BhasinWhat has happened now is only going to help the category. I strongly believe there’s enough room for all of us to grow the category because, as we speak, the category is just 12,000 tons, and India consumes at least 15 to 18 million tons of edible oil. There’s enough room the grow the category exponentially and I think if all of us start working on building the category, creating consumer awareness around olive oil and the health benefits, the category will grow many fold in years to come. It’s going to help at the end of the day.
Curtis CordNow the olive oil quality standards in place since 2013 in India closely resemble those of the International Olive Council but with some components missing that the IOA urged the Food Safety and Standards Authority to consider adding. What happened with that?
Rajneesh BhasinAs we speak, our standards are, I think they are completely in line with Codex. I don’t think there are any significant gaps between Codex standard and olive oil standards in India. We’ve been, Mr. Dalmia and I, have worked on this with the Food Safety Authority in India over the last couple of years. Today the standards in India are very close to the Codex standard, so we’ve been able to work with them and convince them to adopt Codex, and we are proud to say that, today the Indian standard are exactly in line with Codex, so I don’t think there are many gaps there.
Curtis CordHow much enforcement is there of the standards? Do you hear about products being tested off the shelves? Or fines levied against the producers and marketers?
Rajneesh BhasinYeah, so in India our regulations are pretty strong. Also what happens is, though a lot of small-time importers complain, but I think it’s a strength. Every consignment of oil that comes in olive oil that comes and gets sampled and tested and tested in all the 11 parameters before the shipment gets cleared. Most product that is coming into India prepacked, and most of it is coming prepacked from Italy or Spain, or a lot of other countries, is tested at the point of entry, okay? All those products are fairly safe and pass the standards as they enter the country. There could be a question mark on some of the blends that are done in India, so I’m not commenting on that, but I think the entry gate has a strong check which ensures that suboptimal or poor quality of products don’t enter the country.
Curtis CordWe’ve been watching the progress over the past years of the olive cultivation experiment in the Indian state of Rajasthan, it is now graduated beyond an experiment as they bottle the first olive oils made in India, and they are planning to expand cultivation far beyond the existing 240 hectares of government lands out to more than 5,000 hectares on private farm lands; that’s about 13,000 acres providing farmers with free plants and technical support. Will India one day become a major olive oil producer?
Rajneesh BhasinNot so. I don’t think is a step in the right direction. We have also been actively engaging with the Rajasthan Olive Cultivation Limited which is a company which is supported by the Rajesthan government, and they are driving this project. We will be happy to sell locally produced olive oil in times to come, but I think it’s far from where it should be, or where it could be taken, because the initial crop that they got from the 200 hectares is about 100 tons of olives and about, whether it was 8 to 10% yield is about only 8 to 10 tons of olive oil. Even if you go with the 5,000 hectares project, which is what has been kicked off with the Rajesthan government allowing it very recently, I think the output will only grow 25 to 30 times from a 10 tons, which means only about 300 tons, and it’s still a very small minuscule percentage of what olive oil sells in India today.
If these numbers happen in five years from now, or 10 years from now, the olive oil category would have moved from a 12,000 tons, where it is today, to about 20 or 25,000 tons. I am sure the local oil will be good because it’ll, in the long run, or medium term, give better prices to consumers, because one of our biggest challenges in India is because we import, we pay a lot of import duty on the product, and by the time the product reaches the shelves, it is at least two to three times the price on the shelf in Europe, or Italy or Spain.
From a consumer standpoint, if it becomes more affordable, it’s really going to be big news, or good news, for the consumer, because more and more consumers will be able to start adopting it as a daily cooking oil, and it can really grow many fold. One of the big challenges we face today is the import duty and FOREX fluctuations which is really making the prices of olive oil really unaffordable to the Indian consumer. The premium consumers who are priced [in elastic 00:29:59], they buy it, but to a lot of mass consumers, it is still beyond their reach.
I am sure a local project, when it scales up, and I am really hoping that after the Rajasthan experience, many other states should take this up and start supporting it, and very recently there’s been a 100% foreign diet investment allowed in olive plantation; that’s an initiative that has been kicked off by the current government. I think all of these things are steps in the right direction. India, if in times to come, and I’m really hoping it happens within the next decade or so, if we have more than 15, 20,000 hectares of land cultivated across various states producing olive oil, I’m sure we’ll start producing, three, four, 5,000 tons of local olive oil which will help hedge the prices that we get in imports, and maybe will put some pressure on exporting countries to bring their prices down to be more competitive in the Indian market.
All of these are steps that I think should help grow olive culture in India, and I’m sure it will help in the long term.
Curtis CordRight. You mentioned tariffs, and another challenge importers and marketers faced was the duty on extra virgin olive oils brought into India which the India Olive Association lobbied to have adjusted down to, I believe, under 2%.
Rajneesh BhasinYou are correct. That’s where the real boom happened about a decade back is when the duties with active lobbying by the India Olive Association, and thanks to government accepting our proposal, the import duty on crude olive oil was brought down to zero from 45%, and the unrefined duty was brought down to 7.5%. There are very very good times when the duties were zero and 7.5% respectively. Also what happened was internationally, we had some very good crops which kept the olive oil prices very very competitive in the Indian market.
That was really helpful, and that’s the time when olive oil saw, as a category, saw a huge boom in the last four, five, seven years. Very recently, the current government is actively pursuing defensive strategy and is not intended towards product categories like olive oil. It is more to protect the Indian farmers who are into seed oil production, is where that raising the import values on crude and refined imported oils. In this crossfire which is really targeted around seed oils coming from abroad, because we are in the same chapter heading on the same goal, import duties on olive oil, as we speak, for extra virgin has gone up from zero to 12.5% over the last two years, and for refined it’s moved from 7.5 to 20% as we speak.
These are the challenges that we face at one level, and the other part is the Indian Rupee is not doing as well as we would want it to do, though we are really hoping with the current regime really pushing exports and expecting the rupee to be stable, but the rupee as we speak as touched 65, 66 levels versus the dollar and in [inaudible 00:33:39] 73, 74 versus euro, which used to be 62, 63 versus euro almost a couple of years back.
These two problems together are having a compounding effect on the landed price of olive oil, and the last couple of years, I am sure you know, the crop in Spain and Italy has not been too great. With these three problems, what has happened is the price to consumer for a bottle of olive oil is practically double in the last two years, and that’s where we are not seeing huge growth in the category. For example, the category has been practically flat the last two years at around 12,000 tons, which is really because our consumer research tells us that the people who have adopted the category, that adopted the product category which is olive oil are sticking to the category because they have experienced the category and they know the health benefits.
A lot of fence sitters who would have loved to jump into the category because of the prices jumping significantly are tending to stay away from the category and are not jumping in. That’s something we are missing out on, but I am really hoping that the trends for the current crops seem to be really encouraging, and I’m really hoping that in the next few months, the olive oil prices come down significantly, and most of us in the Olive Association believe that we will want to pass these benefits to the Indian consumer, giving them more offers or bringing the price to consumer down at the shelves so that more people begin to pick the product and the category sees another round of boom.
Curtis CordRajneesh Bhasin is the managing director of Borges India, and the president of the India Olive Association. Thank you for joining us today. It’s been very interesting, and I wish you continued success in your campaign.
Rajneesh BhasinThank you Curtis, and it was very nice speaking to you too.
