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Cooking oil producer slashes price in face of competition
The nation's only cooking oil producer, Sengsavang Food and Plastic Production Company, slashed the price of its oil by 75,000 kip last week.
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| Staff package cooking oil in plastic bottles after it is filtered at the plant. |
The company sells oil in 18 litre batches, which previously sold for 325,000 kip and have now been reduced to 250,000 kip, although in November of last year 18 litres cost only 200,000 kip.
“We had to drop the price to compete with imported cooking oil,” a senior company official, Mr Sanhti Louangsuvahnavong, said yesterday.
The company is located in Savang village, Chanthabouly district of Vientiane, and will only just break even as a result of the price reduction. “We will get very little profit now, but we will not able to compete with imported cooking oil if we do not match the low price,” Mr Sanhti said.
Some oil is imported legally, some illegally, but both sell for low prices at local markets.
Sengsavang cooking oil now sells for 16,000 to 18,000 kip per litre in markets; similar to the imported brands.
Mr Sanhti said the company is likely to lose capital because of the regular increases in fuel prices based on fluctuations in the world market, which push up transport costs.
In Vientiane, petrol stations are now selling premium petrol for 10,970 kip per litre, regular petrol for 9,870 kip per litre and diesel for 8,550 kip per litre. The rise in petrol prices varied by 60 to 130 kip per litre around the country last week.
Sengsavang imports unfiltered cooking oil from Malaysia, Indonesia and Thailand, then filters it and packages the oil in labelled containers and bottles, which are also made by the company.
The company's products are sold under the brand name ‘Somboun', and first entered the market in 2000. Previously only sold in Vientiane, the oil is now marketed nationwide.
Even as prices rise and fall, the company's sales and market share remain stable, and production has been increasing every year.
In 2004, the company sold 1.5 million litres, up from 400,000 litres in 2003. This increased by a further 10 percent in 2005 and another 10 percent in 2006.
“Currently we import about 5,760 tonnes of unfiltered oil per year,” Mr Sanhti said.
The oil is mainly sold in Vientiane, with the remainder going to provinces nationwide. The company also manufactures plastic drinking water bottles for local supply.
Vientiane Times
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