Regional Market oultook on Onions
Dehydrated onions would be a potential alternative to fresh onions given its prolonged shelf life, easy storage attributes and lower volume requirements which could help reduce overall spend. Cost savings up to 35-40% can be achieved by switching to dehydrated onions
Lack of dehydrated onions in the domestic market would make KHC dependent on imports from India, Egypt and USA markets for dehydrated onions, with India and Egypt offering better price attractiveness.
Increasing demand for convenient foods, packaged foods and from B2B Foods sectors (restaurants, QSR, food manufacturers) is the chief driver of onion processing.
Which would be an Ideal sourcing region for dehydrated onions to Brazil?
- India would be an ideal sourcing region owing to high availability of raw material and a well developed dehydration infrastructure which would provide supply assurance
- A fairly fragmented supply with mostly small to mid size players, would provide KHC with higher negotiation potential
- The recent removal of MEP (Minimum Export Price) could also be leveraged as suppliers would be more flexible with margins, given the current supply glut of onions in India
Dehydrated onions could be a potential cost effective alternative to fresh onions with a longer shelf life for storage .It is more cost efficient to import dehydrated onions, whereas, for frozen and fresh sourcing from domestic markets or neighboring Argentina could be more cost effective.
Fresh Onions – Market Overview
Market Size: The global fresh onions and shallots market is estimated to be valued at about $51,500 million (51.5 billion) at 2022 at a CAGR of about 6.3 percent between 2017-2022
- Overall global supply volumes witnessed a drop in 2017. The US has a shortage of large size onions. Drought in South Africa has lowered current onion output and increased import dependency
- India’s onion production is estimated to drop by about 4.5 percent at 21.4 million tons, owing to reduction in acreage
About 20 percent of the overall onion production is consumed by the processing sector. Majority of the onions produced is consumed by the domestic market in most of the major growing regions
Top producers: China, India, US, Pakistan, Turkey, Iran, Netherlands, Brazil are the top onion producing countries in the world
Processed Onions – Market Overview
- The global dry onions market is estimated at about 108 million tons at a CAGR of about 1.8 percent between 2017 and 2025
- This is reflective of the current estimated growth in processed vegetable market
- USA and Europe are the leading import market
- Though India is the leading producer of dehydrated onions, it is also the leading consumer. 90 percent of the country’s dehydration units are located in Gujrat and a few in Maharashtra and Madhya Pradesh
Dehydrated onions are expected to continue to dominate market share for processed onions, whereas , frozen and powdered onions are anticipated to witness fastest growth
Brazil onion crop
Small farmers account for more than 50 percent of the total country’s production. Brazil produces approximately 1.49 MMT of onions annually with an average yield of about 24 tons/hectare
Current supply scenario:
Overall supply is lower with a higher availability of smaller sized onions as a result of last September’s drought. The harvest season is currently nearing an end and some of the harvest is still underway
Import Vs. Domestic Production
- Imports – 15-20% Domestic – 75-80%
- Apart from its domestic consumption, Brazil is also one of the leading importers of onions with the country importing roughly 15-20 percent of its onions.
Brazil Onion Trade:
Majority of the onions are imported from the Netherlands. Though onion season is nearing an end in domestic market, the current demand for Dutch onions remain weak are expected to pick up in the coming months.