Coke Studio, sponsored by Coca Cola Pakistan, is a one-hour show that features musicians playing a distinct blend of fusion music that mixes traditional and modern styles. Helped by the media boom in Pakistan, the show has had dramatic success since it was launched three years ago.
A Wall Street Journal story says that Coke Studio is now carried by 27 channels, including regional Sindhi- and Pushto-language channels, where entertainment tends to be more orthodox. The show’s Facebook page has about 200,000 fans and is adding about 10,000 a week. The song “Alif Allah Chambey Di Booty” by Arif Lohar and Meesha Shafi that featured on Coke Studio in June has recorded 531,537 views in just over a month on YouTube. It is popular in both India and Pakistan where the netizens can’t seem to get enough of it.
Here is an except from the Wall Street Journal story on Coke Studio in Pakistan:
Coke and Pepsi's battle in Pakistan shows how some foreign companies remain committed and are expanding here even as others head for the exits because of concerns over terrorism and the country's struggling fiscal position.
Tetra Pak International SA, the Switzerland-based packaging company, is about to complete a €90 million ($116.5 million) factory in Lahore. Metro AG, the German retailer, has invested $175 million to open a string of outlets in the past two years. Adidas AG of Germany has recently ramped up orders of soccer balls from Pakistan, one of the world's largest suppliers.
Others, like U.S.-based Procter & Gamble Co. and Nestlé SA of Switzerland, continue to make healthy profits here. Nestlé, for instance, operates Asia's largest dairy-processing factory in Punjab, Pakistan's largest province.
An upsurge in terrorist suicide attacks and a balance of payments crisis, which led to an $11 billion International Monetary Fund bailout program in 2008, have scared off other businesses. Foreign direct investment in Pakistan fell 39% to $12 billion in the year to July, according to central bank figures. Still, countries like Pakistan continue to matter for consumer-goods companies because they have young populations and growing economies. The economy is set to grow over 4% this year and Pakistan regularly beats out nations in the region, including India, in the World Bank's study on ease of doing business.
Coke said sales volumes fell 2% in North America in the first quarter of 2010 but rose 11% in its Eurasia and Africa division, which includes Pakistan.
Pepsi remains bigger in some Middle East nations, where an Arab League boycott of Coke in the 1970s and 1980s—stemming from its investments in Israel—left the playing field open.
In other emerging markets like China, India and Russia, the two rivals are locked in a close race.
Nestle and Unilever, two of the leading food and drink companies in Pakistan have been reporting strong growth in headline sales, according to BMI. Both companies grew their topline sales revenue by more than 20% year-on-year in the year to December 31 2009. Their annual sales are now approaching US$500m.
Against the odds, demand for beer is strengthening off the back of strong growth posted by Murree Brewery. Despite Muslim's accounting for 97% of Pakistan population and extensive bans on the consumption of alcohol in place, Murree has been reporting strong financials. Q1 (three months to September 2009) after duty and tax sales climb by 16% to PKR539.4mn (US$6.5mn), while net profit after tax increased by 26% to PKR63.9mn (US$0.76mn).
As the sales of cola drinks and tobacco products decline in the West, US companies are targeting developing nations with heavy advertising to increase sales.
Bunge, the third biggest US agribusiness company after Archer-Daniel-Midland and Cargill, has bought Chicago-based Corn Products International Inc. for $4.2 billion in stock to add corn-based sweeteners as demand increases for soft drinks and processed foods in China, India and Pakistan, according to US media reports. This acquisition enlarged Bunge's international footprint in emerging economies to drive its growth.
Corn Products is the fourth-largest maker of high-fructose corn syrup in the U.S. and will give Bunge new customers in Pakistan, South Korea and Thailand, Credit Suisse analyst Robert Moskow said in a note on this deal. Corn sweeteners are used in soft drinks and processed foods instead of traditional cane or beet sugar because of their lower cost and higher concentration. A single 12-ounce can of soda has as much as 13 teaspoons of sugar in the form of high fructose corn syrup, according to San Francisco Chronicle. China, India and Pakistan have all seen double digit annual growth in consumption of soft drinks and processed foods for several years. Last year, the PepsiCo growth in US and Europe was less than 3% but PepsiCo International sales were up 22%, an impressive increase fueled by double-digit growth in China, Russia, Pakistan and the Middle East.
Processed foods and soft drink companies are often blamed in the United States for dramatic increases in obesity and diabetes, particularly among children. Some even accuse them of being merchants of death, not unlike the big tobacco companies. Many health experts argue that the issue is bigger than more calories. The theory goes like this: The body processes the fructose in high fructose corn syrup differently than it does old-fashioned cane or beet sugar, which in turn alters the way metabolic-regulating hormones function. It also forces the liver to kick more fat out into the bloodstream leading to heart disease.
While the presence and growth of Bunge, Pepsi and other food giants are likely to create more jobs in emerging economies such as India and Pakistan, the price for this opportunity is likely to be the danger of greater health problems associated with fats and corn sweeteners in processed foods and soft drinks.
Similar or even greater health threats are coming from the major expansion of tobacco giant Philip Morris in emerging economies. As the smoking rates in developed countries have slowly declined, they have risen dramatically in some developing counties, where PMI is a major player. These include Pakistan (up 42% since 2001), Ukraine (up 36%) and Argentina (up 18%), according to the Wall Street Journal. Philip Morris is currently building a major new plant in Pakistan.
Globalization can potentially bring many benefits, including access to more jobs and improved living conditions in the emerging economies. However, globalization also brings with it all the ills that have been witnessed in the West, including environmental deterioration and life-style diseases such as diabetes, heart-disease, various forms of cancer etc. The challenge for Pakistan, and other countries like it, is to learn from the mistakes of the West. Instead of just repeating such mistakes, Pakistan, India and China must find ways to extract the benefits while minimizing the cost of modernization.
Growing health consciousness across Pakistan is strengthening demand for low calorie carbonate substitutes and bottled water. With concerns about the safety of tap water extensive, demand for bottled water is growing strongly off the back of modest gains in per capita incomes and more importantly, more widespread product investment by leading players.
Here's a video clip of Coke Studio with Arif Lohar and Meesha:
Related Links:
Haq's Musings
Pakistan's Media Boom
Pakistan's Murree Brewery in KSE-100 Index
Health Risks in Developing Nations Rise With Globalization
Pakistan's Choice: Globalization Versus Talibanization
Life Goes On in Pakistan
Pakistan Crowned T20 World Champion
18 comments:
coke pepsi sales are nothing to be very proud off!They are unhealty and very damaging.
whats more S asians are much more susceptible to diabetes than westerners are genetically so the government should actively discourage them!!
In my school cola drinks are banned! even though they are the biggest sponsors of school level competitions like quizes,debates etc kind of like tobacco companies used to sponsor sports.
Pakistani novelist Kamila Shamsie (Burnt Shadows) talked about Pakistani music with Steve Inskeep of NPR Morning Edition this morning.
Here's the NPR website report of this interview:
"Disco Deewane" means "disco crazy" in Urdu. It's also the name of a song by the brother-sister duo Nazia and Zoheb Hassan, a hit in Pakistan in 1981.
But its words spurred religious tension as Pakistan's government became even more conservative. Pakistani-born writer Kamila Shamsie remembers the music video, in which government censors wouldn't let cameras film the sensuous Nazia from the waist down.
"You had this woman and this man, who were sort of out there talking about the craziness of disco," Shamsie says. "And about a certain kind of social liberation that went away."
Many Muslims in Pakistan practice variations of Sufism, a less rigid form of Islam that's very open to music and dance. Facing waning popularity in the late 1970s, then-dictator Muhammad Zia-ul Haq ushered a more extreme Islam into the law and culture of the country.
Pop music managed to prevail. Despite heavy government censorship in 1987, Pakistani television held a competition for its viewers to come up with a patriotic song. The winning track was "Dil Dil Pakistan" from the pop group Vital Signs. It became an instant hit.
"It felt really refreshing and it felt subversive, which is ridiculous if you actually look at the lyrics," Shamsie says.
Two prominent members of Vital Signs parted ways with the group in the early 1990s, taking different directions in both music and religion. Salman Ahmad formed Junoon, a Sufi rock group which achieved widespread popularity in Southeast Asia in 1997 with their chart-topping hit "Sayonee." Meanwhile, frontman Junaid Jamshed began singing religious music and denounced pop as "un-Islamic."
"There are so many different variations of Islam," she says. "I think within the music and the stories of Salman Ahmad and Junaid Jamshed, you can see two of the more dramatic ways in which that search for religious belief can play out."
India will soon adapt Coke Studio from Pakistan for the Indian audience, according to an WSJ report:
In a break from tradition, India will soon see a television show adapted from neighboring Pakistan.
After being tried and tested on the other side of the border, Coke Studio, a music reality show which serves as a platform for musicians to perform live, is set to make its debut here later this year.
We don’t know whether the program will follow the same format as Coca-Cola’s hugely popular television show of the same name in Pakistan.
A Coke spokesman in India confirmed that the company was in talks with “several potential partners for the launch of this property” but declined to share any further details.
“At this point, we can only confirm that we plan to launch Coke Studio – one of our flagship music properties globally – in India, sometime this year,” he said.
While India has oftentimes borrowed the formats of popular TV shows like “Kaun Banega Crorepati,” based on “Who Wants to Be a Millionaire,” and “Indian Idol” from the west, it has never adapted a Pakistani television series to suit Indian audiences.
Coke Studio has already aired three seasons in Pakistan and has featured the likes of “Sa Re Ga Ma” musical talent show winner and popular singer Amanat Ali; Sufi singer Abida Parveen; and Meesha Shafi, lead vocalist of fusion band “Overload.”
Ali Zafar, the lead actor of Bollywood satire “Tere Bin Laden” and a singer, participated in the second season of the show.
The show’s popularity can be gauged by its Facebook fan page where has 458,454 users “like” it. The social networking site has over 80 official and unofficial groups dedicated to Coke Studio with anywhere between 7 and 458,283 “likes.”
There are already 178 fans of the Facebook page “I want Coke Studio INDIA.”
Here's an Express Tribune story on the music industry woes in Pakistan:
Let’s start with the record labels. There is only one active record label in Pakistan at present: Fire Records. With more than 50 artists under its belt, Fire Records enjoys a monopoly over the industry. The other big players of the industry (The Musik Records, EMI and LIPS Music — not counting Alif Records and Riot Records which only cater to individual artists) are currently dormant.
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However, when you read the fine print of the contract, it featured a few conditions.
For starters, the package included no monetary compensation for almost all artists. Secondly, an artist had to give up his/her rights to the music. This meant that Fire Records vetoed every decision including which song to launch when, which video to make when and when to distribute the album. Moreover, all artists signed under Fire Records could have their videos aired only exclusively on Fire Records’ sister television channels (AAG, Geo TV, etc.) unless royalty payments were made by other channels.
With blatantly anti-competitive practices, Fire Records became the sole lifeline for these top 50 artists of Pakistan. So, unsurprisingly, when Fire Records decided to decrease its output of new releases in the market, the whole industry suffered.
A good example is that of the band Mauj. Having released their first single “Khushfehmi” in 2004 to widespread acclaim, and then “Paheliyan” in 2008, the band signed on with Fire Records in January 2009 with a ready-made album in hand. However, the record company decided to postpone the album’s release. The fans waited, the band complained, and illegal free downloads soared on the web. It wasn’t until a year later in January 2010 that the album finally saw a release. But by then a lot of water had passed under the bridge – it was too late. The craze had already died.
Call suffered a similar fate. With their album ready in 2008, they had to wait till February 2011. “Laree Chootee” had truly missed the bus by then.
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Fire Records, the largest investor in the record label business, is also facing the crunch. In the words of the Operations Manager at Fire Records: “The days where an album could easily sell a 100,000-plus copies are over. Even mass appeal albums of artists like Shazia Manzoor are struggling to hit the lower thousands. There are very few returns to be made in an environment such as this”.
Other factors affecting record labels is the refusal of TV channels to pay any royalties on videos, and the increased influx of Bollywood songs being played on local channels which is directly hampering consumer demand for local music.
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Conventionally, record labels engage with distributors and have joint investment and revenue sharing models. This is not true in Pakistan. Artists such as Jal, Ali Azmat, Ali Zafar and many others have to directly engage with Sadaf Stereo and Sound Master for the distribution of their albums. These agreements are often not legally binding contracts but simply a take it or leave it offer in which the artists are paid up front. Consequently, the artists receive no royalty per sale, have no say in where and when the albums will be placed, and cannot keep track of the quantity sold. The lack of respect for legal contracts by distributors reflects the general lack of respect for intellectual property and copyright in our country.
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While some established artists have managed to explore new markets through Indian record labels, new artists have struggled to overcome these enormous hurdles. Take the example of Qayaas, an amazing new band from Islamabad who produced their own album, made their own videos, and personally distributed their own printed albums to stores across Karachi, Lahore and Islamabad.
Here's an excerpt from CBS 60 Minutes story on Givaudan, the largest flavoring company in the world:
When you chug a sports drink or chew a stick of gum, you probably don't think of science. But there is a precise science - and a delicate art - behind what you're tasting. Morley Safer reports on the multibillion dollar flavor industry, whose scientists create natural and artificial flavorings that make your mouth water and keep you coming back for more.
The following is a script of "The Flavorists" which aired on Nov. 27, 2011. Morley Safer is correspondent, Ruth Streeter, producer.
As the Thanksgiving weekend comes to a close, you may feel as overstuffed as that turkey you ate. And if you're overweight - and the chances are, you are, it's probably because you eat too much, too much of the wrong stuff. Most of the wrong stuff we eat comes in a bottle, a can, or a box - food that's been processed - much of that food has been flavored.
The flavoring industry is the enabler of the food processing business - which depends on it to create a craving for everything from soda pop to chicken soup. It is Willy Wonka and his chocolate factory as a multibillion dollar industry; an industry cloaked in secrecy. But recently Givaudan, the largest flavoring company in the world, allowed us in to see them work their magic.
[Jim Hassel: So definitely an aroma, the mandarin, dancy tangerine. Real mild though. Not in your face.]
These are "super sniffers," "super tasters"...
[Andy Daniher: And more bitter.]
...on the prowl. The special forces - first responders to the call for the next best taste.
[Andy Daniher: The mandarin notes are fantastic.]
They are braving the wilds of a citrus grove in Riverside, California, where Jim Hassel - whose nose and palette are legendary - leads a Givaudan team on a taste safari. Big game hunters in search of the next great taste in soft drinks. Their inspiration? The greatest flavorist of them all: Mother Nature.
Jim Hassel: Seeing everything that's available really just drives the whole creative process.
Morley Safer: Like an artist going to Rome or something?
Hassel: Correct. Correct.
Safer: But the ultimate purpose is to sell more soft drinks or whatever?
Hassel: That's what we're in the business of, selling flavors....
http://www.cbsnews.com/8301-18560_162-57330816/the-flavorists-tweaking-tastes-and-creating-cravings/?tag=currentVideoInfo;videoMetaInfo
Here's an ET opinion on the latest season of Pakistani Idol TV show:
The year 2011 marked the discovery of various musical gems through the emergence of Pakistani talent shows like “Uth Records”. The show played a key role in turning raw Pakistani talent into seasoned musicians and singers of today. Every episode had a unique flavour and charm; as it showcased a different musician, singing a different genre, belonging to a different ethnic background and representing a different part of the country. From the catchy tunes of Natasha Ejaz to the folk rock belted out by Yasir & Jawad, every artist created a cult following of their own, becoming a regular feature on the local radio channels. Of course, none of this could have happened without music producers Omran Shafique and Gumby who were integral in the success of the first season of “Uth Records”.
So when 2012 started and the second season of the show was announced, there were even higher expectations from it. However, this time, there was a slight variation in the line-up. Gumby had taken over Shafique’s spot as the solo producer of the show. The fact that Gumby was producing music left many confused as he is better known for his drumming skills than anything else. However, people had been talking about his creative input in producing “Coke Studio” for a long while and this would’ve been a great opportunity for him to put his talent to test.
However, Gumby couldn’t come even close to what was expected from a seasoned musician like him. With artists like Jarar Malik, Affaq Mushtaq, XXI, Sara Haider, Orangenoise and Rahim Saranjam Khan who featured on the show, only two managed to stand out — Khan and Mushtaq. The rest of the artists made no lasting impression and were not extraordinary by any means.
http://tribune.com.pk/story/365571/uth-records-tunes-of-disappointment/
Here's a <a href="http://www.thenewstribe.com/2012/04/23/ian-james-donald-md-nestle-leaving-pakistan/>news story</a> on progress made by outgoing MD of Nestle Pakistan:
<i>Karachi: Ian James Donald Managing Director Nestle Pakistan is likely to be deputed from Pakistan to other country after one year and eight months of his successful service in the leading nutrition country.
Ian J Donald has been Managing Director at Nestle Pakistan Limited since September 1, 2009. He was deputed from Nestle Malaysia Bhd where he served as a Director of Ice Cream, Chilled Products & Associated Businesses.
Under his leadership, Nestle Pakistan succeeded in delivering robust financial results despite the economic slow down and flood crises in the country, which hit livestock sector and affected productions channels of the company.
The leading FMCG company announced good results heralding a prosperous year and sound financials backing its many initiatives.
The profit and revenues witnessed handsome growth from 2010 to 2011 under his tenure as the profit of the company up by 56.6 percent and revenues increased by 58 percent.
Nestle Pakistan profits and revenues stood at Rs 4.7 billion and Rs 64.8 billion by 2011 as compared with profits and revenues recorded in 2010 at Rs 3 billion and Rs 41 billion.
The business profitability and strategy had been successful in the past two years as the company was witnessed as one of most preferred one in equity market. It share value was stood at Rs 66.27 in 2010, which went to Rs 102.94, showing 55 percent growth.
Managing Director Ian Donald – a South African national who has been with the global parent company for 40 years – has focused on expansion of Nestle business primarily by growing the packaged foods market.
Nestle already has a gigantic infrastructure in Pakistan. The company collects milk from over 190,000 farmers spread out over an area of about 145,000 square kilometers.
Donald believes that the strategy of value addition in existing brands rather than adding newer brands in the market. Besides, his contribution was immense in sales expansion in the rural market, which he believes a driving factor for promoting business and standards of masses’ lives.
The outing MD of Nestle, a Swiss company, has made a three years business expansion plan of Rs 320 million Swiss Francs in its presence in Pakistan’ rural and urban markets.</i>
http://www.thenewstribe.com/2012/04/23/ian-james-donald-md-nestle-leaving-pakistan/
Here's Indian writer Aakar Patel in FirstPost on Indian version of Coke Studio:
Why did Pakistan produce the lovely Coke Studio music series and not India? Why is Pakistan’s Coke Studio more popular with many Indians over the new Indian version? Is it because Pakistan’s musicians are better or more creative than India’s?
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One evening Ifti, who is sadly no longer with us, took me to the Waris Road residence of Masood Hasan, later to become a fellow columnist of mine at The News. We had a few glasses of the good stuff with some other guests, and then Hasan took us to a part of the property where his son Mekaal had built a studio and was playing with his band.
This was when I first heard the music that is now so distinctively the sound of Coke Studio. I would define it as a folk song or raag-based melody, layered with western orchestration. This included a synthesizer wash, guitars, a drummer, a bass punctuating the chord changes, and backing vocals and harmony. Essentially it was traditional Hindustani music made palatable for ears accustomed to listening to more popular music.
Mekaal did this very well and his band’s first album, Sampooran, is as good as anything produced by Rohail Hyatt at Coke Studio later.
Indeed, many of the musicians Mekaal worked with, eventually ended up at Coke Studio. Gumby, the Karachi drummer on Coke Studio’s first four seasons, played on Sampooran. Zeb and Haniya, the stars of Coke Studio 2, were originally produced by Mekaal.
The first-rate Hindustani singer Javed Bashir who adds depth to the singers who are not classically trained, used to be lead singer with Mekaal’s band. The great Ghulam Ali was on a flight with me from Ahmedabad to Bombay once and I told him I was friends with Javed. “Mera hi bachcha hai,” he said with great pride.
Lahore’s Pappu, Pakistan’s best flutist, has played flute for Mekaal’s records.
Gumby and I went to a concert next to my house where guitarists Frank Gambale and Maurizio Colonna played. Gumby says Colonna’s playing brought tears to his eyes. Javed and I have drunk a few places dry, and been banned from one. Mekaal is of course a dear friend, as are Zeb and Haniya.
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Now to understand why India did not produce Coke Studio but Pakistan did. The reason is linked to what I said earlier – that Coke Studio is a popular interpretation of India’s traditional music.
India’s talented musicians and producers have a commercial outlet:Bollywood. This is where money is made and this is where Pakistan’s singers who want commercial success must also come.
Their talent, however, is spent on making music that is purely popular, because that is what they are paid big money for. Indian musicians like Shankar-Ehsaan-Loy and Kailash Kher can make
Coke Studio’s sort of classical-popular mix of music easily if they set aside a couple of months for it. They choose not to however, because their working day is spent making music
that makes them rich (Kailash, whom I’ve known since before he sang for Bollywood, today charges Rs 20 lakh for a two hour concert).
In Pakistan there is no commerce in music, and even the most talented musicians must do something other than sing or play to get by. Mekaal for instance, rents out his studio. The disadvantages of not having a commercial outlet for your talent are many. The only advantage of this is that musicians are free to make popular music that is still non-commercial.
Fortunately for all of us, whether Indian or Pakistani, Rohail Hyatt and his team have used this space to produce the music that we love so much. The reason why Coca Cola produces it is that the Pakistani public will not directly pay for it, unlike Indians and Bollywood.
It is cruel to say this, but it is true.
http://www.firstpost.com/living/why-pakistans-coke-studio-beats-indias-hollow-338177.html
Here's a Washington Post piece on American fast food restaurant chains in Pakistan:
Anti-American sentiment may have reached historic highs in this country, but for many Pakistanis, the indignation does not extend to their bellies.
Just over the past few days, Islamabad inaugurated its first Hardee’s restaurant and its first American-style sports bar. In recent months, McDonald’s not only reopened its only restaurant in the capital but also added a home-delivery outlet. Those businesses join existing burger joints and other American fast-food restaurants such as Pizza Hut, KFC and Domino’s Pizza.
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After opening its first Pakistani restaurant in Lahore in 1998, McDonald’s now counts 21 outlets across the country. Hardee’s launched the first of its four restaurants in Pakistan a year and a half ago and plans to open a total of 25 within five years.
Nowhere is Pakistanis’ love of American fast food more apparent these days than at the newest Hardee’s. A few days after a much-hyped opening attended by U.S. Ambassador Cameron Munter and his wife, lines of customers still extended outside the doors. Nawaz Sadiq, manager for development and training at Hardee’s, said the outlet has served an average of 5,000 to 6,000 customers a day so far.
“The Pakistani market is very much brand-conscious,” Sadiq said. “Pakistani people are against America because of its policies, but at the same time, people want quality.”
Unlike in the United States, fast food here is among the more expensive eating-out options. At 390 Pakistani rupees, or about $4.50, a Big Mac is out of reach for most people. Consequently, many customers are part of Pakistan’s highly educated class and have spent time in the United States, or have at least more favorable opinions of the United States than most of their countrymen.
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But for Mohsin Masud, owner of the brand-new restaurant 3rd Base, security is not a major concern. Masud, who spent time in the United States and Canada, said he opened his sports bar because he couldn’t find good hamburgers in Islamabad. The restaurant, which has a Facebook page, also specializes in steaks and chicken wings. But one standard sports-bar item is conspicuously absent.
“The only thing missing is the beer,” Masud said, because it is impossible for Muslims in Pakistan to obtain an alcohol license.
http://www.washingtonpost.com/world/asia-pacific/american-fast-food-on-the-menu-in-pakistan/2011/07/16/gIQAt6RRVI_story.html
Here's BMI's Q3/2012 report on rising food consumption in Pakistan:
Our near-term domestic demand outlook for Pakistan is looking brighter than before. Declining costs of credit and disinflationary pressures should prove supportive of domestic demand. However, we acknowledge a near-term risk to our domestic demand outlook, which is the impact of deteriorating macroeconomic conditions on remittance inflows. Should a slowdown in global demand weigh on remittance growth, this could dampen domestic consumption in the near term. Longer term, the business environment challenges of a destabilising insurgency, chronic lack of electricity generation capacity and an unskilled labour force will continue to hold back the consumer sector from realising its full potential. We therefore expect the liberalisation of the Pakistani consumer sector to occur at a glacial pace going forward.
Headline Industry Data
2012 food consumption growth = +12.1%, compound annual growth rate (CAGR) forecast to 2016 = +9.3%
2012 alcoholic drinks value sales growth = +19.0%, CAGR forecast to 2016 = +10.4%
2012 soft drinks value sales growth = +15.2%, CAGR forecast to 2016 = +8.8%
2012 mass grocery retail sales growth = +20.9%, CAGR forecast to 2016 = +12.2% Key Company Trends Pakistan A Fledgling But Growing Force On Global Halal Scene: Pakistan has not been able to gain much from its US$2trn halal brand market, and has a small share in the global halal industry. The country’s exports have improved from zero-level during the past two years; however, it is still insignificant. However, with the Pakistani government now putting its weight behind the development of the domestic halal industry, there is certainly a cause for optimism in the sector’s future prospects.
The Sindh Board of Investment has entered an agreement with the Halal Department of Malaysia to provide training of certification to its staff. The government also announced that it will be engaging in a project to ensure the credibility of the country’s halal certifications in a bid to tap into the global halal market, which is valued at over US$1trn.
BMI Bullish Coca-Cola’s Prospects In Pakistan: US soft drinks giant The Coca-Cola Company is planning to invest another US$280mn by 2013 in Pakistan. According to Coca-Cola, it plans to channel the bulk of its capital expenditures towards increasing the production of its existing brands as well as expanding its overall beverages portfolio. Coca-Cola plans to introduce more juices and mineral water in the Pakistani market over the coming years. This strategy could diversify Coca- Cola’s presence beyond the carbonates sector and help it secure early footholds in the higher-value bottled water and fruit juice segments, which boast tremendous long-term promise.
http://www.marketresearch.com/Business-Monitor-International-v304/Pakistan-Food-Drink-Q3-7011717/
Here's an ET report on Coke investing to expand in Pakistan:
LAHORE:
It was an announcement made so quietly that it did not even make the headlines: having already invested $172 million in Pakistan this past year, The Coca Cola Company – one of the world’s largest beverage companies – is planning on investing another $248 million in the country over the next two years.
It may have something to do with the fact that Pakistanis are estimated to have spent approximately Rs110 billion ($1.3 billion) on carbonated beverages in 2011, according to an analysis by The Express Tribune based on figures compiled from industry sources. Coca Cola currently enjoys a 30% market share, second only to arch-rival PepsiCo.
“We see great potential in Pakistan’s future, which is why the company is investing significantly in upgrading infrastructure and adding value to allied industries,” said Rizwan Khan, general manager for The Coca Cola Company in Pakistan and Afghanistan.
The money will be spent on two new bottling plants, one each in Karachi and Multan, as well as investing in more coolers, which will be distributed amongst retailers to help with the company’s retail sales efforts. Company officials were quick to point out that the investment is not simply the recycling of profits and cash flows from existing operations in Pakistan, but green-field foreign direct investment that will flow into the country over the next two years.
The expansion plans come as rising demand makes it difficult for Coca Cola to keep pace with its existing production capacity in Karachi and Punjab. The new plants will follow the establishment of a Coca Cola facility, already completed in 2011, which manufactures Coke cans. Previously, Coca Cola used to import cans from its factories in other countries.
Coca Cola’s business model in Pakistan is somewhat unique. The global US-based parent owns a subsidiary called The Coca Cola Export Company, which has a Pakistan branch. That Pakistan branch conducts all marketing and brand building activities and manufactures the concentrate for the company’s signature beverages from a plant it owns and operates in Raiwind.
The concentrate is then sold to Coca Cola Beverages Pakistan, a joint venture between the US-based parent and Coca Cola Içiçek, a Turkey-based partner of the group. Coca Cola Beverages Pakistan operates six bottling factories in Pakistan, located in Karachi, Gujranwala, Multan, Lahore, Rahimyar Khan, and Faisalabad.
Coca Cola used to have eight franchisees for its bottling facilities in Pakistan, but in the mid-1980s the company felt that the business model was not working. It then spent the next decade buying out every single franchisee in Pakistan, consolidating them under one umbrella to form Coca Cola Beverages Pakistan. This entity was a wholly-owned subsidiary of the US-based parent until 2008, when Coca Cola Içiçek took a 49% share.
The company declined to provide a precise revenue figure or growth numbers, but said that it buys close to Rs13 billion in raw materials from its 300 local suppliers. According to Coca Cola Içiçek’s annual report, the company’s revenue growth rate in Pakistan is in the high teens. Coca Cola has over 4,000 employees in Pakistan, and employs another 6,000 indirectly. Company officials say that it paid Rs11 billion in taxes last year.
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“Our aim is to inspire economic activity, create employment and increase tax revenue for the government. However, it is the government’s responsibility to ensure that a productive investment and business operating environment is provided to local and international companies,” said Khan.
....
http://tribune.com.pk/story/463423/beverages-why-coca-cola-is-investing-another-248m-in-pakistan/
There are worries about carbonated drink consumption in South Asia. I think these are overblown considering the fact that per capita consumption in Pakistan is just 5 liters and in India 3 liters.
Compare this with milk, a healthier alternative, whose consumption in Pakistan is 223 Kg per person and 96 Kg in India.
http://www.riazhaq.com/2012/10/pakistan-among-top-meat-consuming.html
http://www.slate.com/articles/health_and_science/map_of_the_week/2012/07/map_of_soda_consumption_americans_drink_more_than_anyone_else_.html
Here's a recent Seekingalpha piece on Pepsi growth in South Asia:
Pepsi depends heavily on emerging markets for growth. It experienced a growth of 14% in emerging markets for the quarter. Organic net revenue in Europe grew by 7%, and in Asia, Middle East and Africa it grew by 10%. The company has significant international exposure, which means that the company's top and bottom lines are affected by foreign currency movements. This is made evident by a 5% decrease in company revenues due to foreign currency movement in the recent third quarter.
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Asia, Middle East & Africa (AMEA) unit experienced strong growth for the quarter. Organic net revenue grew by 10%. Within this unit, snacks experienced double-digit volume growth rate. Beverages' volume experienced high single digit growth rate. India and Pakistan experienced snacks volume growth of 12% and 27%, respectively. Beverage volume for India and Pakistan was up 23% and 25%, respectively. Constant currency operating profit for the unit grew by 14%.
http://seekingalpha.com/article/935611-pepsico-or-coca-cola
Here's an ET story of an unlikely success of Pak singer of a fish song:
LONDON: A 31-year-old Pakistani fish seller at a London market seems like an unlikely pop star. But the moment he starts to sing his One Pound Fish Song, he is suddenly surrounded by a sea of fans.
The song goes Come on ladies, come on ladies, have a, have a look, one pound fish. Very very good, very very cheap, one pound fish.
The One Pound Fish Song by Mohammad Shahid Nazir has led him to sign a record deal with Warner Music, The Sun reported.
Nazir was spotted after a YouTube video of him singing at the Queen’s Market, Upton Park, got more than 3.6 million views.
British star Alesha Dixon and US boy band Mindless Behaviour have both recorded versions of the song.
Nazir said the attention is not unusual.
“People have come from Australia, the US, Canada and all over Europe. They don’t come here to work or shop, they come for One Pound Fish Man,” he told the daily.
Shahid moved to Britain just over a year ago with the hope of making enough money to send to his wife and four children in Pakistan.
On his first day at the fish stall, his boss told him to shout to customers to get their attention. He said he did not like shouting, and so made up a song.
http://tribune.com.pk/story/471054/pakistani-fish-sellers-song-gets-record-deal-with-warner-music/
Here's a News story on rising obesity in Pakistan:
KARACHI: The obesity is an emerging challenge to human well-being like other parts of the world, it was also on the increase in Pakistan.
The overweight and obesity are the fifth leading risk for global deaths.
The World Health Organization (WHO) estimates suggest that 26 percent of women and 19 percent of men in Pakistan are obese. Women are 2-3 times more likely to be obese.Childhood obesity is increasing with an estimated value of 10 percent.
This was stated by Prof Dr Muhammad Iqbal Choudhary, Director International Center for Chemical and Biological Sciences (ICCBS), Karachi University.
He was delivering a lecture on Wednesday at the 4th International Symposium-Cum-Training Course on Molecular Medicine and Drug Research being held at the International Center for Chemical and Biological Sciences (ICCBS).
Over 350 scientists, including 35 scientists from 24 countries, are attending the international event, organised by Dr Panjwani Center for Molecular Medicine and Drug Research (PCMD), University of Karachi.
Dr. Iqbal said that obesity had become a serious health problem worldwide, which is a result of an imbalance between energy intake and expenditure; the molecular cascade involves in obesity and associated disorders are not fully understood.
Proliferation of adipocytes plays an important role in the onset and progression of obesity, he added.
`Obesity has been linked to several serious health ailments like heart disease and stroke, high blood pressure, diabetes, cancer.
Overweight and obesity are major risk factors for a number of chronic diseases, including diabetes, cardiovascular diseases and cancer; once considered a problem only in high income countries, overweight and obesity are now on the rise in low and middle-income countries.
Overweight and obesity are largely preventable; the intake of healthier foods, and regular physical activity are easiest ways to prevent obesity, he said.
There is an urgent need to have R&D programme in the field of anti-obesity drug discovery and development, he urged, saying that the fundamental causes of obesity are an increased intake of energy-dense foods that are high in fat, salt and sugars but low in vitamins, minerals and other micronutrients; and a decrease in physical activity due to the increasingly sedentary nature of many forms of work, changing modes of transportation and increasing urbanization.
Talking about the multi-drug-resistant pathogens, he said that a rapid decline in research and development on new antibiotics coincides with increasing frequency of infections caused by multi-drug-resistant pathogens.
The key reason of bacterial resistance is the indiscriminate of suboptimal use of antibiotics. During the last three days of the symposium, various lectures of the national and international scientists were held on different scientific issues.
http://www.thenews.com.pk/article-83095-Obesity-on-the-increase-in-Pakistan
Here's an ET story on Pepsi sales in Pakistan:
Pakistan is one of the top 10 markets outside the United States for PepsiCo, says Qasim Khan, a senior executive in the global food and beverage giant’s management team for Asia.
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Somewhat surprisingly for PepsiCo, its biggest brand in Pakistan is not the signature Pepsi cola, but rather Mountain Dew. “Pakistan is the second-largest market in the world for Mountain Dew after the United States,” said Muhammad Khosa, head of corporate affairs at PepsiCo Pakistan.
Pepsi began its operations in Pakistan with carbonated beverages in 1967, and currently has eight bottling franchisees operating throughout the country. In addition to Pepsi and Mountain Dew, they produce 7up and Mirinda in the carbonated beverage category, and Sting in the energy drink segment. Over the past decade, Pepsi has added snack foods and fruit juices to its portfolio of products in Pakistan, which it manufactures primarily out of a factory in Lahore.
The addition of the snack food business – as well as strong growth in its beverage lines – has resulted in PepsiCo becoming the largest food and beverage company in Pakistan. According to sources familiar with the matter, the revenues of PepsiCo Pakistan and its eight bottlers came to a combined Rs82 billion for the financial year ending June 30, 2012, up 19% compared to the previous year.
Growth seems to be moving at breakneck speed in the snack food business, which the company started in 2006. “The Pakistan snack food business was the fastest growing in the Asia Pacific region for PepsiCo last year,” said Khan.
Indeed, growth was so fast that the company’s manufacturing plant for snacks reached its peak production capacity within its first year of operations. The company had initially estimated that it would be able to handle at least three years’ growth: it is now scrambling to add capacity as quickly as possible.
Pakistan’s growing importance for PepsiCo is increasingly being reflected in different ways. A television commercial produced in Pakistan for Mountain Dew is now used worldwide. Pakistani technical staff members are occasionally sent to PepsiCo’s divisions around the world to train others. And the PepsiCo food laboratory in Lahore is now used as one of the main labs for products being tested for the Middle East and Africa.
The company’s business unit, under which Pakistan falls, is headed by Qasim Khan, a 1979 graduate of Hailey College in Lahore. After a brief stint at Procter & Gamble, Khan joined PepsiCo in 1986 and has been with the company ever since; serving in senior positions throughout the world.
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PepsiCo and its bottlers combined have over 15,000 employees in Pakistan. And it is among the highest taxpaying entities in the country.
Yet not everything is going well for PepsiCo in Pakistan. The natural gas shortage has meant that gas supply to its captive power generation unit at its manufacturing facility has been cut off, forcing it towards alternative, and more expensive, fuel sources. “The cost savings we had managed in our logistics operations were wiped out by higher energy costs,” said Khan.
Nonetheless, the company plans to continue growing its operations in Pakistan and make it part of the global supply chain. Kurkure, spicy corn-based snack currently available only in India and Pakistan, will soon be exported to Malaysia, Indonesia and Singapore from Pakistan, owing to the fact that the chips produced in Pakistan are already certified ‘halal’.
http://tribune.com.pk/story/493197/food-and-beverages-pakistan-among-pepsicos-top-10-non-us-markets/
Here's ET on Coke's planned investment in Pakistan:
KARACHI: Optimistic about its growth prospects in Pakistan, the Coca-Cola Company – one of the world’s largest beverage companies – will invest $379 million on manufacturing facilities across Pakistan over the next three years to expand its business, the company’s Pakistani subsidiary announced on Monday.
The announcement comes on top of the $172 million already invested by Coca-Cola in the country in 2011. The beverage giant will be spending the money on three new bottling plants, one each in Karachi, Multan and Islamabad. The announcement was made in the ground-breaking ceremony of the Multan plant on Monday.
The funds will be utilised for expansion and bringing about infrastructure changes and systemic improvements in the Coca-Cola system, an official press release said.
The expansion plans come as rising demand makes it difficult for Coca-Cola to keep pace with its existing production capacity in Karachi and Punjab, according to company officials. A decent growth in its top-line may also be another factor encouraging more investments.
Owing to its strategic location, Multan can not only serve southern and northern Punjab – which alone accounts for more than 60% of Coca-Cola’s business – but can also cater to Karachi’s market, company spokesman Fahad Qadir told The Express Tribune.
Greenfield investment refers to new foreign direct investment that will be utilised in setting up a completely new project, as opposed to an existing business expanding operations with its free cash flows.
Qadir says the plant will be fully equipped with state-of-the-art production equipment and product warehousing facilities. The plant will also have a much higher manufacturing capacity, he said.
Besides the three Greenfield plants announced, Coca-Cola Pakistan already operates six bottling factories in Pakistan, located in Karachi, Gujranwala, Multan, Lahore, Rahimyar Khan, and Faisalabad. It buys close to Rs13 billion in raw materials from around 300 local suppliers.
The Coca-Cola System, according to the press release, provides direct and indirect employment to more than 8,000 people in Pakistan; while another 35,000 people are employed through its supply chain, and another 100,000 benefit through employment in allied industries.
Coco-Cola Pakistan refused to comment on its revenues: but our sources say the company earned over Rs50 billion in revenues for the financial year ending June 30, 2012; a 55% increase when compared with the previous year. It also paid Rs10 billion in taxes.
http://tribune.com.pk/story/515776/coca-cola-announces-379m-expansion-plan-for-pakistan/
Here's an ET report on Pak beer company profits:
Murree Brewery, Pakistan’s most prominent manufacturer of alcoholic products, has announced its earnings results for the quarter ended March 31, 2013 (3QFY13) and the nine months of the ongoing fiscal year (9MFY13).
The company recorded a profit of Rs175.94 million for the quarter, up an impressive 18% year-on-year (YoY). Its 9MFY13 profit, meanwhile, has registered a staggering 63% increase over the same period of the preceding year. The company has decided not to pay out any dividends with the result.
The company’s stock hit its upper circuit breaker in trading on Wednesday, after the results were made public.
Murree Brewery has the distinction of being one of the oldest public companies of the subcontinent. Its shares were traded on the Calcutta Stock Exchange as early as 1902, and it is now the oldest continuing industrial enterprise in Pakistan. It ranks among the top 25 performing public listed companies at the Karachi Stock Exchange, according to some accounts.
The company does not advertise its products, and is legally prohibited from exporting them. Nonetheless, it is valuable contributor to the economy, having paid nearly Rs314 million in taxes on profits alone so far this fiscal year, apart from the duties and taxes levied on the sale of its products. That figure is 74% higher than the same period of last year.
And while Pakistan forbids the consumption of alcohol by the Muslim-majority population, the company has recorded an impressive 20% increase in its topline so far this year, as compared to the same period of last year, while seeing gross profits grow 37% in 9MFY13 over the previous year. Higher ‘administrative and marketing’ expenses (up 14%) may point to increased marketing activity, ceteris paribus, which would explain the higher profits.
The company’s stock has been doing quite well. It offers investors a one-year return of 297.83%, with stock prices surging from Rs75.68 on April 24, 2012, to close at Rs293.19 on April 24, 2013.
http://tribune.com.pk/story/540170/murree-brewery-finds-much-to-cheer-about-in-fy13/
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