Vegetable Fats and Oils Category Overview
The vegetable fats and oils category is anticipated to grow at a CAGR of 3.8% from 2023 to 2030. The rising consumer awareness about health and wellness and the adoption of healthier dietary habits are driving the demand for vegetable oils. Consumers prefer vegetable oils as a healthier alternative to traditional cooking oils. This is due to their higher content of unsaturated fats and less content of saturated fats. Additionally, the rising usage of natural ingredients in personal care and food products is fueling the demand for vegetable oils. Oils such as avocado, coconut, olive, and palm are sustainable as compared to synthetic oils and animal-based oils. The rising number of vegetarian and vegan consumers is also driving the demand for plant-derived oils.
Rising demand from industrial plants, pharmaceuticals, and biodiesel plants that are heavily reliant on the production of vegetable oils is expected to boost growth at the regional level. Around 70% of the global biodiesel is vegetable oil-based as of 2023. In the U.S., standards such as state-level low-carbon fuel standards, renewable fuel standards, and IRA tax credits are boosting the demand for bio-jet fuel and renewable diesel. These requirements are met through production from a mixture of feedstock such as rapeseed oil, soybean, used cooking oil, and corn oil. Moreover, biodiesel production from used cooking oil (UCO) is expected to gain traction in the U.S., European Union, and Singapore.
Order your copy of the Vegetable Fats and Oils Procurement Intelligence Report, 2023 - 2030 , published by Grand View Research, to get more details regarding day one, quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis
Government policies, tax incentives, subsidies, and regulations that support the production and use of vegetable oils in food processing have stimulated the category growth. For instance, in November 2023, the U.S. FDA (Food and Drug Administration) planned to cancel the regulation allowing the utilization of Brominated Vegetable Oil (BVO) in food. This is because the FDA and the National Institutes of Health (NIH) in the U.S. concluded through a study that BVO is no longer considered safe for health effects in humans.
The category is fragmented in nature. The top players such as ADM, Fuji Oil Holdings Inc., Cargill, Wilmar International, and Bunge hold dominant positions in the market. These companies are continuously involved in oil-producing capacity expansion, mergers, and acquisitions to meet the growing demand for vegetable oil across industries such as food, personal care and cosmetics, and biofuel. For instance:
- In November 2023, Cargill completed the expansion and modernization project of its soybean processing plant in Sidney City, Ohio. The project would double soy crushing capacity, giving local farmers access to the broader market, and helping the company meet the growing demand for soybean oil. Additionally, Cargill, in October 2023, became the first U.S. large-scale supplier of Roundtable for Sustainable Palm Oil (RSPO) certified palm oil, which is a sustainably sourced oil. Further, the company declared that it would no longer offer conventional palm oil.
- In April 2023, Bunge acquired Fuji Oil’s port-based refinery located in Louisiana. The facility is a state-of-the-art multi-oil refinery that will help Bunge expand its existing consumer base. The deal would also connect North American food, fuel, and feed industry customers to the global market.
Buyers, such as food processors and retailers, may have some bargaining power, especially if there are many suppliers offering similar types and quality oils. However, if there are limited sources for specific types of vegetable fats and oils or if the products are highly differentiated, the bargaining power of buyers may be lower.
Vegetable Fats and Oils Procurement Intelligence Report Scope
The Vegetable Fats and Oils category is expected to have pricing growth outlook of 4% – 9% (annual) from 2023 to 2030, with below pricing models.
- Volume based Pricing
- Competition based pricing
Supplier Selection Scope of Report
- Cost and pricing
- volume
- production capacity
- geographical presence
- compliance
Supplier Selection Criteria of Report
- Quality and type of oil
- bulk quantity available
- packaging type
- end-use industries served
- contract terms
- delivery option
- safety and environmental compliance
- location and presence of supplier
- others
Vegetable Fats and Oils Procurement Intelligence Report Coverage
Grand View Research will cover the following aspects in the report:
- Market Intelligence along with emerging technology and regulatory landscape
- Market estimates and forecasts from 2023 to 2030
- Growth opportunities, trends, and driver analysis
- Supply chain analysis, supplier analysis with supplier ranking and positioning matrix, supplier’s recent developments
- Porter’s 5 forces
- Pricing and cost analysis, price trends, commodity price forecasting, cost structures, pricing model analysis, supply and demand analysis
- Engagement and operating models, KPI, and SLA elements
- LCC/BCC analysis and negotiation strategies
- Peer benchmarking and product analysis
- Market report in PDF, Excel, and PPT and online dashboard versions
Vegetable Fats and Oils Procurement Cost and Supplier Intelligence
To produce vegetable oil, raw materials (seeds), labor, facility, machinery, and packaging are some of the costs incurred in the production. Other costs include transportation and distribution, repair and maintenance, marketing costs, and utilities. Vegetable oils can be produced from various seeds such as soybean, mustard, peanuts, coconut, and others. Hiring skilled labor can reduce the cost of vegetable oil processing by 30%. The equipment cost of a 5-ton/day oil mill can be around USD 8,000. The prices of vegetable oil are highly dependent on the supply and cost of raw materials. The global price of vegetable oil as of December 2023 was around USD 1.5/kg. The price of soybean oil was around USD 1.64/kg. Similarly, the price of coconut oil in December 2023 was around USD 1.44/kg.
In terms of sourcing vegetable fats and oils, producers adopt a complete in-house team of processing oilseeds into vegetable oils. Companies such as ADM and Bunge, for instance, have a complete internal team for storing agricultural raw materials and further crushing and processing oilseeds into vegetable oil and protein meals. These companies provide oils for animal feed, food processing, and biofuel industries. Bunge also provides unrefined vegetable oil to its own refined and specialty refined oil business that converts it into edible oil products. Having product quality handling and warehousing, transportation, and distribution internally can benefit the company over the long run. Developing a strong relationship with seed suppliers and equipment suppliers and ensuring consistency is key to sourcing the category.
List of Key Suppliers
- ADM
- Fuji Oil Holdings
- Cargill
- Wilmar International
- Bunge
- Mewah
- Unilever
- Associated British Foods Plc
- Olam
- IFFCO
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Brief about Pipeline by Grand View Research:
A smart and effective supply chain is essential for growth in any organization. Pipeline division at Grand View Research provides detailed insights on every aspect of supply chain, which helps in efficient procurement decisions.
Our services include (not limited to):
- Market Intelligence involving – market size and forecast, growth factors, and driving trends
- Price and Cost Intelligence – pricing models adopted for the category, total cost of ownerships
- Supplier Intelligence – rich insight on supplier landscape, and identifies suppliers who are dominating, emerging, lounging, and specializing
- Sourcing / Procurement Intelligence – best practices followed in the industry, identifying standard KPIs and SLAs, peer analysis, negotiation strategies to be utilized with the suppliers, and best suited countries for sourcing to minimize supply chain disruptions
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