The stronghold of Marico's premium brand, Saffola, in heart-healthy edible oils, has been challenged

by Adani Wilmar's rice bran oil brand, Fortune. The ensuing fight between the Mumbai-based, Harsh
Mariwala-promoted company and the Ahmedabad-based challenger, promoted by the billionaire,
Gautam Adani, seems far from over.

Adani Wilmar launched its unblended Fortune Rice Bran Health (Fortune) in November, last year.
Taking the competition head-on, it released an ad that compared Fortune with Saffola Gold and
Agro Tech Foods' Sundrop Heart. Fortune not only compared their content but also their prices.
Now, Angshu Mallick, chief operating officer at Adani Wilmar, claims that Saffola Gold has, in fact,
altered its original blend of 70 per cent rice bran oil and 30 per cent safflower oil to 80 per cent rice
bran oil and 20 per cent safflower oil (not to be confused with sunflower oil).

Saffola had launched its Gold variant in 2004, blending rice bran oil with its mainstay, safflower or
kardi oil, to price it lower than its flagship variant of Saffola (only safflower oil), but above its other
variants (safflower oil blended with corn oil and with soyabean oil). While at launch, Marico had
claimed the variant was ideal to tend to the consumer's heart, there is no confirmation from the
company on whether it has changed the blend and how it might stand to benefit consumers' health.
"We have no dispute with Marico nor with Saffola," says Mallick but he informs that Saffola has lost
the goodness by changing the original blend. A Marico spokesperson says, "We cannot comment as
the matter is sub judice". Agro Tech Foods did not respond to an email sent to solicit their view on
the issue.

The brand war came to the fore when Marico flagged off Adani Wilmar's ad, claiming its Fortune
brand of rice bran oil was the healthiest as it contained the highest level of Oryzanol, with the
Advertising Standard Council of India (ASCI). Adani Wilmar also claimed that the National Institution
of Hyderabad said that it was the world's healthiest oil when it came to cholesterol-reducing
properties.

ASCI advised Adani Wilmar against claiming Fortune as the 'healthiest oil' but did not stop it from
claiming its 100 per cent unblended oil was the most suited to bring down cholesterol. Rice bran oil
contains the nutrient Oryzanol, which is known for its cholesterol-lowering ability. With its Gold
variant, Saffola blended rice bran oil with safflower oil, which is shown to have the highest levels of
linoleic acid, an unsaturated omega-6 fatty acid that reduces cholesterol levels too.

Marico also went to the Delhi High Court to protest Fortune's claims. Eventually on the 29th of April,
the division bench of the Delhi High Court asked Marico to withdraw its appeal filed against the
order already passed by a single judge of the court. The single judge order had rejected its plea to
restrain Adani Wilmar from carrying on with its ad campaign for its rice bran oil.

The division bench took notice of what the judge had found - Marico had neither disputed the
cholesterol-reducing abilities of Oryzanol nor the levels of Oryzanol present in Saffola Gold and
Fortune (as claimed in the ad on Adani Wilmar's presumption of an 80:20 blend ratio). The court
also observed that it could only be determined after a trial and the appellate court found no reason
to interfere with a full trial on this issue.

Marico claims on its website that studies have shown that the right combination of safflower and rice
bran oil is more effective in reducing cholesterol than each of these oils by itself. But the company
has not mentioned what is the optimal blend, and if it has been changed over the years. In an
earlier interview, following the order of the Delhi High Court, Saugata Gupta, chief executive officer,
Marico, had said, "There is enough regulatory mechanism in India to ensure that people do not
make false claims."

As per market estimates, India consumes no less than 17.5 million metric tonne of edible oil,
annually, which is worth Rs 75,000 crore. Out of this, about 40 per cent of volumes come from
packaged oil brands, while another 40 per cent is sold loose, in the unbranded market. The
remaining 20 per cent is used in the food services industry.

In packaged edible oil brands, palmolein and vansapati comprise the lower-end of the market. The
mid-premium segment comprises oils from sunflower, groundnut, mustard and soyabean. The
super-premium segment consists of still niche oils from olive, rice bran, safflower and corn.
Together, these make up over 46 per cent in value share, valued at Rs 35,000-37,500 crore.

Adani Wilmar has brands ranging from Raag Gold (palmolein), Raag (vanaspati), King (soyabean),
Bullet (mustard) to Fortune (rice bran). Not being listed, its financials are not available.

For Marico's Saffola, the issue is ill-timed. The company reported a decline in its volume growth,
down to 7 per cent in 2012-13. It attributed it to slowing consumer spends on premium packaged
foods, which are discretionary in nature. The inflation in prices of safflower and rice bran oils, which
were higher than that of sunflower oil further skewed prices in favour of sunflower-oil-based brands,
such as Agro Tech Foods' Sundrop (which grew faster in the last few quarters). Marico reported a Rs
4,596-crore turnover in 2012-13, earning a large part of it from its three brands of Parachute and
Nihar (in coconut oil) and Saffola (refined edible oil). However, the company does not provide a
break-up of its revenue from different product segments.

"The price-point of Fortune Rice Bran Health is Rs 115, lower than most of Saffola's variants (priced
between Rs 140-155), except for Saffola Active (at Rs 115). We see this as a potential negative for
Marico and Agro Tech Foods as it could affect their volumes and increase their ad spends," says
Abneesh Roy, analyst at Edelweiss Securities. "This could be a new point of worry for Marico's
Saffola, as it is already facing a slowdown," he cautions.

Saffola will have to aggressively protect its market share with higher ad spends, feel experts. To
correct the slide in volume growth, Marico cut prices recently. Gupta had said in an earlier interview,
"Our price premium became a little uncomfortable for consumers. We have done a price correction.
We believe that we will get back to double-digit growth this year." Being the incumbent in premium
branded edible oils, the onus is on Saffola to guard against Fortune's aggressive branding.