Coconut Oil Market Analysis

Coconut Oil Market (Global, 2024)

Introduction

In recent years the market for coconut oil has undergone a remarkable change. It is now the subject of a great deal of attention, and the rising popularity of natural and organic products has a great influence. Coconut oil is not only used in cooking, but also in personal care, cosmetics and household products. The trend towards clean label products and the growing demand for vegetable alternatives have pushed the demand for coconut oil in many areas. Furthermore, the growth of e-commerce platforms and the development of marketing strategies have made coconut oil more available to consumers and increased its market share. In this context, the trend towards sustainable production and sustainable sourcing is becoming more and more important, thereby enhancing the position of coconut oil in the wider field of natural oils.

PESTLE Analysis

Political

In 2024 the coconut oil market will be influenced by a variety of political factors, including trade policies and tariffs. For example, the Philippines, which accounts for approximately one-quarter of world production, has introduced a 5% export tax on coconut oil in order to protect the local market and increase the price for local farmers. This measure is expected to have an impact on the price of coconut oil in the international market, since exporters will have to pass on the additional costs to consumers. In addition, the political situation in producing countries such as the Philippines and Indonesia is important, as any disruption to the supply chain could have a significant effect on the availability of coconut oil.

Economic

The economic outlook for coconut oil in 2024 is shaped by commodity prices and consumers’ spending habits. Coconut oil is expected to rise to around $ 1,200 per tonne in early 2024, from around $ 1,000 per tonne in 2023, on the back of increased demand from the food and cosmetic industries. The post-pandemic economic recovery has led to a 3% increase in disposable income in emerging economies. This has increased the demand for coconut oil in the form of a luxury item. Coconut oil producers and retailers face opportunities and challenges in this economic climate.

Social

Social trends are increasingly in favour of natural and organic products, which is good news for the coconut oil market. In 2024, 68% of North Americans prefer organic products. As a result, demand for organic coconut oil rises sharply. Moreover, there is a growing awareness of the health benefits of coconut oil in its various uses, such as in cooking and in beauty treatments. The result is a 15% increase in the consumption of coconut-based products. Brands are repositioning their coconut oil products as healthy alternatives.

Technological

Technological developments have played a vital role in the coconut oil industry, particularly in the areas of production and processing. In 2024, cold-press extraction technology, which increased the oil yield by an average of 20 per cent, enabled producers to increase their production without sacrificing quality. The use of blockchain technology for supply chain transparency is also gaining ground. By 2026, 30 per cent of coconut oil producers had adopted this technology to ensure traceability and enhance consumers’ trust. These innovations will further improve the quality of coconut oil and increase its market share.

Legal

Regulations affecting the coconut oil market in 2024 include food safety and labeling. By mid-2024 all coconut oil sold in the United States must have its source and processing method clearly labeled. The intent of this regulation is to increase public awareness and safety. It also has an effect on how companies market their products. For exporters, compliance with the Regional Comprehensive Economic Partnership is also critical. Coconut oil producers in RCEP countries may be subject to tariffs and may have to meet a new set of regulations to enter their markets.

Environmental

The coconut market is becoming more and more interested in the environment, particularly in the case of sustainable farming. It is estimated that in 2024 coconut oil production will be certified organic or sustainable, showing a growing concern for the environment. Also, the impact of climate change on coconut cultivation is becoming more and more important. It is estimated that by 2050, the sea level will rise by 0.80 m, which could threaten up to 30 % of the coconut area in Southeast Asia. The challenge of the environment is pushing coconut farmers to adopt more resilient farming practices to ensure the long-term sustainability of coconut oil production.

Porter's Five Forces

Threat of New Entrants

The coconut oil market is moderately protected by barriers to entry, namely the cost of setting up production and distribution facilities. The increasing popularity of coconut oil in a variety of industries, including food, cosmetics, and pharmaceuticals, however, is attracting new players. The market is still dominated by a few large producers, who have an advantage in terms of economies of scale and brand loyalty. But niche products and organic products offer opportunities for new entrants.

Bargaining Power of Suppliers

The bargaining power of the suppliers of coconut oil is relatively low, because of the abundance of the raw material. The cultivation of coconuts is widespread in the tropics, so there are many suppliers. This makes it easy for the manufacturers to change their suppliers, and this reduces the influence of any one supplier on price and conditions.

Bargaining Power of Buyers

Coconut oil is a commodity with great buyer power, because of the many brands and products available. Increasingly informed consumers are demanding better quality and better prices, and there is stiff competition among brands. In addition, retailers are pressuring manufacturers to give them good terms, which adds to buyer power.

Threat of Substitutes

The threat of substitutes for coconut oil is moderate, because there are several substitutes, such as olive oil, palm oil, and vegetable oils. Coconut oil has unique properties and health benefits that are different from substitutes. However, the preferences of consumers may change due to price changes, availability, and health trends, which will affect demand.

Competitive Rivalry

Competition is intense in the coconut oil market, with many companies vying for market share. The market is characterized by a combination of established players and new entrants, which has resulted in a high degree of price competition and aggressive marketing. Also, the growing demand for organic and natural products is intensifying competition, as companies seek to differentiate their products.

SWOT Analysis

Strengths

• High demand for natural and organic products among consumers.
• Versatile applications in food, cosmetics, and health industries.
• Strong brand loyalty and recognition in established markets.

Weaknesses

• Price volatility due to dependence on weather conditions and global supply chains.
• Limited awareness in some regions about the benefits of coconut oil.
• Potential for quality inconsistency among different suppliers.

Opportunities

• Growing trend towards vegan and plant-based diets boosting coconut oil usage.
• Expansion into emerging markets with increasing disposable incomes.
• Innovations in product formulations and packaging to attract new consumers.

Threats

• Intense competition from alternative oils and synthetic products.
• Regulatory challenges and potential tariffs affecting trade.
• Environmental concerns related to coconut farming practices.

Summary

Coconut oil is a natural product. Coconut oil is used in many industries. But coconut oil is facing many challenges. The main challenge is the price volatility. Opportunities lie in the growth of emerging economies and in new product development. Threats include regulations and environment. Strategic focus on quality assurance and consumer education is essential to optimize the potential of coconut oil.