Sales of branded edible oils, rice, and wheat flour have increased by up to 15% on year in small towns since April due to a fall in commodity prices and farmers getting good returns for their rabi crop, industry officials said.

Kitchen staples marketers Gemini Edibles & Fats India, Adani Wilmar, and GRM Overseas confirmed a shift from unbranded to branded products in tier-2 and tier-3 markets as brands have cut prices.

Earlier, consumers in small towns largely preferred to buy loose products because of lower prices. “Prices of branded oils are almost on par with loose oils, which has prompted buyers in smaller towns and upcountry consumers to shift to the branded category,” said Pradeep Chowdhry, managing director of Gemini Edibles & Fats that sells edible oils under the brand name Freedom.

He said consumers from tier-2 and tier-3 markets are preferring premium brands over local brands as the price difference between imported sunflower and soyabean oils and domestic oils has narrowed significantly. “Since April, there has been a 10%-15% rise in sales of branded oils in these markets,” Chowdhry said.

Edible oil prices may fall further as international prices are on a downward trend, which may give a boost to branded oil consumption, experts said.

“With the edible oil prices beginning to show a downward trend and are set to witness further reduction…the Indian consumers can expect to pay less for their edible oils,” the food and public distribution ministry had said in a statement last week.

Angshu Mallick, managing director of Adani Wilmar, said there has been a shift of 8%-10% in tier-2 and tier-3 markets from unbranded to branded oil because of price drop.

“In the case of wheat flour or atta, we have seen a 12% shift to branded products from April in smaller towns and villages,” he said.

During January to March, wheat prices had increased and consumers in tier-2 and tier-3 markets shifted to loose wheat flour. “But as the prices cooled off from the end of March, we saw a shift to branded atta,” Mallick said.

Atul Garg, managing director of GRM Overseas, said the consumer staple company witnessed a 15% shift in basmati rice and atta from unbranded to branded category in tier-2 and tier-3 markets. “The farmers have got good money for their crops, which is driving them to shift from unbranded to branded staples,” he said.

He added that rural demand is also showing signs of recovery. “We cater to the 5-lakh plus towns like Meerut from where our products go to sub-towns like Alwar. We are seeing that farmers from Haryana, Uttar Pradesh and Punjab, where we majorly operate, are attracted towards branded products. Also, post-Covid, health and hygiene have become a big issue and therefore, they are shifting to branded products.”

Industry experts say that a combination of positive micro and macro economic elements has created favourable conditions for market expansion of bagged wheat flour in India and this trend is expected to continue, especially as the top market players expand their reach into the country’s rural market.