We are incredibly pleased to announce that Cocoguru coconut oil is now available at Reliance Retail Smart Stores! This Navarathri has been truly auspicious. Goddess Durga has showered her blessings on us. For a small local player like us, it is a big breakthrough. The result of building the brand for so many years is that Reliance has chosen Cocoguru among many coconut oil brands.

Cocoguru is a unique coconut oil brand in coastal Karnataka.

• to have a website explaining all the details about the product and the company
• to have a significant presence in e-commerce platforms like Amazon, Flipkart
• to be run by a team of professionals in an organized way
• to make roasted coconut oil for cooking use
• to focus on automation and technology in operations
• to provide purity and quality at a lower price
• to maintain hygiene and cleanliness in the workplace and thick vegetation on campus
• to provide ESI, PF, Health and Accident insurance to employees

When we started Cocoguru coconut oil, many of our well-wishers casually asked if the product was available in supermarkets like More, Big Bazaar, Reliance Fresh, etc. It is embarrassing to say no, but they got away with a few flimsy excuses, such as asking for low prices and taking a long time to make payments. Twelve years back, we explored placing our coconut oil in supermarkets in Bengaluru. We learnt that we were far from putting it there.

What it takes to get into Modern Trade
Supermarkets have limited shelf space to store various brands of products. They should optimize that space by keeping only a few of the most in-demand brands. It is the most demanded, not the least priced, and has the best trade terms. Consumers come and pick the brands they like and are less likely to choose the brands the stores push. So, a brand makes it onto the supermarket shelf when it is most liked. And that is hard and has no shortcuts. To be enjoyed by consumers, the product should be of good quality at an affordable price and consistently have attractive, strong packaging.

Challenges for local brands in supermarket chains
The trade terms for suppliers are highly one-sided and entirely in favour of the retailer. The only way for small local brands to agree to them fully is to agree to them. The supermarkets ask for hefty listing fees, display rent, deposits to sell products, and long credit periods, which can be financially daunting to the brand.

How did Reliance take an interest in Cocoguru?
Reliance opened its Smart Store at Puttur. It started with a bang because of its aggressive pricing, wide assortment and convenience. Cocoguru is a trendy brand at Puttur, but it was unavailable there. Every day, there used to be many enquiries for Cocoguru at Reliance. Many used to buy all grocery items from Reliance and coconut oil from outside wherever Cocoguru was available. The store manager repeatedly informed the centralized purchase manager. We pitched them a couple of times. But they were content with the two brands they were keeping. One is a national brand, but not favoured in this region, priced at a premium. Another is a local brand that is priced very low, unprofessional in dealings, poor in quality, and irregular in supply. So, market needs and gaps with existing suppliers made Reliance look at Cocoguru.

Wholesale vs. Market
Many times, brands go all the way to please the wholesalers by buying in bulk. But at Cocoguru, we look to please the consumers. Consumers demand Cocoguru, and retailers have no option but to stock our product. Our biggest buyer is not any wholesaler but a standalone supermarket here at Puttur. At the supermarket, consumers can freely pick the product they like without much influence from the retailer.

So, Cocoguru’s availability at Reliance Smart is a win-win situation for local consumers, the brand Cocoguru, and Reliance Retail. This should be the first of many more placements at bigger supermarket chains. Cocoguru should soon be available at Jiomart.com, and consumers will be able to get door delivery in their local area at much lower costs compared to Amazon and Flipkart.

It is logical that per unit cost of a commodity sold in bulk is less than that sold in lesser quantity. But that difference isn’t very significant. Ideally, if 1 litre of coconut oil pouch costs 60 Rs, 100 ml pouch should be around 6.5 Rs if not just 6 Rs. Government tax laws makes it costlier.

Here is how
Pure coconut oil is used all over India as a hair oil (cosmetic purposes), but people of coastal Karnataka and Kerala also use it for cooking (edible purposes). Edible items are considered essential commodities and are taxed less. The government, in its bid to differentiate the usage of pure coconut oil, has come out with this dubious way of classification. All packets above 200 are for edible purposes and attract no excise duty and 4% VAT. All packets at or under 200 gms attract 8.24% excise duty and 13.5% VAT OR combined (8.24% + 13.5% + 8.24%*13.5%) 22.85% ~ 23%. So, a 100 ml pouch, which was 6.5 Rs without tax, now becomes 8 Rs after tax, i.e. 80 Rs per litre. 1 litre pack, which was 60 Rs before tax, will become 62.4 Rs after tax. That is a difference of 17.5 Rs or 28%!

Why is this dubious?
Lower end consumers like the daily wage workers who use coconut oil for cooking like to buy in smaller quantities. They have to shell out 28% extra for an absolutely essential item like edible oil despite their inability to afford. Government is essentially heavily taxing those poor consumers while it should have done it otherwise.

This anomaly presents a great opportunity to unorganized coconut oil manufacturers to avoid taxes and sell cheap gaining a clear 23% (combined tax) price advantage over branded organized players. The consumers at this segment are extremely price conscious and are willing to switch brands for price difference. How can brands compete with them?

A more sensible way is to classify based on whether they follow the food standards, i.e., the Prevention of Food Adulteration Act (PFA), and have an Edible Oil Packing (EOP) License. Those brands that follow PFA guidelines and have EOP licenses should be considered essential and hence less tax.

News item about the same issue – Marico will move court on the coconut oil excise notice, and Dabur may follow suit.