Amsterdam, June 5 - Demand for cooking oil in China and India has been stronger than expected in past weeks despite the global downturn, the chief procurement officer of consumer goods maker Unilever said on Friday.
While an influx of fund money has also helped support commodities prices in the past month, Unilever's Marc Engel said suppliers, especially for tropical oils such as palm, had noted higher than expected bottled oil demand in developing countries.
"This is a clear sign of confidence, that things are perhaps not so bad on the consumer front as was earlier thought," Engel said in an interview with Reuters.
"In the developing markets like China and India there is increased demand for bottled oil, much more than everybody had expected," he said.
Unilever buys about 2.5 million tonnes of vegetable oils annually, for use in a wide range of products including margarine, ice cream, shower gels, shampoo and detergents. Its brands include Flora margarine and Dove soap.
Though Engel said Unilever is only marginally involved in staple product markets such as bottled oil for cooking and frying, as one of the world's largest buyers of palm oil it keeps a close watch on key price drivers.
HOME COOKING AND CINEMA TRIPS
Engel said the economic downturn had not had a major effect on Unilever's vegetable oil buying patterns because it has to stick to nutritional guidelines in food and its ability to switch the content of products like detergents is also limited.
He said palm makes up about 40 percent of the vegetable oil Unilever buys, while 20 percent is soybean oil, another 20 percent is made up of sunflower and rapeseed oil and the rest is coconut, palmkernel and speciality oils such as olive oil.
Engel said some of Unilever's vegetable oil-based products had gained market share during the downturn, as people gave up a holiday, a new car or dining out but were making up by treating themselves to branded rather than discount products at home.
"We have actually had some positive effects from the crisis," he said. "People who would be spending money on dining out are now not doing that but they are going to the supermarket and buying branded goods."
Sales of its Stork margarine were boosted in the first quarter, helped by more home baking, and Ben & Jerrys icecream sales were also up due partly to more people staying at home or opting for a cheaper night out at the cinema, Unilever said.
Engel said he expected Unilever's vegetable oil choices to be affected by a shift towards healthier foods with lower fat content, for example, which would lead to more use of rapeseed and sunflower oil in food products.
He expected the European Union's biofuel mandates would have a significant effect on availability of oils in coming years and will require the EU to import more and more oils from abroad.