Safal spices up price war, reduces vegetable prices

NEW DELHI: Will the vegetable vendors of Delhi oppose this one? Safal — owned by Mother Dairy and the largest organised retail network of fruit and vegetables in the National Capital Region with 400 outlets — has unleashed a price war, slashing rates of seasonal vegetables to a uniform Rs 5 per kg. This is 50% less than the prices at local vegetable vendors, and in some cases, even Reliance Fresh.

Though this is the first time that Safal has brought down prices of 13 vegetables to the same level, senior officials said that there’s no particular reason behind the price cut, except to give consumers and farmers a better price, something that Reliance Fresh has been talking about ever since it opened its first store last year.

Traders’ associations have held nationwide protests against Reliance’s plans to sell fruit and vegetables at cheaper prices, forcing the company to down shutters in Uttar Pradesh and scale down operations in some other parts of the country.

"This is a perception game. Reliance is India’s Wal-Mart, a multi-billion dollar conglomerate capable of arm-twisting suppliers and thwarting competition. It can sell at a loss for several years. On the other hand, Safal has been around for 22 years. Unlike Reliance, it has always maintained a low profile and never gone to town talking about ‘its low prices’, thereby safely co-existing with road-side vendors despite selling at marginally cheaper prices," said a source.

"Our plan is to sell seasonal vegetables at uniform price points. The idea is to drive consumption. We will do so as long as it’s required," said a company source. He added that Safal is equipped to deal with the surge in volume as it procures vegetables from 12 farmer associations.

"The idea is to cut margins and give a better price to the farmers and consumers. We are cross-subsidising the vegetables, which fetch us less margins with vegetables which generate higher margins," said the source. Safal is selling cauliflower, cabbage, turnip, coriander leaves, mint leaves, spinach, methi leaves, pumpkin, two varieties of green chillies, sugarcane, radish and sarson leaves at Rs 5 per kg.

Sources maintain that Safal has chalked out a marketing strategy to compete with emerging organised retailers like Reliance Fresh, Subhiksha and the upcoming Bharti Retail.

Vegetable prices are an emotive issue and the ability of any government to keep prices under control is a parameter on which voters judge its performance. In 1998, soaring onion prices had brought down the BJP government in Delhi.