SDM

PROJECT
STUDY OF
COOKING OIL
DISTRIBUTION
CHANNELS
IN KOZHIKODE

Submitted by
Group 4
Section B
Anuraag (248)
Chanderjeet (251)
Hursh (259)
Vishwas (342)
Shubham (346)

Table of Contents
Introduction Company Information..............................................................2
Major Brands Sold.............................................................................................. 2
Cooking Oil Brands Sold.................................................................................... 3
Product Distribution Snapshot........................................................................3
Distribution Channels........................................................................................ 3

Introduction Company Information

Sector/ Industry: Cooking Oil
Distributor/Agent: Global Trades, Kozhikode
Global trades was set up as a sister company of Thomson trading
agencies to take care of the distribution of various products in and around
Kozhikode area. Thomson Trading Agencies is one of the leading
distribution houses in Kerala and has over 25 years of experience in
distribution. Global trades was set up by Thomson trading agencies in
partnership with Mr. Rojan and Mr. Chandrashekhar, residents of
Kozhikode. Global trades is responsible for the distribution of a wide range
of products including cooking oil, tea, coffee, paper napkins, face tissue
boxes, sugar cubes, sugar sachets, solid fuel, herbs, industrial chocolate
slabs, cocoa powder, low caloric sugar, frozen vegetables, fishes
sausages, french fries, olive oils etc.
Global Trades serves all major supermarkets like Reliance Fresh, Spencers,
Margin Free Markets, Indian Naval Canteen Stores and all other major
wholesale and retail outlets. They also extend their services to the hotel
industry in Kerala. The company has products from some of the major
brands like Druk, Morton, Maharaja, Tasty, Mapro, Bambino, Elite, and Fun
Foods to serve the hospitality industry. Kelloggs, Bagrrys brand Breakfast
Cereals, Tetley Tea Bag, Tata Kappy, Mr. Bean coffee, Callebaut chocolate
slab, Bakers, Bush International corn flour, Custard powder, M B sugar
cubes, Sugar sachets, Light brown sugar, Breakfast sugar etc. are some of
their major selling products.

Major Brands Sold

Cooking Oil Brands Sold

Pietro Coricelli Olive pomace oil sold in 1 litre packs

RS olive oil Comes in three different varieties namely Extra
virgin, extra light and pure olive oil. Products are sold in five
different packs 100ml, 200ml, 250ml, 500ml and 1 litre.
Gaia olive oil- Comes in three different varieties namely Extra
virgin, extra light and pure olive oil. Products are sold in four
different packs 250ml, 500ml, 1 litre and 5 litres.
Canola oil- Sold in 1 litre packs. This brand has recently been
included in the product portfolio.
Gold winner sunflower oil Sold in 1 litre packs

Product Distribution Snapshot

Retailer

Producer

Wholesaler

Distributor

Supermarkets

Hotels

Consumer

Consumer

Consumer

Distribution Channels
The company primarily uses the following three different channels for the
distribution of cooking oil:

Hotels/Restaurants Global trades distributes Pietro olive oil in

many of the hotels and restaurants like Bun club, Kingsbay,
Downtown, Paragon, Kadavu resort etc. Orders are placed by the
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restaurants on demand basis, as and when required. This channel

accounts for the maximum share of revenues. Channel building is
done with the help of the brand representatives who visit various
restaurants along with the distributor during their periodic visits to
Kozhikode.
Retail Stores- Many of the small mom and pop stores in and
around Calicut including Wayanad and Palakkad are served by the
distributor. While the number of retailers served are high, the
quantity-wise share of this channel is lower as compared to other
channels. Generally Pietro and Gaia brands are preferred by the
retailers. Retailers are approached by the distributor directly or with
the help of brand representatives.
Supermarkets- Big bazaar, Malabar fresh and Day-mart are some
of the major supermarkets served by Global trades. While RS olive
oil has a major share in this channel (all big bazaar outlets are
served RS olive oil), Gaia olive oil is served in other supermarkets.

Hotels/Restaurants:
Strengths:
Hotel industry in Kerala is expected to grow at a steady rate of 12% in the
coming years. With Kerala being one of the major tourist destinations for
people in India, hotels and restaurants are one of the major customers for
cooking oil products. Leveraging this channel efficiently is one of the
major strengths of the company. All well-known restaurants in and around
Kozhikode area are Global Trades customers thus providing a reliable
channel for distribution. Apart from this, the volume consumed by hotels
is much higher and fluctuations are much less. This is the highest revenue
generating channel and the distributor, with the help of brand
representatives, is keen on further developing this channel.
Weakness:
Since the focus of most of the average restaurants is on price reduction,
they generally prefer to use to use the non-branded products to maximize
their margins. Some of these often mix these products with the local
cooking oil products, thus reducing the average consumption.
Retail Stores:
Strengths:

The retail stores sector is growing at a rate of 7.5% YOY. Though the
average consumption per retailer is low, high number of stores present a
huge opportunity for Global Trades that can be used for increasing sales.
Weakness:
The retail stores are fragmented and the volume of each store is low. It
also has high distribution costs compared to other channels.
Supermarkets:
Strengths:
Supermarkets are generally served with large volumes of products on a
regular basis. Moreover, they take more varieties of products.
Weakness:
Supermarkets generally sell products at lower prices as compared to
retailers thus diminishing margins for the distributor as well.
Distributor Infrastructure:
Distributor is dealing with three Companies. It has a team of 6 Sales
persons. They have one van for big orders and two Scooters for small &
urgent orders and marketing purposes. There biggest market is Kozhikode
where they cater to 15 Super Bazaar outlets and 30 hotels. Apart from
Kozhikode, they also cater the demands from nearby places like Periyar,
wayanad, kasaragod, Malappuram etc either using Van or Parcel services
from Alleppey Parcel Service (APS). Pietro Coricelli and Gaia are the only
brands which are distributed in the outer districts near Kozhikode. Very
minimal use of the technology by the distributor. Phone and Mails are the
only interface used by the distributor for contacting suppliers, Hotels and
Super Bazaars.
Monthly Targets and Incentives:
Around 1200 bottles of Pietro Coricelli and 5-10 cases of Gaia are sold in a
month. Distributor does not decide any targets but try to push as many as
possible depending upon the last month sales at a particular Outlet and
Hotel. Only the company provided incentives are passed to the Hotels and
Super Bazaar, distributor does not provide any extra incentive to them. In
case of piling up of inventory, distributor can transfers back the inventory
to the company. The risk of ownership is not transferred to the distributor.
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Hence, less pressure to push the products in the Hotels and Super Bazaar
outlets.
Margin Structure
Margin %
Distributor 8-10 %
Big bazaar 15-18%
Credit Terms: The distributor make payment to the supplier in less than a
month and receive payment in less than two weeks from Hotels and Super
Bazaar Outlets.
ROI for the company is 4-5% monthly on an average.