Analysis of the Sunflower Oil and Goat Milk Market in Nepal (Kathmandu Region)

1. Introduction

This report provides an analysis of the sunflower oil and goat milk market in Nepal, with special emphasis on the Kathmandu region. The purpose of the analysis is to assess the feasibility of introducing new brands of these products to the market, study the current demand situation, competitive environment, regulatory aspects and potential sales volumes. The report covers the economic context of Nepal, a detailed analysis of the sunflower oil and goat milk markets, including production, supply, demand, consumer preferences, distribution channels and quality standards, and the regulatory environment for food business. Finally, strategic considerations and recommendations for potential market entry are presented.

2. Economic Survey of Nepal

Understanding the macroeconomic situation and consumer behavior in Nepal is key to assessing market potential. Nepal’s economy is showing signs of gradual recovery and resilience despite external shocks.¹

According to Asian Development Bank (ADB) and World Bank forecasts for fiscal year 2025 (ending mid-July 2025), Nepal’s GDP is expected to grow between 4.4% and 4.5%, up from 3.9% in the previous year.¹ Forecasts for fiscal year 2026 are even more optimistic, predicting GDP growth of 5.1% to 5.4%.¹ Growth drivers include a recovery in domestic demand, growth in the services sector (especially tourism), increased hydropower production and improved agricultural production, particularly rice.¹ Government reforms to improve capital budget execution and attract foreign direct investment (especially in the IT sector) should also support growth.¹

Inflation is showing a downward trend. According to the ADB, the expected inflation rate in fiscal year 2025 will be 5.2%, and in 2026 – 5.0%.⁴ Data from the Nepal Central Bank (NRB) shows that inflation has already dropped to 3.85% by mid-March 2025.² Stable foreign exchange reserves, supported by significant remittances from Nepalis working abroad, provide economic stability.²

Household consumption expenditure in Nepal is on the rise. According to the Central Bureau of Statistics (CBS) for the financial year 2015-16, the average per capita expenditure was NPR 70,680 per annum, up 8.8% from the previous year.⁷ However, expenditures in urban areas significantly exceed expenditures in rural areas (101,659 NPR versus 52,007 NPR).⁷ The average monthly income of a Nepali household in 2018 was estimated at NPR 30,121 and expenses at NPR 25,928.⁸ In the urban areas of Kathmandu, Bhaktapur and Lalitpur (Kathmandu Valley), the average monthly household expenditure in 2015 reached NPR 31,761.⁹ It is important to note that income and expense data may be somewhat out of date.⁹

Expenditures on food constitute a significant part of the household budget, especially among the poor (about 72% ¹¹) and in rural areas (about 60% ⁷). However, there is a downward trend in the share of food expenditure in the total budget, especially in urban areas (about 45% ⁷), and a shift in spending away from grains and legumes towards fruits, vegetables, meat and dairy products.¹² During festive periods such as Dashain and Tihar, spending on non-food items (clothing, electronics, transport) increases significantly, while spending on food increases moderately.¹³ The increase in food prices observed in past years has a significant impact on poverty levels, as it reduces the purchasing power of the population.¹¹

Thus, the economic backdrop in Nepal is characterized by moderate growth, falling inflation and rising, albeit uneven, consumer spending. This creates potential opportunities for new consumer products, but purchasing power, especially outside Kathmandu and among the less affluent, remains limited.

3. Sunflower Oil Market Analysis (Nepal and Kathmandu)

3.1. Market Size and Dynamics

The sunflower oil market in Nepal is characterized by complex dynamics, largely distorted by re-exports to India. Nepal imports significant volumes of crude vegetable oil, including sunflower oil, but much of this volume is processed and re-exported.¹⁴ In 2022, Nepal ranked 36th in the world in sunflower oil exports with a volume of $18.9 million.¹⁵

This trade is driven by the tariff preferences Nepal enjoys under the South Asian Free Trade Area (SAFTA). Nepalese processors import crude oil (paying for it in US dollars), process it with minimal added value (sometimes less than 15%, according to some estimates ¹⁶) and export to India (receiving Indian rupees), where import duties for countries outside SAFTA are significantly higher.¹⁴ This allows Nepalese exporters to offer oil in India at prices 10-15% lower than Indian producers.¹⁷

The volumes of this trade are enormous. In the first eight months of fiscal year 2024/25, Nepal exported goods worth NPR 158 billion, of which vegetable oils accounted for a significant share: soybean oil worth NPR 47.95 billion and sunflower oil worth NPR 7.98 billion.¹⁸ In previous years, imports of crude sunflower oil were also significant (eg 98.9 million liters at NPR 16.49 billion for 9 months of FY2021/22), but exports of refined sunflower oil were less (20 million liters at NPR 4 billion for the same period).¹⁴

It is extremely difficult to estimate the real domestic demand for sunflower oil based on import and export data. It is estimated that domestic consumption may account for less than 20% of total imports.¹⁴ The total annual consumption of all types of edible oils in Nepal is estimated to be approximately 0.43 million tons.¹⁷

Price dynamics also reflect the impact of re-exports. Import prices for crude sunflower oil decreased significantly from 2022 to 2024 (from $1.96-2.80/kg to $0.60-0.73/kg).¹⁹ Export prices fluctuated, but remained higher than import prices ($1.31-2.42/kg in 2024).¹⁵ Retail prices in Kathmandu online stores vary, but are generally higher than recent import prices for raw materials (e.g. 1 liter around 242-299 NPR, 5 liters around 1200-2175 NPR).²⁰ This gap between falling import prices and relatively high retail prices may indicate high domestic processing and distribution costs, brand premiums, or the impact of export prices on the domestic market.

There is significant political risk associated with this model. Indian Vegetable Oils Associations (IVPA, SEA) are actively lobbying the Indian government to restrict duty-free imports from Nepal, arguing that it violates SAFTA rules of origin and harms Indian industry and farmers.¹⁶ Measures such as introducing monthly import quotas or changing ports of entry are being proposed.¹⁶ If India takes restrictive measures, it could dramatically change the market dynamics in Nepal, affecting availability and prices for both exports and domestic consumption.

3.2. Competitive Environment

The sunflower oil market in Kathmandu is characterized by the presence of many brands, both local and international, competing in different price segments.

Existing Brands: The following brands are represented in retail channels, including online platforms (Daraz, Meroshopping, Stopgrab, MilanWholesale): SOR, ZER ²⁰, Dhara Health, Sunflow, Nitriplus, Patanjali, Amrit, Meizan, Byanjan, Saffola Gold (смесь), Fortune.²¹ KL Dugar Group imports and markets Meizan and Sunny brands.²⁵ Neelkamal brand is mentioned as an export brand.¹⁹ Major producers/exporters include Shree Shiv Shati Ghee Udyog, Janakpur Refineries, Siddhivinayak Oils, Ganapati Vanaspati, Narayani Oil Refinery.¹⁵

Pricing and Positioning: Prices vary significantly depending on the brand, packaging and point of sale.

Table 1: Competitive Landscape – Sunflower Oil Brands in Kathmandu Market (Examples)

Brand	Manufacturer/Distributor (if known)	Observed Packaging Sizes	Observed Retail Price Range (NPR)	Key Positioning (Presumed)	Source(s)
BEER	N/A	1.8 l	460	N/A	²⁰
what	N/A	1 l, 2 l, 5 l	245 (1l), 480 (2l), 1200 (5l)	N/A	²⁰
Dhara Health	N/A	1 l	288	Health	²¹
Sunflow	Gyan (KL Dugar?)	0.5 l, 1 l, 10 l (box)	122 (0.5l), 242 (1l), 2399 (10l)	Price/Availability	²¹
Nitriplus	N/A	1 l (package), 5x1l, 10x1l	2280 (10l), 1165 (5l)	Packaging (packages)	²¹
Patanjali	Patanjali Ayurved (India)	1 l	299	Ayurveda/Naturality	²¹
Amrit	N/A	10 l (box)	2299 – 2500	Large volume	²¹
Meizan	KL Dugar Group (Imports)	2 l	950 – 1000	Imported brand	²¹
Byanjan	N/A	5 L (can)	2175	Local brand, daily use	²²
Saffola Gold	Marico (India)	1 l (bag), 2 l, 5 l (can)	490 (1l), 900 (2l), 2250 (5l)	Oil Blend, Heart Health	²²
Sunny	KL Dugar Group (Imports)	N/A	N/A	Imported brand	²⁵

Note: Prices are indicative and subject to change. N/A – no data.

Brands compete on price, packaging size (bags, PET bottles, jars, boxes) and perhaps on perceived quality/health benefits (e.g. Dhara Health, Patanjali, Saffola Gold). The shelf life is usually 24 months.²¹

The presence of multiple players with different value propositions and origins (local, Indian, imported) indicates a fragmented and competitive market. Successful launch of a new brand will require clear differentiation. This can be achieved by emphasizing quality (e.g. meeting strict standards, special purification process), health benefits (e.g. high oleic acid content ²⁶), strong branding or price competitiveness, if possible in the face of market distortions. Understanding the positioning of key players such as Sunflow, Meizan, Dhara and Patanjali is critical.

3.3. Demand and Consumer Insights

The demand for sunflower oil in Nepal is influenced by competition with other oils, price factors and consumer preferences.

Competition with Other Oils: Sunflower oil directly competes with traditional mustard oil and cheaper soybean oil. Soybean oil is often used by low-income households due to its lower price compared to mustard oil.²⁷ Traditional oils from local plants are also used in rural areas, although this practice is declining due to the availability of commercial oils.²⁸

Demand Drivers: The main factors influencing consumer choice are cooking needs, perceived health benefits, price compared to alternatives, brand reputation and availability. Urbanization and changing lifestyles may increase demand for refined oils such as sunflower. Common consumer values when choosing food products include freshness, price, quality, packaging and cleanliness.²⁹ For edible oils, taste, perceived health benefits, and heat stability in cooking are also important.²⁶

Consumer Attributes: Sunflower oil is valued for its versatility (suitable for frying and other types of cooking) and neutral taste.²⁶ High oleic sunflower oil has greater oxidative stability.²⁶

The success of sunflower oil in the market depends on the balance between price competitiveness (especially compared to soybean oil) and perceived quality/health benefits (competing with the traditional image of mustard oil). Marketing efforts should highlight its versatility and any specific health benefits (e.g. fatty acid profile ²⁶). Targeting urban consumers accustomed to refined oils seems a logical strategy.

3.4. Distribution Channels

Effective distribution is critical to entering the Kathmandu market.

Traditional Model: The standard supply chain includes the following links: manufacturer -> distributor/wholesaler -> retailer.³⁰ Large distribution centers are located in border towns (Birganj, Biratnagar, Bhairahawa, Nepalganj) and Kathmandu.³⁰

Role of Intermediaries: The use of local trading companies, agents or distributors is a common practice, especially for imported goods.³⁰ Companies such as KL Dugar Group have developed networks and are engaged in the import and distribution of various products, including edible oils.²⁵ Distributors’ margins in Nepal are typically 15-30%, depending on the product and services.³⁰

Retail Channels: Products are sold through various channels, including traditional grocery stores, supermarkets and online platforms (e.g. Daraz, Meroshopping, Stopgrab).²⁰

Logistics: The bulk of imported goods, especially bulk and bulk goods, enter Nepal through Indian ports (Kolkata, Haldia) and are then transported by truck or rail to border crossings such as Raxaul-Birganj (up to 60% of cargo).³⁰ Air freight is used for high value goods.³⁰ The distribution of consumption is uneven, for example, about 60% of petroleum products are consumed in the Central region, including Kathmandu.³¹

Establishing an effective distribution network to cover retail outlets in Kathmandu (and potentially beyond) is key. Partnering with an existing distributor can provide quick time to market, but will require careful negotiation of terms and margins. Building your own network will be resource intensive. Online channels are present, but are likely to complement traditional retail. The choice of distribution strategy (direct or through partners) will have a significant impact on costs, market coverage and speed of product launch.

3.5. Quality Standards (DFTQC)

Compliance with quality standards set by the Department of Food Technology and Quality Control (DFTQC) is a mandatory requirement for all food products in Nepal.

Installed Parameters: The DFTQC sets specific standards for edible sunflower oil. Key parameters to be monitored include moisture content, refractive index, acid value, peroxide value, iodine value, saponification value and unsaponifiable content.²⁶ A study of samples from the Pokhara market showed that they met DFTQC standards.²⁶

Acidity Limits: There are different acidity standards for locally produced oil and imported oil (for example, limits of 1.5% and 0.5% respectively were mentioned in the context of a specific batch of Chinese oil ³³). It is necessary to clarify the applicable standard for the planned production.

Transgiri: DFTQC has introduced regulations aimed at limiting the content of trans fats in edible oils (target <2% by 2023, in accordance with WHO recommendations).²⁶ Nepal is moving towards mandatory labeling of trans fat content.³⁴

Refining Process: Refined sunflower oil undergoes neutralization, bleaching and deodorization processes.²⁶ High oleic sunflower oil has better stability.²⁶

Compliance with DFTQC standards is a basic requirement. Meeting or exceeding these standards, especially with regard to low acid number and trans fat content, can serve as a quality differentiator. Clearly communicating compliance and quality attributes (e.g., refining process, type of fatty acid) to consumers on packaging and marketing materials is essential. Testing and certification are not only a regulatory barrier, but also a potential marketing tool.

4. Goat Milk Market Analysis (Nepal and Kathmandu)

4.1. Goat Breeding Review

Goat farming is widespread in Nepal, especially in rural areas, but its focus has historically shifted towards meat production.

Prevalence: Almost half of all households in Nepal keep goats (49.8% or 2.79 million households in 2012), although the number per household is small (average 3.3 head).³⁵ The goat population has increased significantly over the past decade (37% from 2008/09 to 2017/18).³⁷ Goats constitute a significant proportion of ruminants, especially in the hilly regions and Terai.³⁶

Main Focus – Meat: Historically and currently, goats are bred primarily for meat.³⁸ The analysis of the goat farming value chain mainly focuses on meat production, market premiums for live goats and the role of butchers.³⁹ Demand for goat meat is growing, especially in cities ³⁵, however, domestic production does not meet demand, leading to imports.³⁵

Production System: The traditional system with small herds and low investment predominates.³⁵ Local breeds (eg Khari) dominate, often with low productivity and fertility (eg twins in only 50% of cases).³⁶ The share of improved breeds is small (about 6.1% according to 2012/2014 data).³⁶ Grazing on communal lands is common.³⁹

Development Initiatives: Various organizations such as Heifer International ⁴¹ and projects (for example, KISAN II ³⁸), are working to improve breeds (introducing Burskaya, Jamunapari, Saanen ³⁸), improving farming practices, building market linkages (mainly for meat) and promoting climate-smart farming. Farmers are showing interest in increasing their numbers if supported.³⁹

The existing goat farming infrastructure is focused on meat production rather than commercial milk production. This means that providing sufficient and consistent quality raw materials for a commercial dairy operation will be a major challenge. It is necessary to either use existing development programs or create dedicated supply chains with dairy farmers (e.g. Saanen ⁴²).

4.2. Milk Supply and Availability

Commercial production of goat milk in Nepal is in its infancy, posing serious supply challenges.

Low Commercial Production: There is no systematic production of goat milk for commercial markets.³⁵ Milk from traditionally raised goats is likely to be consumed at the household level, if consumed at all. A goat cheese factory in Chitlang was forced to import Saanen crossbreds to ensure sufficient milk supply.⁴³

Lack of Infrastructure: Organized collection and cooling centers specific for goat milk are likely to be lacking, unlike the developing infrastructure for cow/buffalo milk.³⁵

Seasonality and Productivity Issues: Traditional farming methods and the use of local breeds result in low milk yields and possible seasonal fluctuations. High kid mortality also affects overall herd productivity.³⁶

Securing a reliable and scalable supply of goat milk is a major hurdle. The business model must take into account the challenges of sourcing raw materials, perhaps through contract farming, establishing collection points and ensuring quality control from farm to processing. The volume required will determine the feasibility and cost of establishing such a supply chain. The lack of an existing supply chain means that a new entrant will have to build one, facing challenges in securing volume, consistency, quality and managing logistics (collection, refrigeration) in potentially remote rural areas.

4.3. Demand and Consumer Perception

The demand for goat milk in Nepal is extremely low due to cultural factors, taste preferences and lack of awareness.

Low Consumption: Goat milk is not a widely consumed product in Nepal. The study showed that 80% of respondents do not use it regularly.⁴⁴ Preference is given to milk from buffalos and cows.⁴⁴ Milk consumption per capita is generally below WHO recommended levels.⁴⁵

Barriers to Consumption:

Cultural prejudices / Dislikes / Lack of habit: These are called the main reasons for non-consumption.⁴⁴
Taste and Smell: Often cited as limiting factors around the world ⁴⁷, although one study found that in blind testing, goat milk products were perceived similarly to cow/sheep milk products.⁴⁸
Lack of Awareness: Many are unaware of nutritional values (53% in one study ⁴⁴) or do not drink milk, even knowing about its benefits (47% ⁴⁴). Lack of knowledge is a key barrier.⁴⁷
Availability and Price: Limited Availability ⁴⁷ and potentially higher price discourage consumption.

Perceived Benefits: Goat’s milk is recognized for its nutritional value (similar to breast milk, better digestibility than cow’s milk, suitable for allergies ⁴⁴). Its medicinal properties are documented in Ayurveda.⁴⁸ Potential benefits have been noted for a variety of diseases.⁴⁴

Target Segments: Potential niches include health-conscious consumers, people with cow’s milk allergies, infants/elderly ⁴⁴, as well as the tourism and hospitality sector (similar to the cheese market ⁴³).

Overcoming deep-rooted consumer reluctance is a major marketing challenge. Focusing on health benefits and targeting specific niches seems more promising than trying to capture the mass market of liquid milk. May require work on flavor/aroma characteristics through processing or creation of additive products (eg, flavored milk, yogurt). Significant investment is needed in consumer education and information campaigns. Simply putting goat milk on the shelves will not create demand.

4.4. Niche Opportunity: Goat Cheese

Unlike liquid milk, goat cheese represents a more promising niche in the Nepalese market.

Existing Manufacturer: Run by Ashok Singh Thakuri since 2004, Chitlang Goat Cheese Factory is a notable success story.⁴³ They use Saanen crossbreds, follow specific production processes and sell their products to 5 star hotels and possibly export.⁴³

Market Demand: There is a demand for goat cheese, especially in the HoReCa segment (hotels, restaurants ⁴³) and possibly in tourist areas (mention of growing demand for cheese in Pokhara/Thamel ³⁵; Chitlang factory attracts tourists ⁴³). Despite initial skepticism, the Chitlang factory achieved recognition.⁴³

Potential: Goat cheese is a value-added product that makes efficient use of dairy raw materials, potentially sells at a higher price and targets a less price-sensitive market segment compared to liquid milk. This is in line with the trend towards diversification of dairy products.¹²

Launching a goat cheese brand, perhaps alongside or instead of liquid milk, appears to be a more viable option based on available market data. It solves the supply problem, creating a more valuable distribution, and targets a proven, albeit niche, segment of demand. Competition will come mainly from the Chitlang factory and possibly from imported cheeses. Cheese production allows for a longer shelf life and potentially higher margins, making it difficult to source raw materials ⁴³ more economically justified.

4.5. Quality Standards (DFTQC)

Although there may not be specific standards for goat’s milk, general requirements for dairy production and hygiene are mandatory.

General Standards for Dairy Products: DFTQC enforces standards for milk and milk products based on the Food Act/Rules/Act 2081.⁵¹ Key quality tests include organoleptic test, coagulation test (COB), alcohol test, fat and non-fat milk solids (SMF) test, adulteration test, phosphatase test, microbiological tests (including coliforms).⁵² A Good Manufacturing Practice (GMP) system for dairy enterprises is being introduced.⁵³

Specific Standards for Goat’s Milk/Cheese: There is no explicit information in the materials provided that DFTQC has separate, detailed standards specifically for goat milk or cheese, in addition to the general rules for dairy products.⁵² Compliance with general standards for milk (fat content, SOMO, hygiene, non-adulteration) will be a minimum requirement.

Criticality of Hygiene: Given past contamination problems (coliforms) in the dairy sector as a whole ⁵³Ensuring high standards of hygiene (at farm, harvest, processing level) is of paramount importance for goat milk products to gain consumer trust.

Although there may not be specific DFTQC standards for goat’s milk, adherence to general dairy product quality and safety standards (especially hygiene and microbiological parameters) is mandatory. Proactive implementation of reliable quality control systems (e.g. HACCP ⁵⁵) and potentially obtaining certifications can be critical to market acceptance, especially for a product category about which consumers already have some wariness. Demonstrating high quality and safety through rigorous testing and process control is not only a matter of compliance, but also a critical element in building trust.

5. Regulatory Environment for Food Business

Starting food production in Nepal requires going through a number of registration procedures and obtaining licenses in accordance with existing legislation, in particular the new Food Hygiene and Quality Act 2081 (2024).

5.1. Registration Business

The process of registering a food manufacturing company includes the following main steps:

Choice of legal form: Sole Proprietorship, Partnership, Private Limited Company, etc.⁵⁷
Company name reservation: At the Office of the Registrar of Companies (OCR).⁵⁸
Preparation of constituent documents: Memorandum of Association, Charter and other necessary documents.⁵⁷
Registration in OCR: Submitting application and documents to OCR.⁵⁸
Tax registration: Obtaining a PAN (Permanent Account Number) and/or VAT registration with the Inland Revenue Department (IRD).⁵¹
Registration with the Department of Industry (DOI): For medium and large enterprises.⁵⁷
Obtaining DFTQC licenses and permits: A key stage for food production.⁵⁷
Obtaining local permits: At the relevant municipality or local authority.⁵⁸

Registration costs vary depending on the share capital and other factors. For example, OCR registration fees can range from NPR 1,000 to NPR 31,000 or more.⁵⁸ The entire process can take from 3 to 8 weeks.⁵⁸

5.2. DFTQC Licensing and Permits

The Department of Food Technology and Quality Control (DFTQC) is the main body regulating food safety and quality.⁶⁰ Obtaining a DFTQC license is mandatory.⁵¹ The process is governed by the Food Hygiene and Quality Law 2081 (2024), which replaced the Food Law 2023 (1967) and the related Regulations 2027 (1970).⁵¹

Procedure for obtaining a permit/license (according to Law 2081):

Obtaining a Letter of Recommendation from the DFTQC (or prescribed office): Required for production, processing, packaging, storage. Need to provide industry details, technical proposal for hygiene and quality assurance.⁵⁹
Obtaining a Permission Letter: Once advice has been received, permission must be obtained from the local authority (for local businesses) or from the DFTQC (for import/export and other activities).⁶² It is required to provide a certificate of business registration, information about products, technologies, etc.⁶² The process includes possible inspections and laboratory tests and takes up to 30 days.⁶²
Register the product: Separate registration of specific food products is also a requirement.⁵⁵ This includes submitting an application, providing product specifications, samples for laboratory tests (microbiology, chemistry, contaminants, expiration date, etc.) and paying fees.⁵⁵
Dates and Cost: The entire process of obtaining a DFTQC license can take anywhere from 6 to 17 weeks.⁵¹ Government fees include application fees, registration fees, laboratory tests and inspections, the total amount may vary (as a guide, product registration can cost anywhere from NPR 7,000 to NPR 30,000, not including other fees).⁶¹

5.3. Law on Hygiene and Food Quality 2081 (2024)

This new law represents a significant step in modernizing Nepal’s food safety control system, bringing it more in line with international standards.⁶²

Key Aspects and Implications:

Strengthening Hygiene Requirements: The law introduces updated and stricter hygiene requirements for all food establishments, including cleanliness, proper food handling and contamination prevention.⁶⁶
Tightening Monitoring and Control: Strict monitoring mechanisms are in place, including regular (including unannounced) inspections, sampling for laboratory tests and tracking systems.⁶² Authorized officers may issue orders to eliminate violations or restrict/withdraw products from sale.⁶²
More Severe Penalties: The law provides for harsher fines and penalties (including prison terms) for violations such as selling substandard or contaminated products, defrauding consumers, exceeding acceptable levels of additives, or missing or incorrect labeling.⁶²
Labeling Requirements: There are clear requirements for labeling of packaged products (name, manufacturer, composition, weight, price, batch number, production/expiration dates, etc.) in Nepali or English (with Nepali giving priority to local products).⁶⁷
Business Responsibility: The law places primary responsibility on producers, processors and packagers to ensure the safety and quality of their products and to comply with legal requirements.⁶⁷
Modern Control Systems: Although the law does not directly require certification of management systems (like HACCP or ISO), it does emphasize the importance of implementing systems that ensure safety at all stages.⁵⁶ The need to implement such systems to protect public health and increase competitiveness is obvious.⁵⁶

For food processors, this means the need to review and update their production processes, quality control systems and hygiene practices to meet new, more stringent requirements.⁶⁶ Compliance with the law is not only a legal obligation, but also a factor in maintaining consumer confidence and reputation in the marketplace.

6. Assessing the Feasibility of Entering the Market and Strategic Considerations

6.1. Overall Feasibility and Optimal Timing

Sunflower Oil: Entering the market is possible given the existing (albeit distorted) demand. However, it carries high risk due to uncertainty regarding India’s import policy from Nepal under SAFTA.¹⁶ Competition in the market is significant.²⁰ Entering the market now requires being prepared to navigate this uncertainty and comply with the new Food Hygiene and Quality Act 2081.⁶² Operationally it is a simpler option compared to goat milk, but with high external risks.
Goat Milk/Cheese: Market entry is challenging, but potentially feasible for niche products (cheese, specialty milk). This will require significant investment in supply chain development and marketing to generate demand. The exit time depends on the readiness for long-term investments. The liquid goat milk market is currently underdeveloped and faces strong barriers.⁴⁴ Cheese production looks more viable in the short term.⁴³ This option carries less external political risk but requires greater operational effort and investment in market creation.

6.2. Sales Potential

Sunflower Oil: Accurately assess potential internal market is difficult due to distortions caused by re-exports. The potential is highly dependent on the ability to win share from existing players (see Table 1) and the actual size of the domestic consumption segment. Initial volumes are likely to be modest, with a focus on Kathmandu.
Goat Milk/Cheese: Initial volumes for liquid milk will likely be very low, targeting narrow niches. Growth is highly dependent on the success of marketing and overcoming consumer barriers. Cheese volumes could be targeted at the HoReCa (hotels/restaurants) and premium retail sectors in Kathmandu, with potential to grow as acceptance and supply increases. Initial sales potential will likely be less than sunflower oil, but could grow in its niche.

Realistic sales expectations should be conservative initially for both products.

6.3. Critical Success Factors

For Both Products:

Building a strong brand (perception of quality, trust).
Creation of an effective distribution network (reaching target retailers/consumers in Kathmandu).
Regulatory compliance (DFTQC approved, Act 2081 compliant).
Ensuring stable product quality.
Specific to Sunflower Oil:

Clear value proposition (difference from competitors in price, quality, health benefits).
Managing price competitiveness (in conditions of market distortions).
Ensuring a reliable supply of crude oil (with local processing).
Specific for Goat Milk/Cheese:

Building a reliable and quality-controlled milk supply chain (partnership with farmers/NGOs, use of dairy breeds).
Effective marketing and consumer education (overcoming barriers, focusing on benefits).
High product quality and taste profile (meeting consumer expectations).
Targeting suitable niche segments (health-conscious, HoReCa).

Success depends on implementing basic principles (quality, distribution, branding) while simultaneously addressing product-specific issues (political risk/competition for sunflower oil; creating supply/demand for goat milk).

6.4. Identified Risks and Issues

Market Risks: Policy changes (India’s import restrictions under SAFTA affecting sunflower oil market), intense competition (sunflower oil), low consumer acceptance/demand (goat milk), economic slowdown (affecting consumer spending).
Operational Risks: Supply chain disruptions (imported raw butter; sourcing goat milk), quality control failures (leading to regulatory action/brand damage), distribution inefficiencies/costs, regulatory barriers (delays or denials in obtaining licenses/permits).
Financial Risks: High initial investment (especially for goat milk supply chain/marketing), price volatility (raw materials, competitors), difficulty achieving scale/profitability.

Both directions involve significant risks. The risk to sunflower oil is largely due to external political changes and competition. The risk for goat milk is more focused on operational aspects and market development. Careful planning of risk mitigation measures is required.

7. Recommendations and Conclusion

7.1. Answers to Basic Questions

Feasibility and Time to Market:

Sunflower Oil: Exit is possible, but carries high risk due to political uncertainty; exit timing is possible now but requires careful monitoring of trade relations between India and Nepal.
Goat Milk/Cheese: Difficult; only feasible for a niche product (probably cheese first) with significant long-term investment; the exit time depends on the readiness to invest. Entering the mass market of liquid milk is currently impractical.
Demand Estimate:

Sunflower Oil: Real domestic demand exists, but its volume is hidden by re-exports; faces competition from other oils. Demand is likely moderate, concentrated in cities.
Goat Milk: Current demand is very low due to cultural factors, taste bias and lack of awareness/availability. There is a niche demand for cheese in premium segments.
Sales Potential:

Sunflower Oil: Modest at the initial stage, dependent on competitive strategy and capturing market share in Kathmandu.
Goat Milk/Cheese: Low initial volume potential, highly dependent on niche targeting, marketing success and supply development.

7.2. Strategic Recommendations

Product Focus: Consider priority launch Goat Cheese, focused on HoReCa and premium retail in Kathmandu. If successful with supply and initial market, niche goat milk products (e.g. UHT, flavored) may be considered. For Sunflower Oil enter the market only with a clear differentiation strategy (e.g., premium certification, specific health properties, strong brand) and a plan to mitigate political risks (e.g., exclusive focus on the domestic market, flexible sourcing of raw materials).
Market Focus: Concentrate initial efforts entirely on Kathmandu valleys due to higher income, expenses and potential openness to new/niche products.
Supply chain: For goat milk/cheese, invest in building controlled supply chain, potentially collaborating with farmer groups/NGOs (e.g. Heifer ⁴¹) and focusing on dairy breeds (Saanen ⁴³) and quality control from the farm. For sunflower oil, ensure reliable supplies of raw materials or carefully cooperate with existing processors, understanding the dynamics of re-export.
Marketing and Branding: Sunflower Oil: Focus on differentiation, quality signals and potentially health aspects. Goat Milk/Cheese: Significant investment in consumer education about health benefits ⁴⁴, working with barriers of taste/perception ⁴⁴, building trust through quality assurance and targeting specific niches.
Regulatory Strategy: Proactively engage with DFTQC to ensure full compliance with the Food Hygiene and Quality Act 2081 ⁵⁶ and consider voluntary certification (e.g. HACCP ⁵⁶) to increase confidence.

7.3. Additional Current Questions and Answers (Examples)

Q: What are the exact steps and costs to obtain a DFTQC license under the new Act 2081?
A: The process involves obtaining a recommendation, then approval, and registration of the product.⁵⁸ Estimated costs and timescales are given in section 5.2, but specific advice is required for exact figures.
Q: Who are the top 3 sunflower oil competitors in Kathmandu and what are their strengths/weaknesses?
A: Based on Table 1, the likely leaders (in terms of visibility, price) could be Meizan, Sunflow, Dhara. Strengths: distribution network, price. Weaknesses: Possibly perceived quality, brand image (requires further research).
Q: What types of distribution partnership models can be effective?
A: Options include exclusive distributor (such as KL Dugar ²⁵), several regional wholesalers or direct deliveries to modern retail chains. Each option has its pros and cons (coverage vs control vs margin).
Q: How to overcome consumer resistance to the taste of goat milk?
A: Strategies include focusing on the cheese (less pronounced flavor), UHT processing (may affect flavor), adding flavors, conducting tastings, and education that emphasizes that the health benefits outweigh the initial unfamiliarity.

7.4. Concluding Remarks

The sunflower oil and goat milk markets in Nepal present contrasting opportunities. The sunflower oil market exists, but is highly distorted by re-exports and is characterized by high competition and political risks. The goat milk market is largely undeveloped, requiring supply and demand to be created from scratch, but offers the potential for a unique niche product, especially cheese. Success in any of these areas will require a carefully crafted, targeted strategy, significant investment (especially for goat milk), robust operational execution, and the ability to adapt to Nepal’s dynamic market and regulatory environment.

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