Small Variety Vegetable Oil Sees High Gross Margin and High Market Risks

By CnAgri2017-05-10 11:09:43 Print

Currently the oversupply of soybean oil, rapeseed oil and palm oil is serious with falling prices in China, the profit margin of small package oil industry is only 1% - 6%. In recent years, the terminal consumption is turning to high quality, small category, functional oil. A batch of strong competitive small and medium-sized enterprises have emerged in producing corn oil, camellia oil, sunflower oil, sesame oil, flaxseed oil and some are listed enterprises, some even appear on the new tertiary board.

As industry giants, the annual revenue of Cofco, Yihai, Jiusan and Luhua is more than RMB ten billion respectively; followed by Xiwang, Changshouhua, Mighty, Daodaoquan with the revenue of RMB billions; the third level includes the main small variety oil enterprises such as your Guitaitai, Yuansen, Carepal with the revenue of RMB hundred million. The overall gross margin of China Agri-Industries Holdings Limited is less than 7% (oil gross margin around 3%), but the gross margin of camellia oil enterprises is around 30%.

Domestic capital markets also have their eyes on the development space of the small variety vegetable oil market and increase investments. But small variety vegetable oil supply is limited, some enterprises have produced a variety of products with various specifications and so-called blend oil in order to increase sales which has a serious impact on the consumer market recognition of high quality, small category vegetable oil, also brings huge market risks on the enterprises.