Wednesday September 28, 2022

PVMA rejects tier-wise branding of edible fats’ products

August 12, 2022

LAHORE: Pakistan Vanaspati Manufacturers Association (PVMA) has stated that the division of various ghee/cooking oil products in three tiers for fixing their prices runs counter to the stipulated laws of Competition Commission of Pakistan (CCP) and it should be revisited immediately.

The division of brands into various tiers was inappropriate and not implementable, the edible fats industry said in a letter to the Controller General of Prices and Supplies, Ministry of Industry and Production (MoIP), urging the authorities to not to not to follow the policy of Tier-wise Branding of ghee/cooking oil products.

The letter was written by PVMA in response to a notification in which the ministry sent lists of different ghee brands by categorising them into Tier 1, 2, and 3.

The Controller General of Prices had asked the PVMA to authenticate/verify the various brands as per the lists provided to them and intimate the MoIP by August 1, 2022.

According to the documents, the MoIP has put 38 bands in Tier-1, 75 in Tier-2, and 342 in Tier-3 category.

However, the PVMA after getting legal opinions to assess the pros and cons of the policy of Tier-wise Branding found it unimplementable.

According to PVMA, the inapplicable model/concept of dividing over 350 brands of Vanaspati ghee and cooking oil into various tiers was first floated about four years ago by the then government.

“Branding is purely customer-oriented on which the manufacturer works for decades to make its goodwill.

A long-drawn exercise involving inputs of all real time stakeholders, end consumers, market forces and legal opinions was conducted to assess the pros and cons of the concept of Tier-wise Branding,” the association said.

Justifying their stance, The PVMA stated that the market standing of any particular brand was assessed by virtue of its acceptance by the consumers. “Further, the sales volumes of brands keep on fluctuating and so is their standing due to intense competition between the manufacturers’.”

Due to volatile international prices of raw materials and weak financial health of manufacturers, the market share of brands keeps on fluctuating and so is their standing in the market, according to PVMA.

“All the products (Ghee/Cooking Oil) irrespective of brand name are manufactured under license from Pakistan Standards and Quality Control Authority (PSQCA), Ministry of Science and Technology, Government of Pakistan vide Pakistan Standards namely PS 221 and PS 2858.”

Thus it was mandatory to manufacture the products as per defined characteristics enumerated in above named Pakistan Standards; therefore, it would be inappropriate to divide various brands in multiple tiers having same ‘Standards’.

“However, few manufacturers nevertheless follow strict and enhanced ‘Quality’ parameters to improve their standing in the market to compete with other brands specially imported products.”

Likewise, the marketing, advertisement and sales promotion activities were extremely expensive and consistent features, legitimately adopted by few brands over decades to attain and strengthen their today’s popularity and acceptance amongst consumers.

“With over 140 manufacturers, the maximum market share held by any one of them is not more than 3 percent, hence it is a well fragmented market, indicating a tough competition and leaving no vacuum for extraordinary profit by any manufacturer or brand,” the PVMA said in its response to the MoIP.

Further, the PVMA mentioned that earlier the division of brands into various tiers was found in-appropriate, against the stipulations of CCP and was discarded.