Wednesday, October 5, 2011

FMCG Companies Profit From Rural Consumption Boom in Pakistan

Away from the violence and the troubles of the big cities, the economy of rural Pakistan is booming. Flush with cash from bumper crops at record commodity prices, the farmers are spending on tractors, cars, motorcycles, mobile phones, personal grooming items, packaged foods and beverages and other consumer products like never before.

Higher crop prices have increased farmers’ incomes in Pakistan by Rs. 342 billion in the 12 months through June, according to a government economic survey. That was higher than the gain of Rs. 329 billion in the preceding eight years, according to a report by Bloomberg News. Companies like Millat tractors, Honda Atlas Motorcycles, Pak Suzuki Motors, Engro Foods, Telnor, Nestle, Colgate-Palmolive, Proctor and Gamble and Unilever have been big beneficiaries of the current rural consumption boom.

Nestle Pakistan's chief Ian Donald has summed up the rising demand for his company's products as follows: “It’s a common perception that China and India are much bigger in terms of growth than Pakistan. But for Nestle, the per capita consumption of our products in Pakistan is twice as much as we have in China and India.” It should be noted that Nestle is the world's largest packaged food company, and Pakistanis' per capita consumption of milk and dairy products is about 2.5 times higher than in India. According to the FAO, the average dairy consumption of the developing countries is still very low (45 kg of all dairy products in liquid milk equivalent), compared with the average of 220 kg in the industrial countries. Few developing countries have per capita consumption exceeding 150 kg (Argentina, Uruguay and some pastoral countries in the Sudano-Sahelian zone of Africa). Among the most populous countries, only Pakistan, at 153 kg per capita, has such a level. In South Asia, where milk and dairy products are preferred foods, India has only 64 kg and Bangladesh 14 kg. East Asia has only 10 kg.

Here are a few key points excerpted from a recent Businessweek story on rise of the rural consumer in Pakistan:

1. Unilever and Colgate-Palmolive Co. are sending salespeople into rural areas of the world’s sixth most-populous nation, where demand for consumer goods such as Sunsilk shampoo, Pond’s moisturizers and Colgate toothpaste has boosted local units’ revenue at least 15 percent.

2. “The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”

3. Consumer-goods companies forecast growth in Pakistan even as an increase in ethnic violence in Karachi has made 2011 the deadliest in 16 years for the country’s biggest city and financial center.

4. Nestle Pakistan Ltd. is spending 300 million Swiss francs ($326 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($378 million) in the six months through June. “We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”

5. Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before. “We had a great year because of cotton prices,” said Mirbar, 28, who lives in a village outside south Pakistan’s Matiari town. “As our income has risen, we want to buy nice things and live like kings.”

6. Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg. “In a generally faltering economy, the double-digit growth in revenue for companies servicing the consumer sector has come almost entirely from the rural areas,” said Sakib Sherani, chief executive officer at Macroeconomic Insights Pvt. in Islamabad and a former economic adviser to Pakistan’s finance ministry.

7. Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said in an interview in Karachi. While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.

8. Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.

9. Its detergents Bonus Tristar and Brite are packed in sachets of 20 grams or less and priced as low as five rupees (6 cents), to boost sales among low-income consumers hurt by the fastest pace of inflation in Asia after Vietnam. Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent and Brooke Bond Supreme tea, is available in about 11,000 villages now.

10. Pakistan, Asia’s third-largest wheat grower, in 2008 increased wheat prices by more than 50 percent as Prime Minister Yousuf Raza Gilani sought to boost production of the staple.“The injection of purchasing power in the rural sector has been unprecedented,” said Sherani, who added that local prices for rice and sugarcane have also risen.

11. Telenor Pakistan Pvt. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.

While the presence of multinational consumer product giants like Nestle and Unilever receive more coverage in the western media, the Euromonitor report finds that Pakistani FMGC companies like Engro Foods, Haleeb Foods, Shezan, Tapal, Shan and others dominate the packaged food business in Pakistan. Here's an excerpt from a recent Euromonitor report on Pakistan:

Although multinationals are paving the way for innovations and taking into account consumers’ demands by launching new products and advertising them heavily, it is usually the domestic companies which win the competitive battle in volume terms as they focus less on expensive and more conventional items which already have a consumer base. Nevertheless, multinationals carry strong brand names and target the higher class with premium products, thus taking their reasonable share in value terms.

Supermarkets/hypermarkets is the most steadily growing distribution channel with a new player Hyperstar. As urbanization is increasing, people tend to leave their families and live separately and therefore there is sometimes no housewife at home to be responsible for the purchase of fresh items close to home. Supermarkets/hypermarkets became more popular over the review period, being gradually considered more convenient as this channel can offer a wide selection of products in one place. Pakistanis are becoming more used to planning their meals for several days and supermarkets/hypermarkets work on offering as wide an assortment as possible. Nevertheless, traditional retail outlets such as independent and small grocery retailers continue to have a good name not just because of the lower unit prices offered but also because of their selection as most of them are specialized.

Pakistan continues to face major problems as it deals with the violent Taliban insurgency and multiple internal and external threats and crises of stagnant economy, scarcity of energy and the lack of sense of security. However, it is clear from the consumer spending data that Pakistanis are a resilient people, and they continue to defy the persistent prophecies of doom and gloom.

Pakistan is just too big to fail. I fully expect Pakistan to survive the current crises, and then begin to thrive again in the near future.

Related Links:

Haq's Musings

Pakistan's Sugar Crisis

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Land For Landless Women in Pakistan


Riaz Haq said...

Pakistan central bank has cut key interest rate by 1.5% in its latest meeting, according to Businessweek:

Oct. 8 (Bloomberg) -- Pakistan’s central bank cut its benchmark interest rate by a more-than-estimated 1.5 percentage points to spur investment after terrorism and floods weakened economic growth.

The State Bank of Pakistan lowered the discount rate to 12 percent from 13.5 percent, Syed Wasimuddin, a central bank spokesman, said in Karachi today. Three of five economists surveyed by Bloomberg News predicted a 1 percentage point cut, and the remainder forecast a 0.5 percent reduction.

Acting Governor Yaseen Anwar had room to act and join emerging markets from Russia to Brazil in lowering borrowing costs after Pakistan’s inflation rate dropped 2 percentage points in the past three months. A rate cut might support an economy that’s seen growing less than half the pace of fellow South Asian nations India, Bangladesh and Sri Lanka this year.

“It’s a bold decision and would help prop up growth,” said Suleman Akhtar, head of research at Foundation Securities Ltd. in Karachi. “Further rate moves would depend on the extent to which the weakening rupee boosts import costs and stokes inflationary pressure.”

The Pakistan rupee has declined 1.9 percent this year and dropped to a record low on Sept. 16, prompting the central bank last month to conduct what it called a “calibrated intervention” to stabilize the currency.

Stocks, Bonds

The Karachi Stock Exchange 100 Index has fallen 1.4 percent since the start of this year, while Pakistan’s 10-year government bond yields are trading at 12.6 percent, the highest level after Greece and Venezuela, according to data compiled by Bloomberg.

Consumer prices rose 10.46 percent in September from a year earlier, after climbing 12.43 percent in July, according to the Federal Bureau of Statistics.

The central bank decided to slash its policy rate for a second straight meeting because of a “high probability” of meeting the FY12 inflation goal and to stimulate investment, according to today’s statement. The State Bank is targeting an average inflation of 12 percent in the year ending June 30, 2012.

Riaz Haq said...

Stock and credit markets respond positively to rate cut by Pak central bank, according to The Express Tribune:

KARACHI: The bond and equity markets have reacted strongly to central bank’s surprise decision of slashing the interest rate to bring it on a par with pre-2008 crisis levels.

Karachi inter-bank offered rate (Kibor), the benchmark six-month lending rate, plummeted 95 basis points in a single day to a 26-month low of 11.96%, according to a Topline Securities research note.

Furthermore, yields of the actively traded one-year treasury bills and the benchmark 10-year Pakistan Investment Bonds fell by 75 basis points and 60 basis points to trade around 11.90-93% and 12.00-05%, respectively.

The State Bank of Pakistan (SBP) on Saturday cut its benchmark discount rate from 13.5% to 12%.

The rate cut has also benefitted well the stock market on account of better earnings for leveraged companies and reduction in risk-free rate, adds the note.

The Karachi Stock Exchange’s benchmark 100-share index opened with a gap of approximately 350 points to skip over 12,000 points for the first time in two months on Monday.

Profits of leveraged companies to jump 2-8%

Heavily leveraged companies from the cement, textile and fertiliser sectors – whose loans are floating and linked with Kibor – will have to bear lower interest charges from January 2012 following quarterly loan re-pricing in December, says the note.

These companies will be the major beneficiaries of the cut in discount rate, the fee commercial banks pay to borrow money from the SBP. DG Khan Cement, Engro and Pakistan State Oil will be some of the major gainers as their annualised earnings will increase by 7.8%, 6.5% and 2.1%, respectively, adds the research note.

Overall, the rate cut will augment earnings growth by 0.5% in 2012.

Riaz Haq said...

Here's a Dawn report on Pakistan auto sales July-Sept 2011:

KARACHI: While sale of cars, two and three wheelers and light commercial vehicles remained brisk from July-September 2011, production by a leading tractor assembler remained suspended between second week of July 2011 and September 2011.
Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.

Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.

Pak-Suzuki Motor Company Limited (PSMCL) raised the prices by Rs14,000-30,000 followed by two to four per cent by Indus Motor Company (IMC).

Honda City also became costlier by Rs25,000 while Civic price was raised by Rs38,000.

Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.

Overall sale of costly cars (1,300cc and above) rose to 16,936 units as compared to 14,949 units.

Sale of Honda Civic, Honda City and Toyota Corolla stood higher at 1,710, 2,562 and 10,682 units as compared to 1,558, 2,274 and 10,371 units respectively. Suzuki Swift sales also surged to 1,826 units from 673 units.

In 1,000cc segment, overall car sales jumped to 7,343 in July-September 2011 from 5,679 units in the same period of last year in which sales of Suzuki Cultus and Suzuki Alto swelled to 3,710 and 3,633 units from 2,860 and 2,819 units respectively.

Increase in Suzuki Mehran sales to 8,415 units from 5,356 units made a positive impact on overall sales of 800cc and below 1,000cc cars which rose to 13,786 units from 9,402 units.

Sale of Daihatsu Cuore and Suzuki Mehran went up to 1,282 and 4,089 units as compared to 1,136 and 2,910 units.

A leading car assembler said he checked with many banks who intend to cut interest rates from Nov 1 after Central Bank`s decision to lower interest rates.

He said car financing by banks now enjoys 20 per cent share in overall car sales and this share may go up slightly after cut in interest rates.

From July onwards, the buyers especially on cash basis had resumed purchases and it was evident from sales trend in the first quarter of the current fiscal year.

Rising farm income also encouraged farmers and growers to purchase more new bikes, thus pushing up Honda bikes sales to 152,605 units in July-September 2011 from 126,701 units in the corresponding period of 2010.

Sale of Suzuki bikes also increased to 5,506 from 4,588 units while sale of Ravi and Habib bikes (Chinese two-wheelers) improved to 6,680 and 7,707 units from 5,971 and 4,053 units.

Qingqi and Sazgar three-wheeler sales reached 5,193 and 3,901 units from 2,787 and 2,976 units.

In pick-ups, a total of 4,586 units of Suzuki Ravi and 856 units of Toyota Hilux were sold in July-September 2011 as compared to 3,129 of Ravi and 285 units of Hilux in the same months during 2010.

In heavy vehicles, sales of only Master trucks rose to 110 units from 82 units while sales of Hino, Nissan and Isuzu trucks plunged to 231, 33 and 36 units from 422, 102 and 119 units.

In buses, Hino bus sales dropped to 56 units from 110 units and Isuzu bus sales also came down to 12 units from 23 units........

Riaz Haq said...

SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.

Rising prices are usually something auto makers welcome. Not in India.

As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.

But thanks to rising interest rates, buyers are hitting the brakes.

Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...

Here's more from Reuters:

NEW DELHI, Oct 10 (Reuters) - Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia's third-largest economy.

The growth forecast is down from the earlier estimate of 10 to 12 percent by the Society of Indian Automobile Manufacturers (SIAM), and 16 to 18 percent before that. Car sales had jumped 30 percent in the fiscal year 2010/11 that ended March.

"If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued," S Sandilya, President, SIAM and Chairman, Eicher Motors , told reporters.

Indian car sales last grew in single digits in 2008/09, at 1.39 percent.

Demand for cars in the world's second-fastest growing auto market after China has also been dented in recent months by rising vehicle costs, with many first-time buyers plumbing for motorcycles or scooters.

Car sales fell 1.8 percent in September to 165,925 cars, data released by SIAM showed on Monday. Demand for cars shrunk in July for the first time in nearly three years.

However, sales of commercial vehicles, a key pointer to the country's economic activity, rose 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 vehicles.

India's central bank has raised interest rates 12 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt credit-based purchases and slowed economic growth.

The Indian car market, which saw a 10 percent decline in August, is driven by a burgeoning and aspirational middle class that mostly relies on bank loans for purchases.

Maruti Suzuki , India's largest car maker, and 54.2 percent owned by Japan's Suzuki Motor Corp , posted a 21 percent drop in September sales, but rival Tata Motors , which makes both commercial vehicles and cars, reported a 22 percent increase for the month.

"The way things have been going in the last few months, this is a realistic number. While there is some uptick in festive demand, it's nowhere close to what it was in the last two years," said Vineet Hetamasaria, auto analyst at Mumbai's PINC Research.

SIAM raised its growth forecast for commercial vehicles to 13 to 15 percent, from the earlier forecast of 12 to 14 percent.

"Demand for movement of goods still remains, because the economy is still growing at 7 to 8 percent," SIAM's Sandilya said.

Riaz Haq said...

Car sales are rising by double digits in Pakistan and declining by double digits in India:

SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.

Rising prices are usually something auto makers welcome. Not in India.

As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.

But thanks to rising interest rates, buyers are hitting the brakes.

Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...

Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.

Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.

Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.

Riaz Haq said...

Here's an Express Tribune story on rapid growth of branchless banking in Pakistan:

With State Bank of Pakistan demoing a constructive regulatory approach for branchless banking, a number of players are now evolving to offer branchless banking in Pakistan as a viable business model, said a report published by CGAP.

CGAP says that Pakistan has become one of the fastest developing markets for branchless banking in the world.

According to the report, SBP has issued four branchless banking licenses and is considering several others. Meanwhile, the government is planning to further encourage the mobile banking by planning to distribute the government payments through branchless banking.

There are currently two major operators in the market with several to jump in during the next couple of years.

Easypaisa, a joint venture of Tameer Microfinance and it’s parent company Telenor, claims to have over half a million mobile accounts. Easypaisa claims to have processed bill payments and domestic money transfers of worth Rs. 43 billion (US$500 million), unveils the report.

UBL Omni, another branchless banking service launched in April 2010, has reportedly won several contracts to disburse payments for nongovernment organizations and government schemes.

UBL claims to have 5,000 agents, countrywide, disbursing payments to around 2 million recipients.

New players including Mobilink, TCS, Bank Alfalah, Askari Bank and MCB are expected to enter the branchless banking market.

CGAP says that next 12 months will be critical for the newly emerging branchless banking sector in Pakistan. The evolution of the sector will likely yield important lessons for the rest of the world.

You can download the complete report by clicking this link.

Riaz Haq said...

Nishat Group entering packaged milk market in Pakistan, according to Bloomberg:

Nishat Group, owner of Pakistan’s largest lender by market value, plans to enter the consumer goods business by starting milk production this year, Chief Financial Officer Inayat Ullah Niazi said.

“We have bought land outside Lahore and after beginning milk production, we will add other products to the line,” Niazi said by telephone from Lahore today. He didn’t provide more details.

Niazi said the group, which owns MCB Bank Ltd. and Nishat Mills Ltd., the nation’s largest textiles exporter, sees growth potential in Pakistan for consumer goods, particularly food products. The government plans to spend 3.5 billion rupees ($40 million) to improve the dairy industry, including expanding infrastructure, in the fiscal year ending June 30, and boost economic growth in the period to 4.2 percent from 2.4 percent.

“Dairy is one of the fastest growing businesses in Pakistan,” said Abdul Aziz Anis, who oversees $35 million in assets including shares of MCB and Nishat Mills, as chief executive officer of Karachi-based Alfalah GHP Investment Management Ltd. “There is huge growth potential in the consumer business, but the only question is the buying power of the population with still-high inflation.”

Nishat Group joins Nestle SA in expanding in dairy in Pakistan. The Vevey, Switzerland-based company said in August that it plans to double dairy output in Pakistan by spending 300 million Swiss francs ($334 million) in the next three to four years. Companies including Unilever and Colgate-Palmolive Co. are also expanding sales of consumer goods in the South Asian nation as demand for products such as Sunsilk shampoo and Colgate toothpaste bolster local units’ revenue.

Inflation in Pakistan rose 11.56 percent in August from a year earlier, the fastest pace in the Asia-Pacific region after Vietnam, according to data compiled by Bloomberg. The State Bank of Pakistan cut the discount rate to 12 percent from 13.5 percent this month to help spur investment in the nation, which has been hit by flooding and terrorism.

Mayraj said...
Pakistan emerges as second best performing market in Asia

Riaz Haq said...

Occasional and isolated but nonetheless tragic suicide cases like Raja Khan's in Pakistan get a lot of media coverage as they should. Meanwhile, over 200,000 farmer suicides in India have passed with little media attention in India.

Here's a Washington Post report on rising suicides in India:

NEW DELHI — Ram Babu’s last days were typical in India’s growing rash of suicides.

The poor farmer’s crop failed and he defaulted on the $6,000 loan he had taken to buy a tractor. The bank’s collectors hounded him, even hiring drummers to go round the village drawing attention to his shame.

“My father found it unbearable. He was an honorable man and he couldn’t take the humiliation. The next day he hanged himself from a tree on his farm,” his son Ram Gulam said Friday.

Babu’s suicide went unreported in local newspapers, just another statistic in a country where more than 15 people kill themselves every hour, according to a new government report.

The report released late Thursday said nearly 135,000 people killed themselves in the country of 1.2 billion last year, a 5.9 percent jump in the number of suicides over the past year.

The suicide rate increased to 11.4 per 100,000 people in 2010 from 10.9 the year before, according to the statistics from the National Crime Records Bureau.

Financial difficulties and debts led to most of the male suicides while women were driven to take their lives because of domestic pressures, including physical and mental abuse and demands for dowry.

A 2008 World Health Organization report ranked India 41st for its suicide rate, but because of its huge population it accounted for 20 percent of global suicides.

The largest numbers of suicides were reported from the southern Indian states of Kerala, Tamil Nadu, Andhra Pradesh and Karnataka, where tens of thousands of impoverished farmers have killed themselves after suffering under insurmountable debts.

The loans — from banks and loan sharks — were often used to buy seeds and farm equipment, or to pay large dowries to get their daughters married. But a bad harvest could plunge the farmer over the edge.

Sociologists say the rapid rise in incomes in India’s booming economy has resulted in a surge in aspirations as well among the lower and middle classes, and the failure to attain material success can trigger young people to suicide.

“The support that traditionally large Indian families and village communities offered no longer exists in urban situations. Young men and women move to the cities and find they have no one to turn to for succor in times of distress,” said Abhilasha Kumari, a sociology professor in New Delhi.

Riaz Haq said...

Here's an excerpt from Dr. Ishrat Husain's comp of India-Pak economy:

Pakistan is one of the few developing countries that has achieved an average annual
growth rate of over 5 percent over the six decades. Consequently, the incidence of poverty has
declined from 40 percent to 24 percent. The salient features of Pakistan’s economic history are
summarized below:
• A country with 30 million people in 1947 that couldn’t feed itself and had to import all its
food requirements is not only able to fulfill the domestic needs of 170 million people at a
much higher per capita consumption level, but also exports wheat and rice .
• An average Pakistani earned about $ 1050 in 2009 compared to less than $ 100 in 1947.
In US current dollar terms the per capita income has expanded almost ten fold.
• Agriculture production has risen five times with cotton attaining a level of more than 12
million bales compared to 1 million bales in 1947. Pakistan has emerged as one of the
leading world exporter of textiles.
• Manufacturing production index is well over 13,000 with the base of 100 in 1947. Steel,
cement, automobiles, sugar, fertilizer, cloth and vegetable ghee, industrial chemicals,
refined petroleum and a variety of other products are manufactured for the domestic
market and in many cases for the world market too.
• Per capita electricity generation has reached 10,160 kwh compared to 100 in 1947.
Pakistan’s vast irrigation network of large storage reservoirs and dams, barrages, link
canals constructed during the last five decades has enabled the country to double the area
under cultivation to 22 million hectares. Tubewell irrigation provides almost one third of
additional water to supplement canal irrigation.
• The road and highway network in Pakistan spans 250,000 km-more than five times the
length inherited in 1947. Modern motorways and super highways and four lane national
highways link the entire country along with secondary and tertiary roads.
• Natural gas was discovered in the country in the 1950s and 32 billion cubic feet of
natural gas is generated, transmitted and distributed for industrial, commercial and
domestic consumption accounting for 50 percent of the country’s energy needs.
• Private consumption standards have kept pace with the rise in income. There are 52 road
vehicles for 1000 persons relative to only one vehicle for the same number of population
in 1947. Phone connections have reached 100 million from almost scratch. TV sets which
were non-existent adorn 62 out of every 1,000 houses.

Riaz Haq said...

Here's an excerpt from a Unilever report on ice cream consumption in Pakistan:

0.5 kg consumption per capita but growing at double digit rate

Riaz Haq said...

Here's a NY Times story about soil renewal for agriculture in Pakistan:

LAHORE, PAKISTAN — In the Pakistani village of Sharbaga, about 130 kilometers from Lahore, a 70-year-old farmer named Mohammed Ali and his wife plant rice seedlings in a wide field. They stand ankle-deep in muddy water holding thin green leaves that they deftly press into the ground. It is hard work under a blazing sun, but this seemingly mundane task is a significant development that can help rural Pakistanis improve their lives.

Just a few years ago, this rice paddy and most of the surrounding fields in this village of 5,000 were barren. For decades the land has lain fallow because it is saline from poor groundwater.

In 2006, the government of the state of Punjab, traditionally Pakistan’s breadbasket, and the United Nations Development Program started an agriculture project to rehabilitate saline farmland by treating it with gypsum. The Punjab government pays for two-thirds of the project’s six-year, $17 million budget, while the U.N. program pays for the rest.

Nearly six million hectares, or about 15 million acres, across Pakistan, including 2.3 million hectares in Punjab, are barren because of salinity and water logging. Gypsum’s calcium composition can neutralize saline soil. Within a season of applying the white powder, farmers like Mr. Ali had transformed a long-degraded land into a field that yielded bountiful crops of rice and wheat.

Forty-three percent of Pakistan’s population of 170 million depends on agriculture for their livelihood and two-thirds of the country’s citizens live in rural areas. Projects that help improve the lives of people on the ground are critical to creating stability in Pakistan, and yet these are often overlooked.

Sustainable agricultural growth is a “necessary condition for rural growth, employment generation, poverty reduction and social stability,” said a 2009 report on Pakistan’s agricultural potential by Weidemann Associates, an economic development consulting firm near Washington. The report was prepared for the U.S. Agency for International Development in Pakistan.

The biosaline project in Punjab has already helped lift 50,000 households out of poverty by raising incomes. From 2007 to 2010, the increase of rice and wheat production on rehabilitated land totaled 417,016 tons, worth $122 million.

Dozens of enthusiastic farmers who gathered to meet a visitor to Sharbaga this past summer were unequivocal about how the agriculture project had improved their lives. Before the project, there were few ways to make money in the village aside from sporadic manual labor. Farmers owned small parcels of largely infertile land, and most of the men migrated to cities for work in factories or as temporary laborers.

Now, all the men said their farming incomes had double or tripled, to as much as $230 a month, compared with the $90 or less that they could earn working in a factory, and migration to the cities is declining.
Reviving agriculture has been life-changing for many rural Pakistanis. Zeba Bibi, who also cultivates a garden in Liliani village, wants to know how she can make her mango trees healthier and more productive. She aspires to one day buy a tractor with extra income from crops grown on her family’s desalinated land. “We are looking forward to a better life,” she said.

Riaz Haq said...

Here's an Express Tribune report on Carrefour hyper stores expansion in Karachi:

KARACHI: Hyperstar – a Dubai-based chain of hypermarkets – is starting its Karachi operations at Dolmen Mall, Clifton from today (Monday), a much anticipated development that came two years after its first Pakistaani store opened in Lahore.

Owned by Majid Al-Futtaim Group, Hyperstar is retail franchise of Carrefour, the world’s second largest retailer after Walmart. The company will kick off its opening ceremony at 2pm on Monday, a company official said, it will be the first hypermarket in Karachi. A retail hypermarket is different from wholesalers such as Makro.

Hyperstar Karachi will be spread over 100,000 plus square feet and display 30,000 products, said Mubashir Jalili, who is the vice president of development at Hyperstar Pakistan.

The store’s selling area is spread over 65,000 square feet while its warehouse is spread over 20,000 square feet. The mall can accommodate 3,000 cars, Jalili said, and a higher number of motorcycles.

In 2009, the company launched its first store in Lahore where it achieved remarkable results – achieving Rs1 billion in revenues in its first year and set to cross Rs3 billion ($35 million) this year, according to sources familiar with the matter.

The company – whose Lahore store alone attracts more than one million customers every month – has already identified four more locations for Karachi and three for Lahore, Jalili said. Hyperstar wants to expand its chain of stores first in Karachi and Lahore then in Islamabad and other metropolitan cities of the country, he added.

MAF group’s second hypermarket in Karachi is under construction at Lucky One Mall near UBL Sports Complex, the site which previously housed the now defunct Fazal Mill.

Riaz Haq said...

Rising per capita income and a growing, young population spending more time online and at Western movies are helping build a mass market in Pakistan, according to Businessweek:

One way to take a city’s economic pulse is to check out where locals shop. In Karachi, Pakistan, shoppers are flocking to Port Grand, which opened in May. Built as a promenade by the historic harbor for almost $23 million, the center caters to Pakistanis eager to indulge themselves. This city of 20 million has seen more than 1,500 deaths from political and sectarian violence from January to August. At Port Grand the only hint of the turmoil is the presence of security details and surveillance cameras. “The whole world is going through a new security environment,” says Shahid Firoz, 61, Port Grand’s developer. “We have to be very conscious of security just as any other significant facility anywhere in the world needs to be.”

Young people stroll the promenade eating burgers and fries and browsing through 60 stores and stalls that sell everything from high fashion to silver bracelets to ice cream. Ornate benches dot a landscaped area around a 150-year-old banyan tree. “Port Grand is something fresh for the city, very aesthetically pleasing and unique,” says Yasmine Ibrahim, a 25-year-old Lebanese American who is helping set up a student affairs office at a new university in Karachi.

One-third of Pakistan’s 170 million people are under the age of 15, which means the leisure business will continue to grow, says Naveed Vakil, head of research at AKD Securities. Per capita income has grown to $1,254 a year in June from $1,073 three years ago.

The appetite for things American is strong despite the rise in tensions between the two allies. Hardee’s opened its first Karachi outlet in September: In the first few days customers waited for hours. It plans to open 10 more restaurants in Pakistan in the next two and a half years, says franchisee Imran Ahmed Khan. U.S. movies are attracting crowds to the recently opened Atrium Cinemas, which would not be out of place in suburban Chicago. Current features include The Adventures of Tintin and the latest Twilight Saga installment. Mission: Impossible—Ghost Protocol is coming soon. Operator Nadeem Mandviwalla says the cinema industry in Pakistan is growing 30 percent a year.

Exposure to Western lifestyles through cable television and the Internet is raising demand for these goods and services. Pakistan has 20 million Internet users, compared with 133,900 a decade ago, while 25 foreign channels, such as CNN (TWX) and BBC World News, are now available. And for many Pakistanis, reruns of the U.S. sitcom Everybody Loves Raymond are a regular treat.

The bottom line: With per capita income rising quickly, Pakistan is developing a mass market eager for Western goods.

Riaz Haq said...

Quality seeds essential for agriculture development, reports APP:

Supply of good quality seed is the base of sustainable and developing economy. "For improving the seed quality Pakistan Agricultural Research Council (PARC) Scientists are making appreciable efforts in agriculture research sector", Dr Iftikhar Ahmad, Chairman, PARC said while speaking in a meeting here on Tuesday.
The meeting on "Review of Variety Release and Seed Production System in Pakistan" was jointly organized by PARC and International Center for Agricultural Research in the Dry Areas (ICARDA). The PARC Chairman further elaborated that seed supplied to farmer is an important measure for achieving enhanced agricultural production. "Due to lack of awareness and information about quality seed we are unable to achieve required productivity, and the bad quality seed has the potential to threaten food security for whole country", he added.
Foreign delegate from ICARDA, US Department of Agriculture (USDA), and International Maize and Wheat Improvement Center (CIMMYT) were present on the occasion. Provincial presentation under the guidance of Secretary Agriculture, Government of Punjab, Arif Nadeem and heads of other agricultural institutes from Sindh, Balochistan, and Kheyber Pakhtoonkhwa graced the occasion.
Dr Iftikhar Ahmed, who chaired the meeting emphasized on improved varieties for quality seed that are basic requirements for enhancing the agriculture productive as well as in livestock sector.
He said that seed certified Cooperation Department also established in Khyber Pakhtunkhwa, Sindh, Balutistan, Baluchistan as in functioning Punjab province for betterment of farmers and also launched a campaign for awareness of quality seed.
During a roundtable meeting of which 30 members participated from across the country discussed current challenges that are being faced to the seed sector.
The members of the meeting special focused on accelerating the transfer of new improved varieties to farmers. The meeting was a follow-up of a three-week mission sponsored by ICARDA during which seed specialist Dr Mishael Turner had wide-ranging consultations with both public institutions and private companies.
He was of the view that the threat posed by epidemics of rust diseases of wheat had raised awareness about the need to move new improved resistant varieties rapidly from research institutes to farmers through the variety release system.
These concerns enabled ICARDA to secure funding from USAID to compare variety release procedures in different countries.
Discussion among the participants covered many issues affecting plant breeding and the seed industry in Pakistan and provided an open exchange of opinions among the stakeholders. Key themes that emerged from the meeting included the need to strengthen public private partnerships and the ways to improve capacity building for all partners of the seed sector.
There was an agreement among the participants that the new Ministry of National Food Security and Research should take up these issues as soon as possible.

Riaz Haq said...

Here's an Express Tribune report tiled "Nokia Sees Pakistan Becoming a High-Growth Market":

KARACHI: Foreign delegates and local entrepreneurs discussed challenges facing businesses, sought greater industry-academia collaboration and highlighted business models to succeed in an emerging market at the 12th Management Association of Pakistan (MAP) Convention on Leadership Challenges for Business Success here on Wednesday.

Emerging markets will account for 80% of the world’s growth the next decade and Pakistan will be an important emerging market in future, Senior Vice President of Nokia India, Middle East and Africa Shivakumar said in a speech titled “Winning in emerging markets”.

Speaking to a conference packed with businessmen, Shivakumar – who is also the senior vice president of All India Management Association (AIMA) – said growth in developed economies has slowed down dramatically and the world is now looking at emerging markets, which account for 42% of population and 13% of income.

Pakistan is listed in four categories of emerging markets including Dow Jones 35 and emerging and growth level economies (EAGLES), he said. “Pakistan will be an important high-growth emerging market.”

In order to succeed in an emerging economy, he said, it is important to understand its segments and consumers. The emerging market consumers – most of whom live under $2 a day – are value-sensitive and not price-sensitive, he said and added entrepreneurs have to work on their business models to accommodate that segment of consumers who believe in the doctrine of “pay more, get more” and “pay less, get less”.

Sharing his experiences, he said, there are three things that he applied and succeeded. “Always put the country’s interest first, keep fixed costs very low and turn as many cost variables as possible,” he said.

“Never cut the features and offer your product at half the price. Consumers don’t want an incomplete product.”

Speaking to the participants earlier on, event’s chief guest and State Bank of Pakistan Governor Yaseen Anwar said it is time for all business leaders and managers to take the lead. Leaders must be more aware of the challenges facing the country – inflation, unemployment and power crisis.

There are no shortcuts to sustained economic development, Anwar said. “We need to develop the right strategies and then translate these strategies into action.”

AIMA President Rajiv Vastupal also addressed the event, saying IMF has lowered growth projection for both 2011 and 2012. “Today’s corporate leaders must focus on innovation to counter the global economic challenges,” he said. He elaborated the successful example of Apple’s iPad, which was launched during recession and earned a great success.

Nasir Zuberi said...

Dear Mr. Riaz, thank you very much for a insightful article & providing a consolidated document on the subject matter.
My only question is the picture, I am forced to taking this as an endorsement from your side that credit goes to PPP for this growth??
Where as facts depict a absolutely different picture, government is printing approximately Rs. 3 billion per day which is directly adding to inflation and this is not mentioned here.
Approaching Rural Markets has been the focus of various FMCGs, few of them are PTC, Unilever, Tapal, EBM, Natioanl Foods and many other similar organizations. But giving credit to PPP is not the right thing to do.
Please correct me on this, It will be a learning for me.

Riaz Haq said...

NZ:"I am forced to taking this as an endorsement from your side that credit goes to PPP for this growth??"

The rural boom is not an accident. It's the result of the PPP policy of high support prices for commodities like wheat, sugar, cotton, etc which has transferred hundreds of billions of dollars from urban to rural economy benefiting the PPP vote bank.

The downside of it are as follows:

1. The high food prices have sparked high inflation, forcing the central bank to tighten monetary policy.

2. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits.

3. It has slowed industrial and service sectors in the urban areas because of credit crunch in the private sector.

Riaz Haq said...

Here's Punjab CM pitching his province's potential as the food basket to the world, reported by Daily Times:

Pakistan is as an emerging country of fully traceable products for the world to meet food supply demand of increasing global population.
Chief Minister, Punjab, Muhammad Shahbaz Sharif at a meeting with EU ambassadors said Punjab government has diverted substantial resources to develop science-based, vibrant and internationally linked agriculture sector that could not only meet the food security challenges but also compete in domestic as well as in international markets.
Punjab Government has entered into certification regime to produce fully traceable agricultural and livestock products to reach high-end markets of the developed world and to enhance export upto $2 billion annually, he added.
He said Pakistan has the potential to become 10th largest economy of the world after Germany. He apprised the distinguished envoys Punjab government has allocated Rs 2.024 billion for a mega project to improve supply chain of selected agricultural and livestock products for improving quality and introducing traceability as per international market standards and requirements.
He said participation of Punjab in the forthcoming International Green Week (IGW), Berlin Germany would be an excellent opportunity to showcase traceable agricultural and livestock products from Punjab and to project Pakistan.
He said display of traceable agricultural and livestock products at IGW would open the doors of high-end markets of the world leading towards generation of tremendous business opportunities for Punjab, Pakistan.
He said Punjab government was benefiting from Star Farm and Metro to enhance capacity of our producers, suppliers and traders to boost exports.
Ambassadors from 18 European Union countries including Lars-Gunnar Wigemark, EU ambassador to Pakistan were present in the meeting.
Lars-Gunnar said Punjab has tremendous potential in agriculture and livestock sectors to get its due share in global trade of food products. He lauded Punjab government for adopting techniques and standards required for food safety and quality, and linking its traceable agricultural products to the global markets.
Arif Nadeem, Secretary Agriculture said 15-20 fully traceable fruits, vegetables, rice and meat products would be showcased at IGW for which capacity of about 25 exhibitors has been built for compliance of Global GAP and International Featured Specifications (IFS) by Star Farm.
He told METRO would organise Pakistan week in their chains in Berlin, parallel to the IGW event, therefore, fresh produce to be brought in Germany would not only be displayed and sold at the event but also at the Metro stores/chains in Berlin.
He said a vendor selected for the event has prepared thematic design of Pakistan pavilion, which contains Business to Business (B2B) and Business to Consumer (B2C) areas for display of products.
The concept, ‘farm to fork’ will be demonstrated through cooked dishes of traceable products as well at the
occasion, he added.
Rizwan Khan, Vice Chairman, Punjab Board of Investment and Trade highlighted the significance of International Green Week scheduled for January 20-29, 2012 at Berlin, Germany and briefed about aesthetics and media coverage of the event, embassy coordination and back end support in terms of product development.
The diplomats of EU Countries and others expressed satisfaction on the level of preparedness of Punjab government for participation in the forthcoming IGW, Germany.\12\18\story_18-12-2011_pg5_7

Riaz Haq said...

Here's a mid-year economic performance summary by Finance Minister Dr. Hafeez Shaikh as reported by APP:

ISLAMABAD, Dec 19 (APP): Federal Minister for Finance, Dr Abdul Hafeez Shaikh here on Monday said economic indicators were showing positive results due to prudent economic policies initiated by the government.Briefing a newsmen, here at the Ministry of Finance, the Minister said the government wanted to improve the workings, efficiency and performance of State Owned Enterprises like Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM) and Pakistan Railways through introducing efficient management and operating through the professionals in order to make them profitable entities for the economic development of the country.
He added that government has fulfilled the minimum financial requirements of the PSM in order to help the organization improve its working capacity.
He informed the media that large scale manufacturing sector has registered growth of 3.6 percent during the first quarter of current financial year which was a health sign for national economy.
He added that revenue collection up to December 16 stood at Rs. 715 billion which was realized at Rs. 555 billion during the same period of last financial year.
Besides, the governmental expenditures were fixed at 42.5 percent during first five months of current financial year which was recorded at 38 percent, he added.
He further informed that government expenditure had targeted to 50 percent of the total expenditures by December this year which would reach up to 42 percent.
However , he said that it would spent about 40 percent of (PSDP) by December.Secretary Finance, Dr Waqar Masood said that export grew by 11.5 percent against the expected targets of 5 percent,while imports grew by 20 percent as against the expected targets of 10 percent.
He informed that inflation rate was recorded at 10.2 percent during the period under review which was recorded at 14 percent during the last year.
Foreign remittances in the country were increased by 18 percent which crossed US $ 5 billion mark during last five months of current financial year.
Secretary Finance said that Federal Board of Revenue (FBR) was determined to achieve its revenue targets of Rs. 1952 billion as revenue collection has registered 28 percent growth as compared to same period last year.

Riaz Haq said...

Pakistan produces 13.67 million tones of fruits and vegetables per annum, according to Online News:

An official told Online on Tuesday out of which about 25 per cent goes waste, between farms to consumers, while only 4 per cent is exported at far 41 per cent lower price compared to world average price.

The horticulture sector contributes about 12 per cent to the national agricultural Gross Domestic Product (GDP) and holds great potential for increasing export of quality horticultural produce, and offering multiple employment opportunities throughout the supply chain, he added.

The official said, “However, its growth & profitability is restrained mainly by lack of proper post harvest management and transport infrastructure. Improving post harvest management infrastructure (grading, packing, storage and transport/cold-chain) will help reduce high post harvest losses, increase production surplus along with improving shelf life and quality of fresh produce, which will help to stabilize prices in domestic markets as well as to substantially boost export to highly lucrative and competitive international markets.”

It is pertinent to mention here that Ministry of Commerce had decided to establish a “Cool Chain System” under “National Trade Corridor Improvement Project”. The Cool Chain project is bound act as a backbone for the development of supply chain infrastructure for horticulture produce.

Riaz Haq said...

Here's an Express Tribune story speculating about Wallmart entry in Pakistan retail market:

...“We have not made any announcements concerning Pakistan,” said Megan Murphy, Walmart’s international corporate affairs manager in an e-mail. Walmart does not comment on market entry speculation, she added.

Murphy, however, said their priorities are to “concentrate on the markets where we already have operations and look for growth opportunities in markets where customers want to see us and where it makes sense for our long-term growth.”

While Pakistan clearly does not fall into the first category, its regulatory environment has been far more welcoming than neighbouring India, where the government was recently forced by populist protests to roll back reforms that would have allowed Walmart and other foreign retailers in. The Pakistani retail market, currently estimated at $42 billion and rapidly growing, is viewed as an attractive opportunity for foreign investors.

“To say Pakistan is not on Walmart’s opportunity radar screen, I don’t agree,” said Afnan Ahsan, CEO of Engro Foods, one of the largest consumer goods companies and a subsidiary of the Engro Corporation.

Pakistan is a very large and concentrated consumer opportunity. Karachi alone accounts for 40% of any consumer business, Ahsan said. “It is on every big player’s radar screen,” he added.

Despite recent troubles, Pakistan’s $210 billion economy has been mentioned by several global analysts as a potent force to be reckoned with in the future, including Goldman Sachs’ Jim O’Neill, the man famous for creating the term BRICs. Goldman includes Pakistan in its list called the Next Eleven, economies that are expected to become some of the most important sources of global growth.

The growing middle class – one-third of the country’s population of 180 million, of which 55% age below 30 – has already prompted international players like Germany’s Metro Cash and Carry and France’s Carrefour to enter the market.

MCC has recently acquired Makro and now has a network of 10 stores in Karachi, Lahore, Faisalabad and Islamabad. Hyperstar – Carrefour’s joint venture with the UAE’s Majid Al Futtaim Group – has one store each in Karachi and Lahore. It also announced opening of four more stores in Karachi and extend its chain to every metropolitan city in Pakistan.

Besides international wholesalers and retailers, local supermarkets – Imtiaz Supermarket in particular – have also been expanding their businesses.

Government officials also have a more welcoming attitude. “Personally speaking, Walmart will be very viable in Pakistan,” said Liaquat Ali Gohar, head of marketing at the Small and Medium Enterprise Development Authority. He said that the retail sector so far has not been able to meet the overall demand.

While the retail sector has grown significantly over the last few years, most of the development took place in the big cities. Misbah Iqbal, a consumer goods analyst at AKD Securities, pointed out that the rural people – about 55% to 60% of the total – are still underserved.

Pakistan is rapidly urbanising, Iqbal said. Despite many new entrants in the supermarket business, all of them are attracting huge traffic and growing significantly, she said, though largely in the major metropolitan areas.

Poor infrastructure in rural areas prevents investment. Nevertheless, many consumer goods companies are actively marketing to rural consumers, creating awareness about branded products, Iqbal said. Retailers will automatically benefit from that, she added....

Riaz Haq said...

Here's a News story on Pakistan missing kinnow orange export target:

Pakistan’s kinnow export target of 300 million tons for this year seems difficult to achieve due to the hurdles created by the customs authorities, an exporter said on Thursday.

The Co-chairman of All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA) told The News that exporters suffered a loss of $10 million on export of kinnow, as shipments were delayed because of complete checking of consignments. “In many consignments planes left and cargo was not taken,” he said.

CEO Harvest Tradings Ahmad Jawad said Japan may be good market for Pakistan kinnow in the coming years if Pakistan Horticulture Development and Export Company (PHDEC) and Ministry of Commerce make serious efforts to explore this market as we did in mangoes last year. “The planners need to realise that there are certain areas where the private sector cannot help exports grow,” he said.

The import of citrus in Japan has doubled in 2010/11 due to decline in local production Jawad said quoting a report of the US Department of Agriculture (USDA). The US and Australian citrus import to Japan has increased substantially during the period.

The import of fresh produce in Japan increased to 21,406 tons for the 12 months to September 2011, up from 10,797 tons for the same period a year before, the USDA Global Agricultural Information Network (GAIN) report said.

The US accounted for the majority of the increased volume, with a 93 per cent jump to 17,650 tons giving it a market share of 82 per cent.

Matching with Japan’s new role as Australia’s largest citrus export market, Australian imports jumped 136 percent to 2,276 tons. New Zealand, Chilean and Taiwanese imports also grew over the period.

Japan’s citrus imports are expected to decline by about 12 percent to 19,000 tons in 2011/12, the report added, because of Japanese Mikan production bouncing back.

“On the other hand Pakistan’s export target for kinnow set at 300,000 tons this year is becoming harder to meet as the season unfolds due to unlimited blunders,” he said.

The CEO Harvest Tradings further emphasized that starting with Pakistan’s image building the trade or counsellors should work as marketing managers fully knowing about the market demand there and about the quality of products and selling tactics by Pakistan’s competitors.

They should be very much in touch with the business communities there, exchange business data and information, provide businessmen at both ends with proper consultation meant to increase bilateral trade and investment, help resolve trade disputes between entrepreneurs of Pakistan and any other country.

Riaz Haq said...

Glaxo Smith Kline plans to expand in Pakistan, reports Express Tribune:

Focused on emerging markets, GlaxoSmithKline’s Pakistan subsidiary is gearing up for expansion in its consumer healthcare arm. The company has been making targeted acquisitions and is looking to expand its core area away from the products in which the government regulates prices.

“GSK Pakistan is still mainly pharmaceutical; its consumer healthcare arm is about 10% of the business,” CEO Salman Burney said in an interview with The Express Tribune. The company wants to grow its consumer healthcare unit, he added.

The GSK chief said they want to do it in two steps: maximise support for the existing portfolio brands that include Panadol, Sensodyne and Aquafresh – in oral care – and Horlicks on the nutrition side. In the second step, Burney said, GSK – which has revenue growth of about 12% in its pharmaceutical line – may also go for new opportunities such as acquisitions and other new launches.

Paul Marson, GSK’s head of finance for their Middle East and Near East consumer healthcare division, in an interview with The Express Tribune earlier this year, already announced that GSK has decided to invest at least Rs2 billion in Pakistan in consumer healthcare over the next five years. “Pakistan is one of the countries where we want to aggressively invest in the near future,” he added.

On the pharma side, the company has been acquiring rival industries on a targeted basis – antibiotic manufacturers for example. It has been investing heavily on acquisitions of new assets and rebranding of certain products. “The current strategy is to broaden our business base and rebalance,” Burney said. GSK Pakistan, therefore, made acquisitions on a targeted basis.

“GSK launched five new products this year including Votrient, Duodart, Avamys, Synflorix and Fixval,” Burney said. The company is soon going to launch one or two antibiotic products, he added.

GSK’s selling marketing and distribution expenses amounted to Rs2 billion for the nine months ended September 30, up 20.6% from Rs1.68 billion in the corresponding period last year – reflecting its recent investments.

“We re-launched some of our products and these are mostly consumer side expenses,” Burney said.

GSK’s operating profit for the nine months ended September 30 amounted to Rs1.8 billion, up 33% from Rs1.4 billion in the corresponding period of 2010. However, earnings per share in the third quarter of 2011 dropped to Rs0.99 from Rs1.44 in the third quarter of 2010.

“Inflation hit our cost of production,” Burney said, “and at the same time we did not make price adjustments. With the exception of few products, we have not had a price increase since 2001.”

Rupee devaluation also affected gross margin, Burney said. “We also capitalized some capital base reserves which diluted the gross margin,” he added.

Burney said increase in profits – to some extent – will depend on business growth, inflation, price increases and how fast GSK can expand its products portfolio. Burney said the government should approve a pricing policy and allow a price increase across the board to urgently support the industry.

The government of Pakistan currently controls the price of pharmaceutical products it deems “life saving”, a policy that has hurt investment in the sector. Sources say the Swiss pharmaceutical company Roche wound up its operations in Pakistan for this very reason....

Riaz Haq said...

Proctor & Gamble Pakistan wins award for corp social responsibility, reports The News:

The US Secretary of State Hilary Clinton presented Proctor & Gamble (P&G) with the thirteenth annual Secretary of State’s Award for Corporate Excellence (ACE) for the company’s exceptional corporate social responsibility (CSR) efforts in Pakistan.

Bob McDonald, Chairman of the Board, President and Chief Executive Officer of The Proctor & Gamble Company accepted the award in a ceremony held at the State Department in Washington, DC on Wednesday.

US Consul General in Karachi William Martin and P&G Pakistan Country Manager Faisal Sabzwari joined the ceremony in Washington via digital video conferencing.

Addressing a news conference at the Karachi Consulate, Martin said that this was the first time that a firm based in Pakistan had received this prestigious award.

He said this recognition is likely to help boost foreign investments in Pakistan as international organisations are bound to take notice of the quality work being conducted in the country. He stated that this award signified the interest American investors have in Pakistan.

He further said that this award had been presented to a firm run and managed by Pakistanis which highlights the progressive social attitude of the people here. Sabzwari said that P&G Pakistan had made massive investments in the country, the last one being a $40 million investment into a laundry manufacturing facility.

He also mentioned the new plant established by the organisation in Port Qasim. Speaking about the award, he said that this year, 62 nominations were received for American companies operating in 38 different countries. Of these, some 13 companies were selected as award finalists. P&G Pakistan and Nigeria were selected as the winners among this group.

P&G Pakistan was awarded the ACE for the company’s efforts under its ‘Live, Learn, and Thrive’ CSR programme, including humanitarian assistance efforts to provide clean drinking water, food, hygiene products. It also made medical care available to over 1.9 million affected residents after the devastating 2010 floods. It also established a network of schools and supported orphanages. “A total contribution of over $2 million was made in flood aid,” he said.

Riaz Haq said...

Former British foreign secretary David Miliband joins Pakistan private equity fund as advisor, according to Express Tribune:

In what appears to be a coup for the fledgling Pakistani private equity industry, Indus Basin Holdings has managed to get Britain’s former foreign secretary David Miliband on board as a senior adviser.

“We are delighted to be able to bring on board the expertise of Miliband who knows the region and its challenges well,” said Indus Basin founder and CEO Aamer Sarfraz, according to a press release issued by Miliband’s office. “He shares our conviction that investment in Pakistan’s agricultural sector can have substantial long-term impact on the country’s poorest farming communities.”

“I am delighted to be advising Indus Basin Holding, a company that is investing in Pakistan’s future at a time of such fundamental importance,” said Miliband in a press statement. “I care deeply about Pakistan, the development of its economy and its future in the wider region. IBH is committed to developing an agricultural sector which has huge potential, but currently lacks investment. I look forward to working with IBH in building support and investment in Pakistan’s agricultural capacity and productivity.”

Officials at the company say they had been trying for the past year and a half to secure the contract with Miliband, who served as Britain’s foreign secretary between 2007 and 2010. He also served as Britain’s secretary of state for the environment, food and rural affairs previously.
Indus Basin Holdings is only a relatively recent entrant into Pakistan’s nascent private equity and venture capital space but already began to attract a lot of attention for the kinds of big-name investors it was able to attract in its fund, which is focused on capitalising on opportunities presented by raising productivity levels in Pakistani agriculture.

The company’s investors include Tim Draper, the famous American venture capitalist known for being an early investor in Skype and Hotmail, and Baron Lorne Thyssen-Bornemisza, a Swiss aristocrat whose family owns the ThyssenKrupp, a German technology conglomerate with over 670 subsidiaries and 200,000 employees worldwide.

Indus Basin’s investments currently include Agroventures, a Faisalabad-based breakfast cereal manufacturer, and Rice Partners, a company that is focused on contract farming and marketing Pakistani rice directly to North American and European retailers.

Riaz Haq said...

Here's an Express Tribune story on the opening of British Dept store Debenhams:

When Pizza Hut opened its first franchise in Pakistan in 1993, few were familiar with the concept of franchising. Soon it became a household name, and was followed by other fast food franchises. Many observers viewed these import-oriented luxuries in an underdeveloped country like Pakistan, with scepticism and considered it a waste of our precious foreign exchange. However, the trend of foreign retail outlets continues to expand into other products, services, and brands.

The press launching of the 200 years old British department store, Debenhams’ branch in Karachi earlier this month on 27,000 square feet space, at the upbeat Dolmen City Mall, was attended by important personalities, like, UK Minister of State for Trade and Investment, Lord Stephen Green and UK Cabinet Minister Baroness Sayeeda Warsi. It appears to have pushed the retail franchising business to another level. The skeptics are turning into fans.

This will be the first international department store in Pakistan offering a complete range of product categories synonymous with Debenhams, including a full range of women’s, men’s and children’s clothing, as well as, home, beauty and accessories. It is promised to be a truly world class shopping experience.

“I am very bullish on retail, not just for local but also foreign brands,” said Yasin Paracha, Managing Director, Team-A Ventures (Pvt) Ltd, which is the franchisee in Pakistan for Debenhams. “Foreign brands will perhaps give Pakistan that softer image we need; that we are normal people, with normal tastes and preferences and actually do drive in cars and wear western clothes! Furthermore, foreign brands will give the local brands the required positioning on the brand scene and will give customers the choice to decide where they want to spend their money.”

It is worth noting that before the fast food franchises, auxiliary industries like the home-delivery service and suppliers of quality poultry, meat etc, according to modern quality standards, hardly existed.

Paracha is very upbeat about the employment possibilities this presents. “This creates immense number of jobs; the average requirement per 1,000 square foot, of retail space is around six, which means Dolmen City, with a leasable area of 650,000 square feet will provide jobs to around 4,000 people! These will be mostly undergrads who might struggle to find good jobs in offices. Here they have the chance to work in a comfortable environment, look nice, and develop the discipline to deal professionally with customers. It also provides students the opportunity to work. Almost every teenager in the UK has worked in a retail environment.”

About government revenue and taxation, Mr. Paracha says, “This adds immense revenue, as most brands will progress towards declaring and paying taxes, they are too much ‘in your face’ to avoid it. Furthermore, instead of considering this as an outflow of foreign exchange, it actually saves it, as most people spend on shopping when they travel, they will convert to shopping within the country if they have the option and the right environment.”...

Riaz Haq said...

"As the green revolution tapered off, a poultry revolution began; in the late 1970s. Ever since, Pakistan has been gnawing away at broiler chicken and there’s no turning back", wrote Punjab's director general of board of investments in a recent Op Ed in Dawn.

In 2011/12 K&N’s expects to produce 80 million layer and broiler chicks, reports

In the 1960’s and 1970’s, obtaining safe, reliable sources of poultry feed was an insurmountable challenge in Pakistan. This led Khalil to set up his own feed mill to produce feed for K&N’s operations at Karachi in 1971. With the growing need of feed for the integrated production operations in Central Punjab province and Northern areas of the country, a feed mill established by a multi-national company at Lahore, was acquired by K&N’s to take advantage of low-cost feed ingredients available in the Central part of Pakistan.

The growth of commercial poultry production through the decades changed the mindset of consumers towards farm raised broilers and eggs, helped by lower prices and greater availability. Today, Desi chicken and eggs are produced in lower volumes and considered more of a delicacy.

Yet the strength of the live/wet chicken market culture, the negligible overheads of roadside sales – a butcher’s knife costs less than US$1 – and the reassurance of Halal slaughter remain significant influences slowing the uptake of processing, says Adil Sattar.

Practical problems, particularly the limited availability of cool chain facilities and frequent power breakdowns, have to be overcome with production and distribution of processed products inevitably involving high overheads.

"Earlier, within our industry, poultry processing was considered a non-viable poultry business activity as many firms had tried but ended up closing down their operations," says Adil. "At K&N’s, we endeavoured to develop the market, and other companies are now looking to start processing operations."

Today, chicken is the most popular protein source in Pakistan, primarily through the industry’s growth and success leading to lower cost and widespread availability, with per-capita consumption about 7kg (15.4lb) per year. The tradition is to eat chicken at home, always skinless cooked in curries, with rice or barbecued.

Restaurants offer local cuisine including a variety of curries, barbecue dishes and different types of rice, with a number of upmarket cafes and restaurants serving western cuisine and many of the international fast food caterers such as McDonald’s, KFC, Pizza Hut, Nando’s, Hardees and Subway also present.

Riaz Haq said...

Here's a News report on meat consumption in Pakistan:

The consumption of poultry meat increased by 239 percent in 11 years from 322 million tons in 1999/2000 to 767 million tons in 2010/11, but it is still only 0.7 percent of the global poultry production, experts said on Monday.

At a seminar organised by Big Bird to commemorate its 20 years association with the global poultry giant Hubbard pioneer of poultry in Pakistan Dr Yaqoob Bhatti in his paper revealed that the value of poultry infrastructure exceeds Rs300 billion and annual turnover of commercial poultry is Rs40 billion.

With 105 hatcheries, the annual broiler chick production is 820 million, he said, adding that the commercial egg production is 8.690 billion per annum in addition to 3.742 million production of rural eggs.

Pakistan Poultry Association former chairman Abdul Basit said that poultry is the cheapest source of animal protein not only in Pakistan, but the world over. The average daily animal protein consumption in Pakistan is only 17 grams per capita, while the average minimum requirement is 27 grams, he said.

There is a dire need to increase poultry production in the country that has largely grown without helpful government policies or facilitation, said Basit. The industry, for instance, has since long been demanding the government to disallow poultry farm clusters through a law as chicken farms at least 1.5km apart greatly reduce the risk of spread of diseases among various poultry flocks, he said.

He said his concern has to relocate its very large chicken farms each time when place was surrounded with many other farms too close to his farms. He said he has shifted his major high quality grand parent farms to Thar deserts. Dr Mustafa Kamal said that the consumption of mutton has declined rapidly, while that of beef and poultry has increased.

The share of poultry meat increased from 16.4 percent to 24.3 percent, he said, adding that the consumption of mutton declined from 0.649 million tons to 0.616 million tons, showing a fall of 20 percent in total meat consumption share.

Still, he said, Pakistan as a meat eating country produces around 50 percent broiler chickens of those produced in India, which has seven times human population and has a good chance to develop Grand Parent breeding operations, which has an existing capacity of producing eight million parent stocks for domestic as well as for export purposes.

Olvier Behaghel of Hubbard France said that Pakistani poultry improved efficiencies rapidly during the last 20 year that has helped it control the cost. Maturing time of a broiler has reduced during this period from four days to 46 days and from 38 days to 40 days, he said.

The weight gain of the chick at the time of maturity has increased from 1.5-1.7kg to 1.9 to 2kg and feed consumption by the time of maturity has declined from 2.2-2.5kg to 1.7-1.9kg. “Pakistan, he said, is gradually reaching global and Hubbard standards in chicken health, morality and efficiency in productive processes.

Riaz Haq said...

Here are excerpts of Express Tribune story on Nestle Pakistan's record revenue and profits:

Even as the economy continues to grow sluggishly, Nestle Pakistan announced another year of record breaking profits, which grew by 13.5% to reach Rs4.7 billion – or about Rs102.94 per share – on the back of a 26% increase in revenues, which reached Rs64.8 billion.
Managing Director Ian Donald – a South African national who has been with the global parent company for 40 years – believes the key for Nestle to grow in Pakistan is primarily by growing the packaged foods market.

“Take the example of yoghurt. We are 80% of the market when it comes to packaged yoghurt. But that packaged segment is only 2% of the total market,” he said in an interview with The Express Tribune. “So it doesn’t really matter what our market share is. We need to grow the whole packaged segment.”

A key constraint to growing that segment, however, seems to be the limited purchasing power of the ordinary Pakistani consumer. “Our single biggest challenge is how to get the right quality product to the consumer at a price that they can afford,” said Donald.

Over the past year, inflation has not helped matters. While Nestle’s global food portfolio is highly diversified, in Pakistan it focuses heavily on milk and dairy products. As milk prices continue to rise by more than 20% a year, the company has not been able to pass on the entirety of that effect to its customers. This is at least partially reflected in its gross profit margins, which shrank by 1.2% to 25.8% in 2011. Energy costs have continued to go up as well. Nonetheless, the company was able to grow the volume of products sold by a healthy 12%.
“We have a lean mindset,” said Giuseppe Bonanno, the company’s head of finance and control in Pakistan. The company’s operating costs are certainly lower than most of its competitors. For instance, Nestle’s logistics costs are about 12% of revenues, compared to between 18% and 19% for both Unilever Pakistan and Engro Foods, two of its biggest competitors. Part of the advantage is economies of scale: Nestle about as big as both of its rivals combined. But part of it, said Donald, is that the company invests heavily in its infrastructure. In 2011, the company invested about Rs8.9 billion in building up its capacity.

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.

Another part of its growth strategy seems to be augmenting and developing its existing brands rather than adding newer brands to its line-up in Pakistan. “We cannot afford to invest in too many brands because we cannot grow all of them,” said Donald.

However, the company has introduced brands such as Nido Bunyad, which is a powdered milk product targeted to the rural consumer at a price that is competitive with non-packaged milk.

The rural economy seems to be a key market for Nestle. “It seems to us that the rural economy is growing faster than the urban economy. However, we are also consciously driving growth in the rural markets,” said Donald.

The company identifies its fastest growing markets as Peshawar, Multan and areas that it describes as “peri-urban”, areas that lie on the outskirts of most large cities and form a part of its metropolitan area.

Nestle’s growth in Pakistan has been a mixture of both organic as well as through acquisitions. When asked about whether Nestle might pursue acquisitions in the future, Donald replied: “We are always open to considering opportunities.”

As part of its plan over the next three years, the company will spend about 320 million Swiss Francs in growing its presence in Pakistan.

Riaz Haq said...

Unilver Pakistan reports record sales and profit, according to Business Recorder newspaper:

Unilever Pakistan Limited has delivered profit after tax of Rs 4.094 billion in the year ended December 31, 2011, up 25 percent on previous year's profit of Rs 3.273 billion.

The company's earning per share increased to Rs 308 in the period under review against Rs 246 in the same period a year back.

The board of directors of the company in its meeting held here on February 9, recommended final cash dividend of Rs 202 per ordinary share ie 404 percent.

With the interim dividend of Rs 105 per ordinary share already paid during the year, the total dividend for the year 2011 amounts to Rs 307 per ordinary share of Rs 50 each against Rs 246 per ordinary share paid in 2010.

Total profit distributed byway of dividend amounts to 99.7 percent in 2011 against 99.9 percent in 2010.

The final dividend will be payable to the members on the number of ordinary shares held by them at the close of business on March 27.

According to the financial results sent to Karachi Stock Exchange, the company's sales increased by 16 percent to Rs 51.876 billion in 2011 against Rs 44.671 billion in 2010.

The cost of sales increased to Rs 33.792 billion against Rs 30.094 billion.

The company said the operating conditions in Pakistan remained tough as economic growth for the second consecutive year was marred by floods, prolonged power outages, rising commodity costs and adverse security environment.

Notwithstanding this, consumer demand remained resilient.

Unilever further strengthened its foothold by launching seven new brands - the highest ever in a single year.

The company now has a footprint that is significantly broader and a reach much deeper, helping millions of Pakistanis feel good, look good and get more out of life, it added.

Home and Personal Care continues to deliver double digit growth in key categories; laundry, hair care and skin care.

Six new brand launches, product renovations and market activations continue to be the drivers.

Beverages sales grew mainly on the back of price increases following an inflationary material cost environment, compounded by government levies.

Smuggled tea continues to pose a threat to branded players; high government levies lead to high consumer price, deny the formal sector fuel to grow and provide smugglers incentive to evade.

Despite challenges, ice cream sales grew by 11 percent fuelled by strong innovation and launch of Fruttare.

Greater focus on costs, a better product mix and pricing actions helped improve gross margins.

Input cost continued to increase on the back of rising commodity costs, margins, however benefited from improved scale and timely but measured price corrections.

This helped preserve consumer value.

Greater scale and improved mix led to increase in gross and operating margins by 223bps and 73bps respectively, resulting in 25 percent higher profit after tax and earning per share.

The company's profit before taxation increased to Rs 5.925 billion in 2011 as compared to Rs 4.780 billion in the year 2010.

Riaz Haq said...

Here's some info on Nestle's rural entrepreneurship program in Pakistan:

The Small Entrepreneur Development Project was launched in March 2009 from a partnership between Nestlé Pakistan Ltd. (as implementing partner) and the Swiss Agency for Development and Cooperation (SDC) which has co-funded the project. Its aim is to contribute to the improvement of economic opportunities, income generation and food security in rural areas of the country. Livestock and dairy farmers are provided with training and assistance to both enhance their skills as small entrepreneurs and improve their market linkages. Training is provided through the Nestlé Agricultural Services in the location of training farms specially dedicated to the project.

Current dairy farming constraints

The livestock and dairy sector represent 11% of Pakistan's GDP. There are 10 million farming families and 50 million cattle heads in Pakistan, out of which 7 million farming families (approx 35 million people) live in the Punjab Province. Many of them are landless farmers.

The lack of sustainability of dairy farming in Punjab is due to the lack of training and skills, poor infrastructure, poor breeds, lack of good fodder management, lack of support mechanisms for the farmers, lack of financial services and expertise in running small enterprises.

It is then no surprise that there are no commercial dairy farms or formal dairy farming structures in Pakistan. The majority of these farmers are domestic dairy farmers with only 2 to 3 cows or buffalos.

All this amounts to poverty driven farmers, no socio-economic growth in the dairy sector, poor living conditions and very low social standing, particularly for women. 48% of the farmers are women. As part of their domestic chores, they care for the livestock but are not socially acknowledged for these services and are kept out of the decision making processes. Hence there is a strong need to initiate a development programme targeted specifically at the women which the Nestlé-UNDP Partnership Programme tackles with great success (see specific project description).

While the demand for milk and meat is growing by 5%, the actual supply increase represents less than 2% per annum. There is a large potential for farmers to play a positive role in the development of the dairy sector in Pakistan's economy. Regretfully, very few initiatives provide farmers with livestock and dairy training at the grass root level which could strongly link rural development to economic growth....
Nestlé Pakistan has established the training facility over 103 acres of leased land as an investment for the development of the dairy sector and to work towards sustainable farming and an improved rural economy - benefiting the farmers through increased prosperity and food security. Furthermore, this win-win community development model is designed to sustain itself in the following manner: Institutional linkages with the Government departments and financial institutions once established will sustain beyond the life of the project; capacities of the farmers once built shall yield economic benefits and further contribute to generate employment; training modules developed and tested by Nestlé Agri-Services will continue to be used beyond the life of the project.

Riaz Haq said...

Philip Morris is getting squeezed in Pakistan, reports Express Tribune:

Philip Morris Pakistan is beginning to feel a financial pinch, and is already reducing the scale and scope of some of its manufacturing operations inside the country.

In a statement released to the press on Saturday, the company announced that it will be reducing the operations in its smallest factory, located in Mandra, near Rawalpindi. The company cited “difficult economic conditions” including high taxes and low consumer purchasing power as a primary reason for the decision. The decision was described by Philip Morris as “difficult, but necessary.”

Among the key factors that specifically affected Mandra was a government regulation known as SRO 863(I), a 2010 law that effectively bans the marketing and sales of the smaller 10-cigarette packs, which were the mainstay of the company’s operations near Rawalpindi. Given the fact that Mandra is the company’s smallest factory, and that its main product is now illegal, the operational costs per cigarette at the plant would effectively become too high to be sustainable.

“The main activity of the factory has become obsolete,” said the company in its statement. It, however, declined to say whether the factory would be completely shut down.

Philip Morris did not disclose how many of its 2,363 employees in Pakistan work in Mandra and how many of them would be laid off. The company did, however, state that it would be paying the laid off workers a severance package that would exceed the legal minimum requirements.

“We are committed to ensuring that all retrenched employees are treated fairly and with dignity, and genuinely appreciate the contributions that each and every employee has made over the years,” said Arpad Konye, the managing director at Philip Morris Pakistan, in the statement released to the press.

The troubles at the Mandra facility are the latest in Philip Morris’ woes in Pakistan. The company had been operating as a joint venture with the Lakson Group (the parent company of Century Publications, the publisher of The Express Tribune) until 2007. In that year, the global company bought out its local partner’s share to retain well over 97% of the Pakistani subsidiary. (The remainder is listed on the Karachi Stock Exchange).

The acquisition, however, does not appear to have turned out well. Profits have gone from Rs1.5 billion in 2007 to Rs573 million in 2010, a nearly 62% drop. The year 2011 appears to have gone even worse, with the company earning a net loss of Rs284 million for the first three quarters of the year, ending September 30, 2011.

Philip Morris Pakistan has perennially been the number two player in the Pakistani tobacco industry, outshone by the Pakistan Tobacco Company, the local subsidiary of British American Tobacco. Industry insiders say that Pakistan Tobacco has better market penetration with its higher-end brands than Philip Morris. “Philip Morris got into a cut-through price war with Pakistan Tobacco over the lower-end brands,” said one person familiar with the matter. “And Pakistan Tobacco has an unassailable advantage on the higher-end segment of the market because of their Benson & Hedges and Gold Leaf brands.”

Philip Morris appears to have come out the worst of that price war, with revenues declining by 3.9% to Rs24.7 billion during the first nine months of 2011. By contrast, Pakistan Tobacco’s revenues went up by 12.3% to Rs49.9 billion during the same period.

Riaz Haq said...

Here's a Fiber2Fashion report on Pakistan's bumper cotton crop:

With around 14,548,845 bales already reaching the ginneries by March 15, Pakistan’s cotton output for the current season is expected to surpass record 15 million bales, according to Pakistan Cotton Ginners Association (PCGA).

PCGA Chairman Amanullah Qureshi said the country’s cotton output for next season is pegged at 17 million bales.

He reiterated the need for formulation of National Cotton Policy in consultation with all the industry stakeholders including ginners and growers, so as to protect their interests.

Mr. Qureshi said the Government should develop a mechanism to stabilise the cotton prices, instead of leaving the farmers and ginners at the mercy of textile mill owners.

He claimed that all production estimates presented by Governmental agencies and departments have proved to be incorrect, while those by PCGA have proved right.

He also called upon the Government to approve a bailout package for cotton cultivators who suffered a loss of over Rs. 225 billion due to textile millers lobby.

The PCGA Chairman urged the Government to direct the Trading Corporation of Pakistan (TCP) to buy a minimum 0.7 million bales of unsold cotton from ginners.

Riaz Haq said...

Here's Express Tribune on rising sales of international global brands in Pakistan:

Faisalabad has historically been a city that conducted the manufacturing for global brands. Yet as the middle class in Pakistan expands, it appears that many of the city’s residents are affluent enough – or aspirational enough – to become consumers of those brands, resulting in booming sales for retailers and local franchisees of international brands.

Most of the sales of branded clothing and jewellery is taking place through franchises that have bought the right to sell these products to consumers in Faisalabad. The demand for these products is fuelled by the vast segment of the middle class that can afford to buy global brands but not necessarily to fly out to Dubai – or even to Karachi and Lahore – to buy them.

A series of interviews conducted by The Express Tribune, both amongst consumers and retail managers, suggests a voracious and growing appetite for branded clothing lines. And it seems that the economic slowdown has done nothing to decrease sales in this segment of the market.

“The higher income buyers of international brands never seem to get affected by economic disorder in the country,” said Sohail Safdar, a franchise manager for Charles & Keith, the Singapore-based company that sells its own brand of women’s shoes and bags. “Many of our buyers do not want to have to travel abroad to buy these products. That has created a boom in retail sales and led many retail franchise owners to think hard about expansion.”

“Sales of international brands keeps getting better and better and has begun to lure in even more brands,” said Syed Suleman Raza, a manager at one of the Nike franchises in Faisalabad.

The underlying cause of the trend seems to be a willingness by a large part of the Pakistani middle class to be willing to pay significantly higher prices for what they perceive to be higher quality. And given their longer durability, many branded products are seen as good value for money.

“Branded tend to be more and last two to three seasons,” said Sonia Razzaq, a shopper at one of the upscale malls in Faisalabad.

Nonetheless, prices are steep for many products, with shoes frequently costing Rs5,000 per pair or more. Jackets, shirts and women’s dresses go for even higher, commanding prices in the range of Rs10,000 or higher. These prices are well beyond the reach of most ordinary Pakistanis and yet a sizeable proportion of the population can easily afford them.

“Our customers are very brand-conscious and buy these products without any hesitation at the price tag or any attempt at bargaining,” said Sheikh Sultan, a manager at a franchise of The Body Shop, a UK-based cosmetics brand.

Riaz Haq said...

Here's an APP report on Pak food exports so far this fiscal year:

The exports of fish and fish preparations surged by 14.69 percent during the first eight months of current fiscal year (2011-12) against the corresponding period of last year.

The exports of fish and fish preparations were recorded at $195.284 million during July-February (2011-12) as against the exports of $170.274 million during July-February (2010-11), according to data of Pakistan Bureau of Statistics (PBS).

However, in terms of quantity, the fish exports witnessed nominal increase of 0.34 percent by going up from 74,265 metric tons to 74,518 metric tons.

On month-on-month basis, the seafood exports also witnessed positive growth of 13.88 percent during February 2012 when compared

to the same month of last year.

The fish exports during February 2012 were recorded at $21 million against the exports of $18.441 million during February 2011.

However, as compared to the exports of $21.401 million recorded during January 2012, the exports during February witnessed negative growth of 1.35 percent, the data revealed.

In terms of quantity, the fish exports increased by 5.57 percent in February 2012 when compared to the exports of February 2011, however decreased by 2.62 percent when compared to the exports

of January 2012.

The overall food exports from the country witnessed nominal increase of 0.59 percent during the first eight months by going up from $2.601 billion during July-February (2010-11) to $2.616 billion in July-February (2011-12).

The major food products that witnessed positive growth in exports included.

The food products that witnessed increase in exports during the period under review included rice (other than basmati), exports of which increased by 2.91 percent, fruits (15.02%), leguminous vegetables (1,315%), tobacco (37.85%), oil, seeds, nuts and kernels (59.84%), meat and meat preparation (16.46%) and other food products


The commodities that witnessed negative growth in exports included basmati rice (17.78%), vegetables (36.69%), wheat (53.22%) and spices (1.49%).

The overall exports from the country during the period under review witnessed negative growth of 0.48 percent by going down from $15.263 billion to $15.189 billion.

Imports into the country, during the period, increased by 16.36 percent by going up from $25.600 billion to $29.788 billion.

Based on the figures, the trade deficit during the first eight months of the current fiscal year was recorded at $14.599 billion, against the deficit of $10.337 billion last year, showing an increase of 41.23 percent.

Riaz Haq said...

Here's a Pak Observer report on Pak fishing industry exports:

Karachi—Holland’s Ambassador to Pakistan Mr Gajus Scheltema disclosed that a powerful lobby of international fish exporters was strongly opposing the exports of fish from Pakistan to the European Union countries. Talking to mediamen in Karachi he said that the international fish exporters lobby was actively involved in creating obstacles in the way of Pakistan’s fish exports to EU nations.

When asked to name the lobby, the Dutch Ambassador said that the leading international exporters do not want to see fish exports from Pakistan. He, however, that Netherland was assisting the Balochistan government to develop Pasni Port and Fish Harbour that would help Pakistan to enhance fish exports to European Union countries. He pointed out that a firm, engaged in the exports of fish, had demanded license to export fish from Pasni to EU.

Mr Scheltema pointed out that the government of Japan had provided a grant of Rs800 million for the rehabilitation of Pasni Fish Harbour in Balochistan. Holland is engaged in rehabilitation of the harbour so that it meets the required international standards to export fish to EU and other countries in the world.

He said that the Japanese grant would be utilised for the procurement of a dredger; maintenance and dredging of the harbour; and extension and improvement of the breakwater.

Holland’s Ambassador further stated that his country could invest in agriculture, dairy and livestock in Pakistan. He said that Holland is one of the leading producers and exporters of dairy and livestock products in the world. He said that Holland and Pakistan should explore the agriculture, dairy and livestock sectors for mutual investment. Some Dutch companies are willing to explore avenues of investment in these areas in Pakistan and the companies could export agriculture, dairy and livestock products to European Union.

He said that Holland was keen to enhance trade with Pakistan and also supporting Pakistani business people who seek to export to the Netherlands. Scheltema said that their ‘Centre for Promotion of Imports from Developing Countries’ waseducating Pakistani exporters for improvement of their products to export level quality.

He said that Pakistan has a huge potential in agriculture and food processing sector and Holland is planning to invest in these sectors. He also pointed some trade hurdles in importing of cows and cattle from Netherlands to Pakistan.

He further said that Holland was willing to help government of Pakistan in promoting the wind energy in the country. He said that he had recently met the Federal Minister for Water and Power Syed Naveed Qamar and apprised him of the Dutch companies interest in developing wind energy projects in Pakistan.

Mr Scheltema said that Holland had strongly supported Pakistan in getting the GPS+ facility from the European Union that would help this country to enhance its textile exports share to EU markets. He said Holland was enjoying very cordial relationship with Pakistan and he was making efforts to strengthen the bilateral ties between the two countries. Holland plans to earmark 30 million euros for clean drinking projects in urban cities and some other water-related projects in Pakistan, he said. He said Holland had already worked in various water sector projects and keen to invest in water management, flood control, clean drinking water, waste water treatment and de-silting projects.

Riaz Haq said...

Here's a Businessweek story on Pakistan's informal economy:

It’s early morning in Karachi, Pakistan’s biggest city, and Muhammad Nasir is outside his makeshift shelter of palm leaves, rags, and bamboo, washing up after breakfast. He uses water stolen from a nearby supply pipe that belongs to the local water utility. The 17-year-old bids farewell to his mother, an unlicensed midwife, and walks to his tire-repair shop, an open-air stand in a residential area with a table of tools and a wooden bench. He checks to make sure the electricity he’s drawing illegally from the overhead power line is on so he can run his tire pump. Then he sends 10-year-old Abid, one of his two employees, along with 12-year-old Irfan, to get tea from a nearby shop.

Nasir’s business, his home, his power and water supply, and even the cup of tea Abid brings him don’t exist in Pakistan’s official figures. They’re part of another economy that doesn’t pay taxes or heed regulations. It probably employs more than three quarters of the nation’s 54 million workers and is worth as much as 50 percent of Pakistan’s 18 trillion rupee ($200 billion) official gross domestic product. And while the documented economy had its smallest expansion in a decade at 2.4 percent in the year ended June 2011, soaring demand for cars, cement for houses, and other goods shows the underground market is thriving.
the nation’s purchasing power is more than estimated, says Nadeem Naqvi, managing director of the Karachi Stock Exchange. Rising crop prices have pumped an extra 1 trillion rupees into the rural economy in the past four years, most of it undocumented, Naqvi says. He estimates agriculture may account for as much as 35 percent of GDP, instead of the 21 percent reported.

Evidence of consumer demand is everywhere as new shopping malls and restaurants in Karachi are filled to capacity. Car sales rose 14 percent in February from a year earlier, as more people could afford a Toyota Corolla or Suzuki Mehran (a small hatchback), according to the Pakistan Automotive Manufacturers Association. More than half a million motorbikes hit the road in the eight months ended February, a 5 percent increase, perhaps a sign that Nasir’s tire business has a bright future. ..

Riaz Haq said...

Here's Khaleej Times on Pakistani food brands in UAE:

Pakistani food companies made inroads to the UAE market at the Gulfood exhibition in February. The major groups held fruitful meetings at the exhibition and they will start launching their products from June onward, according to industry insiders.

K&N’s Foods (private) Limited, a leading name in poultry and meat products in Pakistan, is expected to market its products in the UAE by June. Brands in 
edible oil like Sufi Cooking Oil and Habib Oil, leading herbal trademark Qarshi and confectionery products leader Hilal, among others are also planning to enter the UAE food market this year.

“We are in talks with some leading groups and distributors to launch our brand in the UAE and we are confident to market our products by June,” Atiq R. Siddiqui, K&N’s head of exports, told Khaleej Times.

K&N’s Foods, which started its operation in 1964, is the first international brand in recent years, which has given permission to export frozen items to the UAE. The brand is considered a beacon for Pakistan’s poultry industry and its halal processed chicken, ready-to-cook and fully-cooked products are popular among domestic consumers.

“We have established the brand in Pakistan and now the company is ready to make a foray into the international market. The UAE will be the first international and regional market for K&N’s products,” Siddiqui said.

In reply to a question, he said Gulfood is a premier event for food industry. It is considered a good opportunity to interact with stakeholders to promote the brand and explore new business opportunities, he said.

“We showcased our products at Gulfood and received a good response from local businesses. We are in discussion with some leading names to launch our brand in the UAE market,” he said.

As many as 23 Pakistani companies in the food business attended the Gulfood exhibition in Dubai this year and displayed their full range of products in Pakistan pavilion. The exhibitors had fruitful meetings with the local importers and indenters and most of them are optimistic to launch their products at competitive price in the Gulf markets.
Pasha said the volume of Pak exports to the UAE touched $1.8 billion in 2011 out of which food group exports were to the tune of $500 million. “There is, however enough room to expand keeping in view the UAE’s global food imports of more than $7 billion annually,” he said.

In reply to a question, he said some projects in food business are in the pipeline that will further strengthen the bilateral trade relations. “There are a few joint ventures ranging from farmland acquisition to joint production of commodities, fruits and vegetables and building of state-of-the-art food silos are in the pipeline,” Pasha said.

Asif Jabbar, director and group chief executive of Alif Investments, welcomed the entry of Pak brands into the UAE market.

“We have successfully launched many Pakistani brands including the Junaid Jamshed and Meat One. It is good to see that more Pakistani brands in food business are set to enter the local market,” he said and cautioned the new entrants about the stiff competition in the local market.

“The marketing of a new brand in the UAE is not an easy job amid competition from international and regional brands. One should be aware of marketing cost and other expenses in an international commercial city like Dubai to find place in the competitive market,” Jabbar concluded.

Riaz Haq said...

Here's a BR report on State Bank of Pakistan's ag loans target for the year:

The State Bank of Pakistan has set Rs 285 billion target for disbursement of agriculture loan among small farmers for current fiscal year.

Director Development Finance of SBP Karachi, Dr Muhammad Saleem said this while addressing "Agricultural & Industrial Awareness Convention-2012" here on Tuesday.

Khyber Pakhtunkhawa Higher Education Minister Qazi Muhammad Asad Khan participated as chief guest in the convention organised by the State Bank, Rawalpindi in collaboration with commercial banks and insurance companies.

More than 120 stalls of handicrafts, clothing agriculture equipment, handmade beautiful jewellers, banking products and food, etc, were set up by women from various organisations and banks to promote rural culture and potential of trade in these areas.

Horse dancing and culture displays made this event more beautiful.

More than 1500 people including students, farmers and women participated in the convention.

Chief Manager State Bank Akhtar Raza, Group Head of United Bank Ltd (UBL) Jameel Ahmed, Vice Chancellor Hazara University Haripur, Professor Dr Sahawat and others were also present on the occasion.

Dr Muhammad Saleem said the SBP had set Rs 270 billion agriculture loans target for small farmers in the previous financial year while actually Rs 260 billion loan was distributed among farmers.

He said that agri loan is being given to farmers through one-window operation.

He said farmers could give better output if banks provide them loan in time on easy instalments.

"Agriculture is backbones of our economy and its share in Gross Domestic Product (GDP) is 21 percent.

Livelihood of 47 percent people is directly or indirectly is linked with agriculture sector.

The SBP is playing pivotal role in progress of agriculture sector by providing loans especially to small farmers," he said.

Dr Muhammad Saleem said the SBP formulates policy in consultation with all the stakeholders including farmers.

The SBP changes its policy with passage of time by keeping the necessities of farmers in view.

Addressing the convention, Khyber Pakhtunkhawa Higher Education Minister Qazi Muhammad Asad Khan said land of Haripur is fertile and the farmers of this area can give maximum production if they were given some financial support for seed, fertiliser and tractor and other inputs necessary for increasing production.

He urged the SBP to set up its branch in Haripur for promotion of small industries and agriculture sector.

About the Haripur University, He said Haripur has also become a part of the community of 120 universities.

"The government should increase budget for education to 4% of GDP.

The quality of education can only be improved by increasing the budget for this sector.

Group head of UBL, Jameel Ahmed said the State Bank has good legal framework and governance in the region.

The employees of the Bank are servants of people.

"It is your money and used to benefit you," he added.

Vice Chancellor Hazara University Haripur, Professor Dr Sahawat said knowledge-based economy and use of latest technology is of vital importance for progress of agriculture sector.

Riaz Haq said...

Here's a Zee News report on crop yields in South Asia:

Productivity of major food crops such as wheat, rice, maize and pulses in India is almost half of that in neighbouring China, according to a data.

In fact, yield of staple grains like maize and pulses in India is even less than that of countries like Pakistan, Bangladesh, Nepal and Myanmar, the data presented in Parliament by Agriculture Minister Sharad Pawar last week said.

The productivity of rice in India is 3,264 kg per hectare, while in China it is 6,548 kg a hectare, the data compiled by UN's agriculture body FAO for the year 2010 said.

It is also high in Bangladesh at 4,182 kg/hectare and Myanmar at 4,123 kg per hectare.

China also tops the list in wheat with yields of 4,748 kg per hectare, whereas for India it stands at 3,264 kg a hectare.

India stands at the bottom in terms of maize and pulses productivity compared to China, Pakistan, Bangladesh, Nepal, Sri Lanka and Myanmar.

Bangladesh leads the tally in terms of maize yields with 5,837 kg per hectare, followed by China at 5,459 kg a hectare, Myanmar 3,636 kg/hectare, Pakistan 3,558 kg per hectare, Nepal 2,118 kg every hectare, Sri Lanka 2,806 kg a hectare and in India it is 1,958 kg/hectare.

In pulses, China tops the list with 1,567 kg per hectare followed by Myanmar at 1,114 kg a hectare, Bangladesh at 871 kg/hectare, Nepal 791 kg per hectare, Pakistan 762 kg every hectare, while in India it stands at 694 kg per hectare.

Pawar said that productivity depends on factors like rainfall, extent of inputs such as fertiliser, micro-nutrients, seed replacement rate, duration of crop, extent of area sown under any crop and the nature of lands used for cultivation.

To enhance the agricultural production, the government is working on frontier areas of research like marker assisted selection, stem cell research, nanotechnology, cloning genome resource conservation, Pawar said.

The National Institute of Abiotic Research Management has been established in Maharashtra to address issues related to impending climate change, he added.

That apart, the National Institute of Biotic Stress Management and Indian Institute of Agricultural Biotechnology are in the pipeline for undertaking high quality research, the minister added.

Riaz Haq said...

Here's a PakistanToday report on SBP's efforts to increase funding of agriculture and financial literacy among farmers:

Presiding over a one-day ‘Farmers’ Financial Literacy & Awareness Program on Agricultural Financing,’ which was jointly organized by State Bank and Habib Bank Ltd. today at NRSP Training Center, Bahawalpur, he said the agriculture sector has a key role in country’s economy and stressed the need for making necessary finances available to farmers for multiple cropping activities. He outlined SBP’s efforts for creating awareness amongst the farming community and developing capacity of commercial banks through its various training and awareness programmes.
Dr. Saeed Ahmed, Head, Agricultural Credit and Microfinance Department, SBP said the programme is aimed at creating awareness among the farming community about agriculture financing products & services offered by banks, money management techniques and lending procedures, documentations, etc. Besides, it would also develop capacity of agriculture field officers of banks in agri. financing and synergize the efforts of all stakeholders including policy makers, executing agencies, service providers & farming community to improve access to agricultural credit, he said, adding that SBP’s promotional initiatives and policy interventions have translated into around 200 percent increase in the flow of credit to the agriculture sector from Rs. 137.4 billion in 2005-06 to Rs. 263 billion in 2010-11.
However, he pointed out, despite this encouraging growth, the disbursement to the agriculture sector was around 40% of the total estimated credit requirements. ‘SBP has planned to increase the disbursement to 70-80 percent during the next five years covering 3.3 million borrowers by adopting a multipronged strategy,’ he added.
The inaugural session was followed by a technical session for the agricultural credit staff of banks in which senior officials of SBP and HBL made detailed presentations on dynamics of agriculture finance and related policies. The purpose of this session was to train the agriculture finance officials of banks enabling them to conduct farmers’ financial literacy programs at their end and to share the best practices in agriculture lending with the participants.

Riaz Haq said...

Here's a News report on rising sales of cars, motorcycles and tractors in Pakistan:

Sales of automobiles in the first nine months (July-March) of the current fiscal year increased 15 percent to 128,576 units, compared to 111,852 units same period last year, according to the data released by the Pakistan Automotive Manufacturers Association (PAMA).

According to the data, in the third quarter (Jan.-March) of this year, automobile sales increased 7 percent to 46,632 units from 43,753 units in the correspondent quarter last year. When compared with the second quarter of this year, sales in the third quarter showed an impressive growth of 22 percent.

Pak Suzuki Motor Company (PSMC) continued to depict strong sales showing a growth of 32 percent in the July-March period to 81,360 units compared with 61,693 units in the same period last year. Analysts attribute strong growth to the yellow cab scheme announced by the Punjab government. In March 2012 alone, PSMC sales stood at 11,198 units, up 16 percent from same month last year and 12 percent from February 2012.

On the other hand, Indus Motor Company sales growth remained subdued during the period under review. The company sold a total of 38,858 units compared to 37,259 units in the same period last year, up by 4 percent. In the third quarter, the company sold 14,792 units against 14,851 units in the same period last year.

Samina Kanji, an analyst at BMA Research, a 15 percent year-on-year growth in auto sales is primarily due to the yellow cab scheme of the Punjab government. On the other hand, motorcycles and three wheelers sales increased on month-on-month basis and sales in March stood at 70,671 units as compared to 65,011 an increase of 5,660 units, the data showed. Total sales of farm tractors decline to 6,229 units as compared to previous month sales of 8,906 units. Sales of trucks and buses sales in March stood at 379 units as compared to 304 units in February 2012.

Riaz Haq said...

Here's an ET story of a celebrated CEO's departure in Pakistan:

(Asad Umar's) tenure at Engro has certainly been a remarkably successful one. When Umar took over as President and CEO of the company in January 2004, Engro was largely just a fertiliser manufacturer with a small petrochemical subsidiary. Under his leadership, however, the company turned into a diversified industrial conglomerate, with interests ranging from fertilizers, foods, petrochemicals, chemical storage, energy and commodity trading.

Small wonder, then, that Dawood was effusive in his praise of Umar when announcing the departure to the company’s employees, noting that under his leadership, Engro’s revenues had grown from just Rs13 billion in 2004 to Rs114 billion in 2011, growing at an annualised rate of nearly 36.4%. (Inflation during that time averaged 12.6% per year.)

Even within the core fertiliser business, Umar took Engro from being a local player to a globally competitive one, leading the firm into the $1.1 billion project that set up the world’s largest single-train urea manufacturing plant in Pakistan.

Umar’s 27-year career at Engro began in 1985, when the company was still a subsidiary of ExxonMobil, the global oil giant. “I still remember the exact figure of my first salary: Rs8,170 per month. My boss at the time said ‘Well, frankly they are paying you too much.’” As CEO of Engro Corporation, Umar was paid Rs68.6 million for the year 2011, which comes to a monthly salary of Rs5.7 million.

In addition to his salary, Umar, 50, was also paid in stock and currently owns about 2 million shares of the company, with options to buy another 924,000, according to Engro’s latest available financial statements. At Monday’s closing price of Rs102.47 per share, that puts the value of Umar’s stocks and options at over Rs300 million.

Umar represents the growing class of executives trained by the country’s business schools who made it big by working their way up the corporate ladder rather than being born into privilege. Umar graduated from the Institute of Business Administration in Karachi in 1984, working for a short stint at HSBC Pakistan before moving to what was then Exxon Chemical Pakistan as a business analyst.

He was the only Pakistani employee of Exxon working abroad (in Canada) when the famous management buyout of Engro took place in 1991. Umar came back to Pakistan and in 1997 was appointed the first CEO of Engro Polymer & Chemicals, the group’s petrochemical arm.

When became president of the company in 2004, he immediately made the company take a global perspective, becoming the first Pakistani private sector firm to hire the top (and expensive) US consulting firm McKinsey & Company to help create the Engro’s strategy. Engro changed its corporate structure as a result of that engagement and is now on a global expansion kick, buying out a US-based food company and considering expanding into the fertiliser business in North Africa to supply the European market.

Riaz Haq said...

Here's a Business Recorder summary of packaged food giant Nestle Pakistan:

Nestlé Pakistan seems to be doing well in 2012.

The Companys financials for the first quarter ended March 31, 2012 show that the foods giant posted a profit after tax of Rs1.664 billion.

Nestlés product portfolio in Pakistan is truly diverse, which includes dairy products such as Milk Pak, Nido, Everyday and yogurts; beverages like Fruita Vitals, Milo and Nescafe; and food products like Maggi noodles, Cerelac, breakfast cereals, and confectionaries.

The Companys net sales crossed the milestone of Rs20 billion in 1QCY12, as the milk and nutrient businesses seem to be growing.

The competitive landscape has drastically changed for Nestlé Pakistan in recent years following the arrival of Engro Foods and strong performance of Unilever Foods.

Nestlé has had to deal with multiple competitors across various product lines; however, its consistent revenue growth shows that the size of the pie is expanding as the competition is penetrating deeply into the addressable markets.

Nestlés topline grew by a strong 24 percent during 1QCY12, but somewhat diluted by a larger, 25.4 percent increase in cost of goods sold.

Resultantly, these costs consumed 72.7 percent of net sales, and brought down the gross margin by 78bps compared to same period last year.

The spiraling prices of key commodity inputs (wheat and milk) along with the energy crisis continue to weigh heavy on the margins.

Nearly 15 percent increase is seen in the distribution & selling expenses, whereas the administrative expenses rose by a whopping 31 percent.

Nestle spent Rs12.53 on these two expense heads for every 100 bucks it earned in the quarter under review.

However, compared to the competition, Nestlés distribution & administrative expenses are controlled due to its vast network and economies of scale.

Nestlés non-operating performance is clearly an area that needs to complement the decent operating performance.

For instance, the finance cost jumped by a whopping 125.7 percent; the other operating expenses increased by 52.2 percent; and the other operating income decreased by 52.17 percent.

Healthy topline growth, coupled with somewhat controlled operating expenditures, ensured that Nestlé posted a double-digit profitability growth during 1QCY12.

Yet the net margin dropped by 93bps to come down to 8.24 percent, owing to the slippages mentioned earlier.

However, the profit of over 1,600 million rupees is sweeter still, especially for shareholders who earned Rs36.71 on each share during the period.

Despite the rising input costs and energy issues, Nestlé is well-placed to capture a bigger slice of Pakistans food market which is forecasted by various estimates to grow in double-digit in the coming years.

Services like Nestlé Professional - which markets food and beverage solutions for out-of-home establishments like restaurants, offices, airports, universities and hospitals - can also boost revenues.

Nestlé may be leading in many of the product lines it operates in.

However, the packaged goods share is still a fraction of the total market, and that is where the promise for sustained future growth lays.

Riaz Haq said...

Here's a <a href=">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>

Riaz Haq said...

Here's an ET story on supply chain management in Pakistan:

....According to Agility Logistics Director Commercials Aamir Haroon, the field of supply chain has undergone a drastic transformation in Pakistan during the last 10 years. “We used to have a storekeeper, godown manager and in charge of transport a decade ago. Today, we have a logistics officer, supply chain manager and chief turning officer,” Haroon told the audience.

Stressing the need for outsourcing non-core activities, he urged companies to make their balance sheets leaner by getting rid of unnecessary assets and liabilities. “It’s no more a company versus another company these days. It’s basically one supply chain competing against another supply chain,” Haroon said, adding up to 70% of a typical company’s annual budget was managed by supply chain professionals.

Referring to an internal study carried out by Unilever Pakistan to gauge consumer reaction to an inefficient supply chain, company’s Logistics Director Faheem Khan said most consumers would not go back to a retail outlet if they did not find their desired brand there first time around. “It’s bad for you as a retailer if you’re selling a brand that has a poor supply chain.”

Making a presentation on the role of cold chain in the contemporary world and its implications for Pakistan, Raaziq International CEO Muhammad Nadeem Khan said horticulture formed 12% of the country’s gross domestic product, adding 30% of it was wasted annually because of an inefficient supply chain.

Similarly, he said only 6% of livestock produced in Pakistan was actually sold after value addition. With the global market for frozen food worth about $175 billion, Khan said Pakistan could benefit immensely by improving its supply chain, especially in horticulture and meat segments.

Riaz Haq said...

Here's an APP report on Pakistan's dairy industry:

Pakistan can easily triple its milk production by employing simple methods while latest measures can further milk output by 900 per cent.

Pakistan has impressive dairy industry which can be exploited to its real potential, said Economic Councilor Embassy of Netherlands, Ian Van Ranselaar here on Thursday.

He said a developed environment can help revolutionize Pakistan's dairy industry.

"A Dutch cow produces nine times more milk a Pakistani cow or buffalo can produce", he said and added that some measures are needed to bring per cow production of both friendly countries at par.

The Dutch diplomat was talking to Vice President Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Mirza Abdul Rehman, Chairman Coordination Atif Akram Sheikh and Chairman Media Malik Sohail.

Ian Ranselaar further said that 16 Pakistani major dairy stakeholders are due to leave for Netherlands to know the latest trends and techniques.

He said currently balance of trade is in favour of Pakistan and they are working on various projects to boost Pakistan economy.

The diplomat said various Pakistani products including rice, textiles, surgical goods, sports hardware, leather products and fruits are of superior quality but local entrepreneurs lag behind in branding which has been identified as a major obstacle.

"Security situation in Pakistan is not as bad as perceived in many countries which is shying away investors. Pakistan should improve its perception", the diplomat remarked.

The Dutch diplomats were all praise for the tireless efforts of Pakistan Commercial Councillor in Hague.

On the occasion, Mirza Abdul Rehman said with 180 million population, Pakistan has great potential for investment, vast space for business activities and there is no issue of law and order.

Atif Akram Sheikh said both the countries have good political ties which should supplement our trade relations.

Pakistan has three times the animals that Germany has, but yields are one-fifth of Germany's and one-third of New Zealand, representing a significant loss, he added.

Business community is satisfied with the efforts of the Ambassador Hugo Gajus Scheltema, said Sheikh, adding that issuance of visa should be made easier.

Malik Sohail said being the fourth largest producer of milk in the world, Pakistan produces 35 billion liters of milk from around five million animals which is worth Rs.177 billion.

"Our dairy sector is growing by five per cent per annum while demand is increasing by fifteen per cent which calls for urgent measures to address issues effecting production", he underlined.

Pakistan is processing only two per cent of milk production which if increased will help boost living standard of rural population and economy.

Riaz Haq said...

Here's an ET story on Engro supply chain in Pakistan:

Have you ever wondered where the milk in packaged dairy products comes from? In case you assumed that big food companies maintained their own dairy farms that generated thousands of litres of milk daily and remained insulated from fluctuations in open market rates, you are wide of the mark.

In fact, only 5% of about 1.2 million litres of milk that Engro Foods collects every day for its dairy segment during the flush season – from January to April each year when fodder is available in abundance and milk production is high – comes from its own corporate farm located in Sukkur.

The rest of the milk supplies during the flush season and the summer, when milk production drops by roughly 50%, comes from about 15,000 small farmers scattered between Sanghar and Jhang districts, an area of 135,000 square kilometres.

Streamlined under Engro Milk Automation Network (EMAN), Engro Foods maintains a sales force of 1,500 people across 1,200 villages in Sindh and Punjab. They collect milk, mostly in small quantities, from farmers between 6:00am and 9:30am every day, which is then transported for further processing.

But why would a villager with just a few cattle sell the excess quantity of milk to Engro Foods instead of the traditional milk contractors known as dodhis?

According to Aamir Khawas, who works as head of milk procurement and agri services at Engro Foods, doing business with a large food company offers small farmers a number of benefits. “Animals are susceptible to diseases. Our network of veterinarians ensures sick animals receive immediate treatment. That’s a benefit no traditional milk contractor can offer,” he said.

Moreover, the moment a farmer sells milk to an Engro representative, in whatever small quantity, the transaction is recorded electronically in a centralised database by swiping the EMAN card that each of the 15,000 suppliers carries.

The availability of real-time data ensures that money is transferred to the farmer the day the transaction takes place. This is in contrast to the past practice of issuing receipts on paper that took at least a week before a transaction was recorded and payment processed.

In addition, Engro’s advisory service helps farmers increase milk production. “There’re two ways for a farmer to increase his revenue. If he gets Rs41 instead of Rs40 per litre, his revenue increases by Re1. But if the milk output increases by one litre, his revenue increases by Rs40. We help him do the latter,” Khawas said.

So how does Engro ensure that the milk is pure? “It’s very easy. We pay farmers not on the litres of milk they bring to us. Rather, the basis of payment is total solid contents of the milk,” he said, explaining that milk consists of three things – water, fat and solid non-fat (SNF). Total solid contents are the sum of fat and SNF.

“It’s hard to adulterate when the quantity is low. So no matter how much water you add, the solid contents can easily be determined by running a few tests,” he said.

A total of 13 tests are carried out when a farmer hands over milk to an Engro representative. It is picked up from there by an Engro van that carries out another 20 tests on the collected milk. It then reaches the regional office where 30 more tests are done to check its quality. Eventually, milk is taken to the Engro plant where the final 40 tests take place before it is processed, packaged and dispatched to the retail market.

With the demand of milk increasing by 15% annually and supply rising by just 2% a year in Pakistan, the dairy sector looks like a heaven for investment. The Sukkur farm of Engro Foods has already grown 10 times since its inception with about 3,000 cows. “Yet we’re looking for a major expansion in the near future.”

Riaz Haq said...

Here's a News report on US Aid program helping livestock farmers:

Nina Fite, consul general of the United States in Lahore recognised recent graduates of a US Agency for International Development (USAID) supported livestock export training programme at a certificate ceremony, a statement said on Friday.

The programme trained the participants in GlobalGAP certification, a standard for dairy and meat exportation required by several European and international markets. By implementing these standards, Pakistani meat and dairy producers will be able to export to wider markets, growing their businesses and boosting Pakistan’s economy, it said.

“The United States is committed to promoting the economic development of Pakistan. One important element of this commitment is our support to local farmers with programmes to build their business capacity and generate higher incomes – higher incomes that will improve their lives and the lives of their families,” said Fite. “Programmes, such as this USAID-funded training, will have a direct and positive impact on the lives of Pakistanis through the promotion of livestock entrepreneurship,” she said.

Global Good Agricultural Practices (GlobalGAP) is an international private body that sets voluntary international standards for the certification of agricultural production processes.

Riaz Haq said...

Here's an excerpt of ET story on Pakistan's commercial dairy business:

Economies of scale were the key to JK Dairies’ strategy, and not just in the number of animals. The company imported some of the finest milk breeds from Australia in order to improve output per animal. And it was smart in terms of the kind of cows it imported too.

Many dairy farmers have made the mistake of simply looking up which cows yield the most amount of milk per lactation and import them into their farms in Pakistan, not realising that most of those breeds are not suited to the Pakistani climate.

JK Dairies imported the Australian Friesian-Sahiwal, a breed that was created by the Australian state of Queensland in the 1960s by crossing the Sahiwal cow (named after the city in Punjab where it is from) and the Friesian breed to produce a new cross-breed that combines the sturdiness of the Sahiwal with the lactation prowess of the Friesian.

The average Sahiwal cow (still common in many parts of the Punjab), produces about 2,270 litres of milk per lactation. The Friesian Sahiwal breed produces over 3,000 litres per lactation, about 32% higher. Since then, the company has been cross-breeding the Friesian and Jersey breeds of cows that are also part of its stock with local breeds to produce better milk-giving animals that are suited to the local environment.

“We can compete with the world only by experimenting with the latest available technologies, and that’s what we are doing,” Tareen said.

JK Dairies employs a lot of foreign staff, particularly from East Asia, since Tareen feels that local universities do not have enough graduates who are familiar with global best practices in agriculture and livestock. In addition, the company does not use fodder, a common local practise and instead uses multi-cut seeds, which not only can be produced year-round but also help the cows enhance their milk production.

The company then markets its milk through various techniques, including retail outlets in Lahore as well as a home delivery service. But the bulk of JK Dairies’ sales go to Nestle Pakistan, the largest food company in the country and the owner of Milkpak, the leading brand of packaged milk.
...Tareen appears highly bullish on the livestock sector, which constitutes about 11% of Pakistan’s GDP and employs about 17% of the workforce, including most of the poorest people in the country. “The livestock sector of Pakistan can singlehandedly became a game changer for our economy.”

Others agree. “If Pakistan were to improve its overall milk yields by just 15%, it would displace New Zealand as the largest exporter of milk in the world,” said Ian Donald, the outgoing CEO of Nestle Pakistan.

Riaz Haq said...

Major market research firm Ipsos comes to Pakistan, according to The News:

The launching ceremony of Ipsos, Pakistan was held at a local hotel of the city on Tuesday, hosting over 200 representatives of leading companies in Pakistan. The participants included CEOs, marketing and research heads of national and multinational companies from the FMCG and services sectors.

The chief guest of the event was the global founder and co-president of Ispos, Didier Truchot. He was accompanied by the chairman and CEO of Ipsos MENA, Edouard Monin and Global Group CFO Laurence Stoclet. While foreign investors are usually reluctant about investing in Pakistan, the launch of Ipsos in the country denotes the trust of the group’s stakeholders in the potential of marketing research business in Pakistan.

Didier Truchot said that he had high hopes for tapping the tremendous potential of the research industry in Pakistan owing to immense demographic dividends of the resource-rich country. “Ipsos believes in imparting knowledge and expertise across various countries it is working in. Our global presence gels in with the locally intelligent need gap assessment and deliverance of services accordingly. I am happy that Ipsos has already been well-received in Pakistan and is a critically acclaimed research company in terms of its futuristic and client-driven approach.” Ipsos co-president said that the success story narrated by Ipsos across the globe is the result of a vision held by sound intellectual deeds of professional researchers. “Ipsos is owned and run by researchers and this fact speaks volumes for its intellectual and professional supremacy over other competitors in Pakistan.”

Ipsos Pakistan is headed by Abdul Sattar Babar, a researcher. During his inaugural speech, he said: “This is a moment of pride for us that Ipsos is formally announcing its anchoring in Pakistan. I am happy that our global co-president made it to Pakistan to attend this event and his presence ensures transfer of knowledge and technology in a wide range of marketing research services that are not fully developed in Pakistan. Ipsos Pakistan is all geared up to make a headway in the industry based on trust, which certain clients had already conferred on us even prior to this formal launch.”

Riaz Haq said...

Here's Daily Times on mango export processing in Pakistan:

Pakistan is considered as a country, lagging behind the developed world regarding science and technology, but the situation was not as much worst as seen, because Pakistan has an edge in treatment of mangoes and its shelving.

Mango is a well-regarded fruit and is known as ‘King of fruits’. Mango appears in local markets as the summer season commences.

Globally, it is one of the most eaten fruits. As many as 11 countries, including Pakistan export mangoes. To meet the global standards, mangoes are treated before export. There are four ways of treatment, out of which three are recognised across the world: hot water treatment (HWT), vapor heat treatment (VHT) and radiation.

There are nine types of bacteria that prevail in mangoes. To kill all of those, in most common way of hot water treatment, mangoes are treated with hot water for one hour, during which the temperature is managed at 75 degree centigrade. Resultantly, the pores at mangoes surface get rupture and its shelving become difficult.

Pakistan has a double edge in regard with treatment and shelving of mangoes. The country has a capacity to treat 15 tonnes of mangoes per hour. Besides this, Pakistani private sector has ability of shelving mangoes for 35 days after treatment, however, the rest of exporter countries could shelve mangoes for maximum seven days.

Recently, Pakistan has achieved another significant achievement in export of mangoes sector. Pakistani has recently initiated to export mangoes to China, which itself is the second largest producer and one among the largest consumers of mangoes.

Though China itself produce mangoes in massive quantity, it still is a vast market for Pakistani mangoes as locally produced mango is small in size and less sweet, however, Chinese people like larger in size and sweeter mangoes and Pakistani types of mangoes all their desired qualities.

AQ Khan Durrani, the owner of treatment plants in Pakistan and exporter of mangoes to China, said while talking to the Daily Times that China is biggest country in term of population and is 2nd largest producer of mango in the world with production of 4.5 million tonnes of mangoes annually. Chinese people like mangoes a lot and while exploring this big market of ‘mango lovers’, Pakistan can earn millions of dollar in fruit sector.

“China can be the biggest market of Pakistan mangoes and within three years Pakistani export can be doubled,” he added.

It is pertinent to mention here that the Pakistan produces 1.6 to two million tons of mangoes annually and was ranked fourth to fifth among producer countries of mango. The dire need of hour is that the government should follow and respond to the achievements and strive of private sector, which is going to explore even largest producer countries of mango as consumer market.

Pakistan would become the largest producer and exporter of mangoes due to the quality of local mango, if the government supports the sector. This also would result in very positive impacts on local economy and the position of the country as well.\07\09\story_9-7-2012_pg7_16

Riaz Haq said...

Here's a BR report on PM Raja talking about PPP's pro-farmer policies:

Prime Minister Raja Pervez Ashraf Tuesday said prudent and farmers-friendly policies of the PPP led government has helped injection of Rs500 billion in the rural economy ultimately benefiting the farming community in the country.

"Due to our pro-farming policies and due payments of agriculture produce of the farmers specially in wheat production, Pakistan once an wheat importing country has now become an exporting country and we are self sufficient in wheat production", the Prime Minister said while addressing APP regularization certificate distribution ceremony to distribute letters among the contract and daily wages employees of Associated Press of Pakistan (APP), here at the Prime Minister Secretariat today.

Riaz Haq said...

Here are excerpts of PakistanToday's interview with Pepsico Asia chief Qasim Khan:

.. In a recently-conducted detailed interview with Pakistan Today (PT), Qasim Khan, a US-educated Pakistani who is PepsiCo’sgeneral manager and president for the North and South Asia Business Unit that, in its scope, ranges from Japan to Mongolia, talked at length about the immense potential as well as challenges the MNCs like his own are presently facing in Pakistan.
What is the current size
and scope of your business in Pakistan?

Qasim Khan: PepsiCo International is intricately linked towards the development of the corporate sector in Pakistan as we were one of the first multinationals to start operations in Pakistan in 1967. Now we are the biggest Food and Beverage Company in terms of the retail turnover in Pakistan having seven beverages franchises across the country. We also brought in Foreign Direct Investment in the shape of a concentrate plant set up in Hattar. Today, Pakistan is the 6th largest market for PI worldwide and we have three brands; Pepsi, Dew and 7-UP which are bigger than our rivals in terms of volume contribution. Pepsi is ingrained as a household brand while our contributions towards the development of sport, specifically cricket and music industry is unparalleled. We have been the pioneers of developing both these industries while strengthening our beverages brands over the past many decades. Since 2006 we also introduced the famous Lay’s potato chips brand in Pakistan by investing in a state-of-the-art plant which employs over a 1000 people. We have made strong investments in the agricultural sector of Punjab by introducing latest technologies for potato growers and are looking to expand potato growing into the country’s northern areas. We also plan to export potatoes to other countries around the world. Our snacks portfolio consists of leading global brands like Lays, Cheetos, Kurkure and Wavy.
PT: OK, now tell us what made PepsiCo invest in Pakistan?
Qasim Khan: Pakistan’s opportunity is driven from the following facts:
Large Market: It’s the 6th most populace country in the world with approximately 70 percent population under the age of 30.
Trained Workforce: A large trained and productive population represents a big opportunity to Pakistan to benefit from its demographic dividends.
Investment Policies: Pakistan’s policy trends have been consistent with liberalization, de-regulation, privatization and facilitation being the cornerstones of its policy.
Large Agro Base: The strong agriculture base presents a great opportunity for our food business to expand in the future. We realize that Pakistan is the 11th largest wheat producer, 12th largest rice producer and the 5th largest milk producer in the world.
Geo-Strategic Location: It can be a gateway between the energy rich Central Asian states, the financially-liquid Gulf states and technologically-advanced Far Eastern countries. This alone makes Pakistan a market teeming with possibilities.
Incomes on F&B: A significant amount of individual incomes (as high as 40 percent) are spent on food and beverage representing a huge opportunity for the industry.
Financial Markets: The capital markets are being modernized, and reforms have resulted in development of improved infrastructure in the stock exchanges of the country. The Securities and Exchange Commission of Pakistan has improved the regulatory environment of the stock exchanges, corporate bond market and the leasing sector....

Riaz Haq said...

Here's a BR report on Pakistan's rising private consumption:

The real private consumption in Pakistan is expected to grow during the fiscal year 2012 by a significantly higher rate than in 2011, a report compiled by the Asian Development Bank (ADB) said.

ADB in its recent report titled ' Asian Development Outlook Supplement July 2012' notes: "Based on the government's latest survey, real private consumption in Pakistan is expected to grow in the fiscal year 2012 by a significantly higher rate than in fiscal year 2011, supported by inward remittances."

The report argues that foreign investment is declining in the both India and Pakistan while the inflation in South Asian region is projected to be 7.8 percent of GDP in 2012 while for the FY 2013, it is projected at 6.9 percent of GDP.

According to the ADB report, South Asia is expected to grow by 6.2 percent in 2012 and 6.9 percent in 2013. South Asia economic growth will moderate as the weaker global environment reduces exports and investment inflows. Although somewhat offset by stable inward remittances, widening trade deficits have led to the depreciation of most currencies in the sub-region and have helped drive inflation up since

early 2012. While manufacturing growth is slowing in most countries, domestic conditions vary among major economies.

The report says that weak global demand has also affected trends in international commodity prices. In general, they are projected to decline throughout 2012 and 2013. The trend in the international price for oil and food suggests prices for 2012 and 2013 to fall below 2011 levels.

Economic growth in developing Asia moderated during the first half of 2012 as slower growth in the US and euro area reduced the demand for the region's exports. Worries over the economic strength of important developing economies have also emerged recently. Growth in developing economies will be slow in the second half of 2012. Unwinding policy stimulus in some countries has also contributed to the region's weaker first half performance.

Riaz Haq said...

Here's a Bloomberg story on rapidly rising sales at Engro Foods:

Engro Foods Ltd. (EFOODS), Pakistan’s biggest maker of packaged milk, may record an 80 percent increase in net income this year as demand for dairy products rises, the chief executive officer said.

Profit may cross 1.6 billion rupees ($17 million) in the year ending Dec. 31 compared with 891 million rupees a year earlier, Muhammad Afnan Ahsan said in telephone interview from Karachi yesterday. Net income rose to 531.8 million rupees in the three months ended June 30, from 99.2 million rupees a year ago, the Karachi-based company said in a filing to the stock exchange yesterday.

Engro Foods, which has a 45 percent share of the milk market and a quarter of the ice cream trade, may introduce as many as 13 new products and lines, Muhammad Aliuddin Ansari Chief Executive Officer of Engro Corp., the parent company, said in an interview this month. The food business may become the largest segment by profit and sales and will be the dominant area in the next five years, he said.

Engro Foods, which has climbed threefold this year, compared with a 20 percent gain in the benchmark KSE100 index, increased as much as 1 percent to 67.83 rupees at 9:33 a.m. local time

Riaz Haq said...

Here's a PakTribune report on new plant for producing BOPET for packaging of FMCG products in Pakistan:

Novatex Limited has successfully commissioned a project to produce Biaxially Oriented Poly Ethylene Terephthalate (BOPET) film.

This is a pioneer industry for Pakistan, bringing in technology and machinery, which is so far non-existent in the country.

Habib Bank Ltd, United Bank, Faysal Bank and Standard Chartered financed this project and the plant commenced operations in June 2012.

BOPET Polyester film, which will be produced by Novatex, has due to its superior attributes become a necessary packaging material for food, etc allowing the introduction of strong aroma retention and beautiful printed small as well as bulk pouches for tea, ketchup, mayonnaise, salad dressings, spices, fruit and vegetables packaging, food pastes as well as milk powder, good quality biscuits/snacks washing powder and shampoos, etc.

The current consumption of BOPET in Pakistan is over 16,000 tonnes and it will cross 20,000 tonnes following its availability locally.

Pakistan will become self sufficient in BOPET polyester film and save import of $40 million besides will generate export in excess of $30 million.

BOPET polyester film is also used for LCD/LED TV panels, solar panels, cable interior, salma sitara type decorations and x-ray film.

The project of Novatex has been set up with the latest German technology supplied by Lindauer Dornier of Germany.

It has a capacity to produce 31,000 tonnes BOPET per annum with 8.7 metre width and is the largest capacity and width currently available in the world for BOPET film lines.

Riaz Haq said...

Here's a Dawn story on Pakistani retail boom:

Isn’t it great that we in Pakistan finally have a mall which houses international brands such as Next, Nine West, Splash, Monsoon, Accessorize among other names? The retail boom is in full swing no matter what the economists say. Proof: Mango’s launch which brought out top models, stylists as well as your everyday shoppers.

Though its doors have been open to the public since June, its media launch (managed by Catalyst P.R. aka Frieha Altaf) was just held recently. Okay, so coming back to the basics, I love LOVE loveeeee shopping BUT I am an even bigger lover of a good bargain. IMAGINE my disappointment when a pair of heels (hideous ones by the way) at Nine West were for Rs.13,000! I had convinced myself that Mango will fair no better. I was pleasantly surprised…to an extent.

The thing is that these brands are RETAIL brands, NOT designer brands, as some may think. The price points cannot be “unaffordable” as they have to appeal to the general public. Right? Where Mango had their summer clothes (which I loved!!!) there was winter wear as well! Hmm, isn’t it still summer and isn’t winter like MONTHS away? Winter in Karachi won’t be until end of November (if we are lucky), so what is the point of having SWEATERS smack in the start of one of the hottest summers we have had? What is that? Yes, that’s a puzzle even I couldn’t figure out! There were cute tops and accessories, bags and shoes, scarves, fun summer maxis and jeans – all the good stuff. What Nine West or Monsoon lack in affordability, Mango makes up for it. Comparatively, Mango is much more affordable than the rest of the retail counterparts which have come to town. Next, though was one of the first retail brands to open its doors in Karachi and Lahore, has the inventory which can easily be classified as, say it with me “ANCIENTT!!!” They should just pack up or change their management. Note to Management of Next, WAKE UP!!

Coming back to Mango, jeans were ranged between Rs.4,000 and under Rs.6,000 – Gold Star for Mango! The summer maxis however, were above 13,000! Five thumbs down! Over all, the accessories were relatively affordable as well as current. Noted fashion designer Sadaf Maletarre said and I quote “It’s great to have Mango in Pakistan.”

Top model Fayezah Asad Ansari said, “It is brilliant that Mango has opened up in Karachi, though for a retail brand I wish the clothes were more affordable.” This concern was also shared by stylist Beenish Pervez. “The clothes are fantastic, that being said they are not as affordable for everyone.”

I have to agree and disagree with my fellow fashionistas. It’s excellent for these brands to open their door here which is perfect for people who cannot travel abroad and shop. They finally have an avenue to have what people who travel abroad have had for years… however, people who travel do know what is in the stores in London, New York, Toronto, Dubai etc. and can quickly asses what is new and what was in stock last season. For them, it is pointless to shop here anyways.

Riaz Haq said...

Here's a Dawn story on Pakistani retail boom:

Isn’t it great that we in Pakistan finally have a mall which houses international brands such as Next, Nine West, Splash, Monsoon, Accessorize among other names? The retail boom is in full swing no matter what the economists say. Proof: Mango’s launch which brought out top models, stylists as well as your everyday shoppers.

Though its doors have been open to the public since June, its media launch (managed by Catalyst P.R. aka Frieha Altaf) was just held recently. Okay, so coming back to the basics, I love LOVE loveeeee shopping BUT I am an even bigger lover of a good bargain. IMAGINE my disappointment when a pair of heels (hideous ones by the way) at Nine West were for Rs.13,000! I had convinced myself that Mango will fair no better. I was pleasantly surprised…to an extent.

The thing is that these brands are RETAIL brands, NOT designer brands, as some may think. The price points cannot be “unaffordable” as they have to appeal to the general public. Right? Where Mango had their summer clothes (which I loved!!!) there was winter wear as well! Hmm, isn’t it still summer and isn’t winter like MONTHS away? Winter in Karachi won’t be until end of November (if we are lucky), so what is the point of having SWEATERS smack in the start of one of the hottest summers we have had? What is that? Yes, that’s a puzzle even I couldn’t figure out! There were cute tops and accessories, bags and shoes, scarves, fun summer maxis and jeans – all the good stuff. What Nine West or Monsoon lack in affordability, Mango makes up for it. Comparatively, Mango is much more affordable than the rest of the retail counterparts which have come to town. Next, though was one of the first retail brands to open its doors in Karachi and Lahore, has the inventory which can easily be classified as, say it with me “ANCIENTT!!!” They should just pack up or change their management. Note to Management of Next, WAKE UP!!

Coming back to Mango, jeans were ranged between Rs.4,000 and under Rs.6,000 – Gold Star for Mango! The summer maxis however, were above 13,000! Five thumbs down! Over all, the accessories were relatively affordable as well as current. Noted fashion designer Sadaf Maletarre said and I quote “It’s great to have Mango in Pakistan.”

Top model Fayezah Asad Ansari said, “It is brilliant that Mango has opened up in Karachi, though for a retail brand I wish the clothes were more affordable.” This concern was also shared by stylist Beenish Pervez. “The clothes are fantastic, that being said they are not as affordable for everyone.”

I have to agree and disagree with my fellow fashionistas. It’s excellent for these brands to open their door here which is perfect for people who cannot travel abroad and shop. They finally have an avenue to have what people who travel abroad have had for years… however, people who travel do know what is in the stores in London, New York, Toronto, Dubai etc. and can quickly asses what is new and what was in stock last season. For them, it is pointless to shop here anyways.

Riaz Haq said...

Engro Foods forecasts 80% jump in profits, reports Businessweek:

Engro Foods Ltd. (EFOODS), Pakistan’s biggest maker of packaged milk, may record an 80 percent increase in net income this year as demand for dairy products rises, the chief executive officer said.

Profit may cross 1.6 billion rupees ($17 million) in the year ending Dec. 31 compared with 891 million rupees a year earlier, Muhammad Afnan Ahsan said in telephone interview from Karachi yesterday. Net income rose to 531.8 million rupees in the three months ended June 30, from 99.2 million rupees a year ago, the Karachi-based company said in a filing to the stock exchange yesterday.

Engro Foods, which has a 45 percent share of the milk market and a quarter of the ice cream trade, may introduce as many as 13 new products and lines, Muhammad Aliuddin Ansari Chief Executive Officer of Engro Corp., the parent company, said in an interview this month. The food business may become the largest segment by profit and sales and will be the dominant area in the next five years, he said.

Engro Foods, which has climbed threefold this year, compared with a 20 percent gain in the benchmark KSE100 index, increased as much as 1 percent to 67.83 rupees at 9:33 a.m. local time.

Riaz Haq said...

Here's BR report on Engro Foods:

Engro with its rich history of over four decades of developing the agricultural sector of Pakistan used dairy as a stepping stone to enter the foods business in 2005 to give further impetus to its already diversified business portfolio including fertilisers, petrochemicals, energy, trading and chemicals storage and handling.

In a span of just seven years, with a compound annual growth rate (CAGR) of 65 percent and a planned infrastructure investment in 2012 to the tune of eight billion rupees, Engro Foods has become the country's fastest growing local company catering to a wide demographic consumer base from high income groups to the more economically conscious segment of the market both in Pakistan and abroad.

Serving over five million consumers nation-wide every day, Engro Foods had revenues of about Rs 19.76 billion during 1H-2012 with profitability registering an increase of over 450 percent to close at Rs 1.02 billion. Since its inception Engro Foods has invested heavily in dairy development initiatives, cold chain infrastructure, enhancing capabilities of dairy farmers across Pakistan through innovative breakthroughs that have redefined the milk collection standards and benchmarks in the dairy industry. Employing over 12,000 individuals both directly and indirectly, Engro Foods' continues to touch and improve life for over 160,000 dairy farmers through improved payment cycles, guaranteed collection, improved margins and up to a 15 percent increase in milk yields. Through its wide network of over 900 milk collection centres, Engro Foods focuses its impact at the most economically challenged communities in Pakistan - an effort that has also been recognised at local and international fronts including the IFC managed G20 Challenge on Business Innovation where Engro Foods was declared the winner from over 300 global contracts.

The Company also had the unique opportunity to become the first company in Pakistan to produce one billion packs within a year in 2010 alone; a distinction that has been achieved by only 18 companies out of 3,000 Tetra Pak customers world-wide. Living its vision of 'elevating consumer delight world-wide' the business established its Global Business Unit (GBU) and acquired Al-Safa Halal - the oldest Halal meat brand in North America in 2010. With presence in key retail stores including Loblaws, Wal-Mart, Sobeys, Metro, Kroger etc, Engro Foods GBU has obtained a market share of 15 percent in Canada and three percent in USA in the branded foods category.

Speaking at the occasion, Afnan Ahsan - CEO Engro Foods said: "The story of Engro and that of Engro Foods is a source of national pride. The fact that in a short span of seven years a home-grown multinational company has been created - with a geographic footprint spanning across Pakistan, Afghanistan, US and Canada - is testament to the vision and business acumen of the Company. Engro Foods is an example that through focused approach companies can create real business value - not just in the Pakistani market but also globally." Building on plans for the future of the Company Afnan said: "We are in the early stages of our growth trajectory and looking ahead we will continue to further explore diversification with focused growth in our dairy and beverage business - both locally and on the international front. We are also confident that we will continue to create real value for all our stakeholders by pursuing an inclusive growth strategy that positively impacts each individual through the value chain process."

Riaz Haq said...

Here's an ET report on HWT technology to increase shelf life and exports of fruits and veggies in Pakistan:

The establishment of Karachi’s hot water treatment (HWT) plant – a facility for post-harvest treatment and processing of fruits and vegetables – is a very good example of how the country’s agriculture sector can benefit by investing in technological advancements. It is because of this technology that Pakistan has been able to venture into some of the world’s largest markets for its mango over the past couple of months.

In order to expand mango exports, Durrani Associates, one of Pakistan’s largest mango exporters, in partnership with the government, set up the Rs220 million HWT plant, which is officially known as Pakistan Horti Fresh Processing (Pvt) Limited. This investment, according to Durrani Associates’ Director Babar Khan Durrani, can be recovered within five years.

Durrani told The Express Tribune that they were already exporting mangoes to Tesco in the United Kingdom and Carrefour in the rest of Europe – two of the world’s largest retail chains – but HWT facility has opened new markets for the exporters. The exporters can use the facility and ship their products via sea now, which will enable them to sell at competitive prices.

HWT increases shelf life of mangoes to 35 days, thus they can now be shipped by sea to remote destinations, a major development, which reduces freight charges to a great extent.

Take the example of China, Durrani said, where air freight alone costs more than $1.25 per kg of mangoes. The processed mangoes can be shipped by sea, he said, bringing the cost down to $0.20 per kg. As a result, the Pakistani exporter was able to impress Walmart China, which, in a week’s time, will strike a contract for supply of another 100 tons of mangoes.
Talking about how this technology has helped expand mango exports, Durrani said fruits and vegetables processed by HWT facility meet requirements of the United States Department of Agriculture (USDA), World Health Organisation (WHO) and International Quarantine Standards, thus making them globally acceptable.

In the past, Pakistan’s mangoes were denied access to several key markets including the US and China because of nine diseases. HWT kills anthicolas, a major disease that results in black spots on mango skin.

“The skin of our mango is rough but its taste is very good,” company’s Chairman Abdul Qadir Khan Durrani said. “HWT improves the skin while killing all diseases after treating at 50 degrees for an hour,” he added.

He claimed Pakistan has world’s largest HWT plant having capacity to treat 15 tons of mangoes per hour. The second largest plant is in Mexico that treats 4.5 tons of mangoes per hour, he said.

Besides the $2,200 per ton market of Europe, the $1,600 per ton market of China could prove to be the largest importer of Pakistan’s mangoes, Durrani said.
By contrast, the mango exports are 8% of the production or less than 50% of the export potential, a strong indication that there is still a huge space for more investment on the technology front. “We need more than 10 such plants for meeting mango demand of North American markets,” Director Durrani said.

“Our agriculture sector lacks technology. People shy away from using technology.” It will take a while before all farmers adopt new technologies, he said.
“About 30% to 40% of our fruits and vegetables are wasted because they are not processed,” Durrani said. “Given the HWT plant can process almost every fruit and vegetable that we produce, we can save our produce from being wasted,” he added.

Riaz Haq said...

Here's Business Recorder on Pakistan's rising wheat exports:

Following the rising demand and better price in the world market, Pakistan''s wheat exports has again picked up, witnessing some 200 percent growth during the first month of the current fiscal year. Exporters told Business Recorder on Wednesday that after posting some decline in the second half of FY12, wheat exports surged, on the back of demand from Sri Lanka and some other regional countries.

"Pakistan''s wheat exports was declining a few months ago because of low prices. However, better wheat prices and rising demand in the world market have opened up new venues for the export of the commodity," exporters said. Wheat price in the international market was rising because of reports regarding bad wheat crop in Russia, they said.

According to them, wheat prices had crossed $300 per ton after a gap of 6-8 months. Month-on-Month basis, export statistics for the first month (July) of this fiscal year were very encouraging, as wheat export witnessed a massive growth of 198 percent.

Keeping in line with the current trend, wheat exports amounted to $4.652 million in July 2012 against $1.562 million in June this year, depicting an increase of $3.09 million in a single month. In term of quantity, some 15,521 tons of wheat was exported during July against 5,592 tons in June this year.

Export figures for August will be higher than July, as huge export orders have been placed by foreign buyers and several shipments are in the pipeline. However, in the longer run, exports were linked with price stability in the world market, they added. "We are exporting wheat without any government subsidy, disposing off excess stocks, earning millions of dollars in foreign exchange. Wheat price below $300 per ton is not visible for us," exporters said.

The quality of Pakistan''s wheat is best and as per international standard it has 11 to 11.5 percent protein content and is considered perfect for markets in Sri Lanka, Bangladesh, the Gulf states, Far East and Myanmar, they informed. Traders also confirmed that commodity exporters were quickly procuring wheat from domestic market for export as attractive prices are being offered by importers from around the world.

Expressing some reservations regarding wheat exports, they said that hasty buying of wheat from domestic market could create panic in the commodity market, resulting in a massive increase in wheat pries. Wheat prices have witnessed a surge of Rs 2,000 per ton over the past month because of huge buying by exporters. With the current rise, the price of wheat grains rose to Rs 28,000 per ton from Rs 26,500 per tone. Although, the country harvested a bumper wheat crop this year and there is an ample stock in government and private warehouses, extraordinary jump in the quantum of exports could hit domestic prices and wheat availability in the domestic market, traders said.

Riaz Haq said...

Demand for Food Science graduates rising in Pakistan, reports Express Tribune:

As the food processing sector in Pakistan expands, the job opportunities – and starting salaries – for graduates in food science, nutrition and dietetics are increasing substantially.

The University of Agriculture Faisalabad reports that its graduates are finding jobs faster, with higher starting salaries and rapid career progression for many of its graduates. According to Tahir Zahoor, a professor in the food science department, the top graduates of the university’s food science programmes command salaries of Rs45,000 or higher, and get employed by such brand name employers as Nestle Pakistan, Engro Foods and Unilever Pakistan.

These starting salaries are comparable to those earned by graduates of the country’s leading business schools when they join the largest banks on Karachi’s McLeod Road. And it is not just the starting salaries that are high. Many graduates report earning more than Rs100,000 per month within five years of graduation, though admittedly these are some of the best performing students.

Not all graduates get these packages, of course. But according to the university’s professors, no graduate has gotten a job offer with a starting salary of less than Rs25,000 per month, with Rs30,000 per month being the median salary package. The middle-tier of students typically go to some of the smaller names in food production, such as Dawn Foods (a leading bread manufacturer), Shan Foods (a spice manufacturer), etc.

Revenues and profits at food production firms have been soaring. Between 2005 and 2010 (the latest year for which figures are available), revenues at food companies listed on the Karachi Stock Exchange have grown by an average of more than 18.2% per year. Profits have expanded even faster, by more than 21.2% per year.

This blowout growth has caused many to invest heavily into expanding production capacity. Both Engro Foods and Nestle Pakistan invest upwards of Rs8 billion every year in increasing their production facilities. Engro Foods – started only in 2006 – has been particularly aggressive in broadening its product line-up.

These two companies, however, are not alone. K&N Foods has become the nation’s largest supplier of processed chicken, tempting other food companies to enter into the fray. Dawn Foods, long a manufacturer of just bread and baked products, is now entering meat products. Quetta Textile Mills is setting up a processed chicken facility. And Shan Foods is trying to expand its presence overseas by acquiring a brand in the United Kingdom.

This expansion in the food sector is pushed by a change in the underlying consumer behaviour when it comes to buying food. Consumer spending on processed food appears to be expanding. The average Pakistani household spent almost Rs500 per month on processed food in 2011, over two and half times more than a decade ago, according to the Pakistan Bureau of Statistics, representing a rate of increase faster than inflation....

Riaz Haq said...

Here's a Reuters story of an entrepreneurs helping enhance cow milk yield in Pakistan:

Pakistani Shahzad Iqbal abandoned the jet-set lifestyle of a corporate executive because he wanted to do something worthwhile for his country. So he invested his life savings in world-class bull semen.

He imports the sperm from potent bulls in the West, with names like Socrates, Air Raid and Liberator, and sells it at affordable prices to farmers so they can breed cows that produce higher volumes of quality milk.

Iqbal is one of a band of trailblazers - from small-town entrepreneurs to managers in multi-national companies - who want to transform Pakistan's ramshackle dairy industry into a multi-billion dollar enterprise.

"It's going to take a revolution to turn it around," said Iqbal, as his farm workers moved metal cylinders filled with liquefied nitrogen gas that store the semen at -196 Celsius (-321 Fahrenheit).

If Iqbal and his comrades can succeed in their mission to overturn centuries-old practices and introduce modern techniques, they could open the door to a revolution in the livelihoods of millions of impoverished farmers.

The dismal state of the dairy industry is a striking example of Pakistan's habit of missing opportunities throughout a 65-year history tainted by military coups, political infighting and a form of crony capitalism that has stifled entrepreneurship.

With 63 million cows and buffaloes, Pakistan has one of the world's biggest herds, but it cannot export milk because the animals' yields are so low.

Preoccupied by power struggles and tension with the army, successive governments have failed to realize the potential of the sector, which engages about 35 million people, or 20 percent of the population, in direct or related work

After 15 years of making good money as an executive for Western beverage and tobacco companies overseas, Iqbal decided he wanted to do something for Pakistan.

To Iqbal, there was no more glaring example of the gap between Pakistan's potential and its performance than the dairy industry.

Rather than despair, he saw an opportunity, pouring his savings of $1 million into creating a breed improvement project called Jassar Farms.

He dreams of the day when the average Pakistani cow, which yields about 1,600 liters (420 U.S. gallons) of milk after it calves, can compete with the top of the line Israeli Holstein that churns out 12,500 liters (3,300 gallons).

Iqbal acknowledges the odds are stacked against entrepreneurs in Pakistan because of red tape, corruption, poor governance, chronic power cuts and a Taliban insurgency that keeps many investors away.

"I'm not saying I'm mad, but certainly I'm not absolutely normal either, because it takes a lot of persistence to undertake this kind of challenge," said Iqbal, wearing a pink polo shirt and jeans.


Iqbal can take comfort from the fact that he is not alone in his quest for reform. Some international companies are also working for change.

Nestle has installed 3,200 industrial-size milk refrigerators at collection points across the country to lay the foundations for the kind of cold storage chain essential for a modern dairy industry, and give farmers a steady market for their milk.

At a training centre with manicured lawns and spotless dormitories for farmers in Punjab, Nestle holds workshops to drive home a simple message - properly managed cows produce more milk.

Instructors show farmers how to treat their animals - the Nestle cattle lounge around on soft sand under powerful fans, chewing nutritious fodder. They have constant access to water - essential practices of which most farmers are ignorant....

Riaz Haq said...

Pakistanis consume over 170 Kg of milk per capita and it's growing, according to FAO.

Growing milk consumption can help reduce malnutrition in Pakistan.

Here's a story illustrating the value of milk in reducing malnutrition in Africa:

WFP Executive Director Josette Sheeran kept a promise she made to WFP-supported Rilima health centre last July by giving two cows worth 1,360,000 Frw to help reduce malnutrition among poor communities in the area.

WFP Executive Director Josette Sheeran kept a promise she made to WFP-supported Rilima health centre last July by giving two cows worth 1,360,000 Frw to help reduce malnutrition among poor communities in the area.

The milk produced by the cows will be used to feed severely malnourished children and breast feeding mothers. “The health centre expects to get 50 litres of milk to feed over 200 malnourished children per day,” says Pascal Habyarimana assistant director of the health centre.
Rilima nutrition centre assists more than 37,000 people in the area. WFP provides monthly fortified supplementary food to malnourished children under the age of five years and malnourished pregnant or nursing women.

“Since 2009, more than 20,000 malnourished children have been supported and recovered from malnutrition", says WFP Rwanda Country Director Abdoulaye Balde. "WFP will continue to provide relevant suport to reduce malnutrition among poor communities in Rilima sector”.
Parents and nursing women come to the centre not only to collect fortified food provided by WFP but also to be trained on good nutrition practices. Training is focused mainly on balanced meals, hygiene, disease prevention and family planning.
The idea is that, after receiving assistance from nutritoon centres, parents can become agents for change in their communities with the help of a a trained community health worker.

Local mothers are currently learning how to organize vegetable gardens at home. A garden can be established on a small plot and maintained with waste water from the kitchen. The nutrition centre itself has a model garden and vegetables from it are used for cooking demonstrations.
In partnership with World Vision and Rilima health centre, beneficiaries are encouraged to develop good cooking practice at home and share them with their neighbours.

Riaz Haq said...

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.

Riaz Haq said...

Here's a BR piece on Colgate Palmolive Pakistan:

Colgate Palmolive Pakistan, one of the leading manufacturers of personal care and consumer products in the country, began its operations back in 1985 when the US granted the firm license to manufacture and market Colgate Palmolive products in Pakistan.

Currently, the firm is engaged in the production and marketing of some of the leading international brands of oral and personal care products, bringing a few of the world's most trusted household names such as Colgate Toothpaste and Palmolive Naturals to the Pakistani market.

Working under the umbrella of the Lakson Group, the company boasts of 450 distributors across the country and has been a KSE top performer, being listed amongst the Top 25 best performing companies for seven years straight as of 2012.

Financial highlights The company's accounts ended 30th June saw its Net Profits go through the roof, managing a 38.7 percent increase to top off Rs 1.6 billion versus Rs 1.17 billion recorded last year on account of a hefty top-line growth that saw sales climb by 28.6 percent year on year.

The steady growth in revenue, which amounted to Rs 18.71 billion- up from Rs 14.15 billion in the last year-came mainly off the back of the firm's well spent money devoted to advertisement and distribution as well as through effective in-store promotions which allowed the relevant brands to achieve steady volume growth thorough out the year.

The company managed to retain profitability as a result of their ongoing cost-saving initiatives which enabled to offset the exorbitant input prices hindering most other manufacturers. Consequently, the firm also made small price adjustments across various products to pass on the rising costs of packaging and raw material to the consumers, thereby ensuring that the Gross profit margin only saw a small decline, going down to 28.92 percent as compared to 29.40 percent.

However, despite the fact that the rising input prices dampened the firm's stellar top line growth somewhat, Colgate continued to steadily increase its overall spending on sales promotion which has been mainly responsible for the propagation of the company's sales volumes. Overall, the media and promotional spending increased by 43 percent, going up to Rs 1.6 billion as compared to Rs 1.1 billion spent during the same period last year.

The year-end also saw Colgate's financial position improve as the firm's cash and cash equivalents increased by 35.3 percent, signing off at Rs 840 million, up from Rs 620 million recorded during last year.

Key operational highlights In the previous quarter, Colgate Palmolive Pakistan had launched "Brite Anti Bacterial Detergent" powder, which was the first such product in the Pakistani market. Marketed as a detergent with a unique germ-busting formula, this latest innovation was hailed positively by the consumers. The product continued to strengthen Colgate's equity during the last leg of FY12, and was a major driver of sales volume growth.

In the dishwashing category, Colgate saw increasing competition from a number of local and imported brands, however, the firm arranged a brand re-launch for the entire Lemon Max range. This make-over saw one of the pioneer dishwashing products on the market undergo an overhaul and acquiring a new look. Formulated with real lemon juice, the re-launched Lemon Max boasted greater grease cutting powers in heavily circulating adverts, which allowed increased brand equity and sales growth......

HopeWins Junior said...

^^^^^Pakistan continues to face major problems as it deals with the violent Taliban insurgency and multiple internal and external threats and crises of stagnant economy, scarcity of energy and the lack of sense of security.

However, it is clear from the consumer spending data that Pakistanis are a resilient people, and they continue to defy the persistent prophecies of doom and gloom.

Pakistan is just too big to fail. I fully expect Pakistan to survive the current crises, and then begin to thrive again in the near future.


1) Big or small, why do you fear that Pakistan could even fail at all? What is failure? Do you mean political or economic or financial failure? What would be the mechanism by which it would fail? What makes you think Pakistan could fail? Do you have any "potential failure ahead" data? Could you elaborate on these issues a little further?

2) You say "stagnant economy" and then you talk of "rising consumer spending". The only way these two things can simultaneously be true is if savings/investment is falling.

Economy = Consumption + Investment

IF Economy = Stagnant, AND
Consumption = Growing, THEN,
Investment = Falling

Falling investment, by definition, bodes ill for future growth. And yet in the next paragraph you say, "..and thrive again in the near future".

Where is this "thriving" going to come from? What will drive it, given than investments are falling? Are we discussing Economics or Messianic Hope?
Can we move beyond the superficial slogans and do a more rigorous analysis of this issue?

Riaz Haq said...

HWJ: "Where is this "thriving" going to come from? What will drive it, given than investments are falling? Are we discussing Economics or Messianic Hope?
Can we move beyond the superficial slogans and do a more rigorous analysis of this iss"

Consumption precedes investment.

Economic history of the world tells us that when investors and entrepreneurs see a large enough market, they bring in the capital.

The key inhibitor right now is the security situation in Pakistan which I expect will improve with the war in Afghanistan winding down in the next couple of years.

Riaz Haq said...

Here's a Businessweek story of Pakistan's rising rice exports:

Rice exports from Pakistan, the fourth-largest shipper, are set to rebound from November with the new harvest after a rally in domestic prices and cheaper supplies from India cut shipments, a traders’ group said.

Overseas sales may reach 4 million metric tons in the year that began on July 1 as increased supplies from the new crop cool local prices, said Safder Hussain Mehkri, vice chairman of the Rice Exporters Association of Pakistan. Exports slumped 46 percent to 238,659 tons in the July-August period, according to Pakistan Bureau of Statistics. Shipments were 3.7 million tons in 2011-2012, according to the association.

Rice, staple for half the world, is poised for a second monthly decline as Thailand and India, the world’s biggest exporters, accelerated sales. Futures are little changed this year, lagging behind corn, wheat and soybeans, as global rice harvests are set for a record.

“New harvest will bring down the prices which are way too high at the moment, making us less competitive in the global market,” Mehkri said by phone from Karachi. “Our rice is 10-15 percent costlier than India’s. Better domestic prices will improve our competitiveness against India.”

Non-basmati rice from Pakistan was sold at about $451 a ton free-on-board in July and August, while it was $385 a ton in India, according to data from the exporters’ associations in both the countries. Rough rice for November delivery was little changed at $14.90 per 100 pounds on the Chicago Board of Trade at 6:48 p.m. in Singapore yesterday. Futures have lost 2.5 percent this month.
Indian Exports

India will export 8 million tons in 2011-2012, making it the top shipper ahead of Vietnam and Thailand, the U.S. Department of Agriculture data show. In 2012-2013 India’s shipments would drop to 7 million tons, compared with Thailand’s 8 million tons and Vietnam’s 7 million tons, the USDA estimates. Pakistan’s exports in 2012-2013 will reach 4 million tons, according to the agency.

Shipments from Pakistan were also hurt by international trade sanctions on Iran, which made payments between traders in the two countries difficult, Mehkri said. The rice harvest this year may surpass the 6 million tons in 2011-2012, he said.

Riaz Haq said...

Here's a News excerpt on tractor sales in Pakistan:

Tractor sales increased immensely, by 190 percent YoY, to 2,855 units in comparison with the sale of 957 units in the same period last year. However, August 2012 sales (2,855 units) went slightly higher as compared to July 2012 sales (2,828 units). Al-Ghazi tractors registered a sales growth of 300 percent YoY but a sales decline of 28 percent MoM to 1,216 units. Millat tractors sales boosted by 151 percent YoY and 44 percent MoM to 1,639 units, the data said.

On cars:

Pakistan Automotive Manufacturers Association (PAMA) has recorded a decline of 30 percent year-on-year (YoY) in automobile manufacturing to 20,820 units in August 2012, according to the PAMA data released for the same month.

A month-on-month (MoM) analysis of the sector demonstrates a comparatively steady performance with the sector’s sales down by a modest 0.5 percent to 10,385 units. This can primarily be attributed to the low base effect of July 2012, owing to fiscal year-end phenomenon and implementation of taxes in the federal budget 2012-13.

Segment-wise breakup shows that car sales in August 2012 went down by 13 percent YoY to 8,467 units while the 1300cc and above segment shrunk by 17.6 percent YoY. Sales of light commercial vehicles (LCV) and 4x4 registered an 18.3 percent YoY declined in August 2012, mainly due to a decrease in sales volume of Bolan, Ravi and Hilux.

Pakistan Suzuki Motor Company Limited (PSMC) registered a sales decline of five percent YoY to 6,002 units but continued its performance as a market leader. However, in August 2012, its market share dropped by six percent YoY to 56 percent. The reason behind this decrease was the discontinuation of its brand Alto, which was PSMC’s leading brand in 1,000cc category.

A better picture can be seen on MoM basis as it shows a seven percent improvement in sales volume of the company, the PAMA data said. This was mainly accounted for the base effect of lower sales volume in July 2012.

PSMC has been successful in attracting its Alto customers towards Mehran, Cultus and Swift models, which registered YoY enormous sales growth of 40 percent, 21 percent, and 16 percent respectively in August 2012 while other models including Liana, Bolan and Ravi showed YoY decline of 26 percent, 10 percent and 34 percent respectively.

Indus Motor Company Limited (INDU) experienced sales contraction of 28 percent YoY during August 2012 to 3,092 units. During this period, sales went down by 30 percent YoY to 6,179 units. The main reason behind this was a 10-day production halt in July-August 2012 due to higher inventory and pre-buying of buyers and road side dealers in June 2012.

Corolla’s sales decreased by five percent YoY to 2,800 units in August 2012 while Hilux sales improved by three percent YoY to 282 units. MoM sales of the Corolla grew by 14 percent while sales of Hilux drastically decreased by 50 percent, the data said.

Imported Japanese second hand cars are becoming major competitor for INDU flagship brand Corolla as during FY12 about 55,000 units of used Japanese cars were imported in the country.

Hence, it has become a serious threat for INDU as all eyes will now be on the upcoming Auto Industrial Development Program (AIDP 2012-17), which will set the course for future direction for imported cars in the country.

Honda Atlas Cars Pakistan Limited (HCAR’s) experienced a sales drop of 14 percent YoY to 1,241 units in August 2012. The period under consideration portrays an improved picture as sales increases by 20 percent YoY.

Riaz Haq said...

Here's Economic Times' report on Pakistan sugar exports:

NEW DELHI/MUMBAI: Pakistan has allowed the export of an extra 200,000 tonnes of sugar, on top of the 300,000 tonnes already allowed, as the government aims to trim surplus stocks and bolster local prices.

Higher stocks and expectations of robust output next year encouraged the Islamabad government to allow the export of the additional sugar, Ali Raza Bashir, spokesman for the Finance Ministry, said, though the permission was for less than had been sought.

"There was a request to allow (extra) exports of 400,000 tonnes but the cabinet gave its permission for 200,000," Shunaid Qureshi, chairman of the Pakistan Sugar Mills Association, said by telephone.

The move came as neighbour India sealed deals to import about 5,000 tonnes of white sugar, despite expectations of a domestic surplus, as some traders seek to capitalise on lower prices in Pakistan and higher prices in India.

In Pakistan, sugar output in the crop year starting Oct. 1 is likely to remain steady at last year's level of around 4.7 million tonnes, Qureshi said.

The country's sugar consumption is between 4 million tonnes and 4.2 million and it started the 2012/13 year with around 400,000 tonnes of stock, said a dealer in Karachi who declined to be named.

Most sugar so far has gone to Afghanistan, Saudi Arabia and east Africa.

"These countries will again show interest due to lower prices. Millers in Pakistan want cash to start the crushing season ... They can give discounts to world prices," the dealer said.


A New Delhi-based trader, who did not wish to be named, said: "The (Indian) traders who have contracted imports from Pakistan perhaps found the FOB price of $545 per tonne attractive enough to buy.

"They stand to gain $15 to $20 a tonne after paying a duty of 10 percent," the trader added.

The sugar price in western India is around $680 per tonne, while in northern and eastern parts of the country it is as high as $720.

India, the world's top consumer and the biggest producer behind Brazil, has been an exporter for the past two years. Exports in the year to September 2012 totalled 3.3 million tonnes.

Traders in India, which levies a 10 percent tax on sugar imports, have booked whites from Pakistan for delivery at the eastern Haldia port, a second Indian trader said.

India is expected to have a small exportable surplus in 2012/13, though higher production costs could make it difficult to find buyers at prices acceptable to mills.

Last month, Indian mills signed deals to buy up to 450,000 tonnes of Brazilian raw sugar because of the attractive gap between domestic and overseas prices.

The strengthening Indian rupee and a wide gap between Indian and Pakistani prices made these deals attractive, said a Mumbai-based trader with a global trading firm.

India could buy more for delivery in October and November to meet higher festival demand, traders said.

Riaz Haq said...

International frozen yogurt franchises Tutti Frutti and Fruz are coming to Pakistan, according to news reports:

Business Recorder on Tutti Frutti:

Tutti Frutti is a specialty brand available in various world markets, including the USA, Canada, Brazil, Malaysia, Thailand, Hong Kong, China, France, Pakistan and the United Kingdom. Work is in progress to open up outlets in countries like India, Bangladesh, Russia, Romania, Spain and various Middle Eastern countries.
17 outlets already opened in Pakistan. There are five outlets in Karachi, three each in Lahore and Islamabad, two in Rawalpindi, two at Bhera Motorway rest area and one each in Abbottabad and Faisalabad. Another 19 are under-construction in different cities. We are targeting about 100 branches by the end of the year 2013, reaching customers in nearly every city of Pakistan.

The Nation on Yogen Fruz:

LAHORE (PR) – Yogen Fruz, the world’s leading frozen yogurt chain opened its first outlet in DHA amidst much fanfare on Sunday. The master franchise of the Canadian desserts chain has been acquired by MFK Foods in Pakistan, and the local business group is already working on a plan to open outlets and franchises all across Pakistan.“When we received a query for bringing Yogen Fruz to Pakistan, we all were very excited. Pakistan is a huge consumer market and if the conditions are right, this country can attract a lot of foreign investments. We all flew in from Canada to be a part of this launch”, said Carlos Campo who is the Director Operations for Yogen Fruz worldwide, and is in Pakistan with his team to assist in the launch of this giant food and desserts chain.“Frozen yogurt is freshly prepared, is rich in probiotics, and is available in endless flavours,” added Basir Syed, CEO MFK Foods and master franchisor for Yogen Fruz Pakistan. “Yogen Fruz is here, and soon it will be available in all parts of Pakistan. We have an aggressive business development plan and we have received numerous franchise requests and sold many as well. We will also be opening outlets in other parts of Lahore as well.”

Riaz Haq said...

David Ogilvy, founder of Ogilvy and Mather, used to say "The consumer is not a moron, she is your wife." Here's an ET story on marketing FMCG to women:


With more women participating in the country’s work force, fast moving consumer goods companies (FMCGs) seem to have found a new market for products that they once considered ‘a small category’.

Take for example feminine hygiene products – referred to as ‘quiet products’ in the advertising world. According to industry sources, it used to be a very small category – however, this does not seem to be the case anymore especially when one looks at ongoing ad campaigns marketing such products.

These products are portrayed more openly in television ads today than a few years ago – one can also notice gigantic billboards on main thoroughfares of city displaying these products.

The increase in ad campaigns of ‘quiet products’ has helped FMCGs increase their revenues manifold in the respective category; according to Saad Hashmi, Senior Accounts Manager, Client Services and Business Development at Orient Advertising.

Some ten years ago, Hashmi said, women from elite and upper-income classes were the main customers of feminine hygiene products but now, even urban middle class women are buying it.

Explaining, Hashmi said, over the past few years the participation of the middle-class women in education and labour rose significantly thus increasing their awareness and income respectively. They are more adaptive to such products for they have that additional income to do so; he said.

Hashmi, who has worked with FMCGs on advertising such products, further said that heavy marketing of these products created awareness about brands, which increased demand of branded products. Some ten years ago, he said, there was no concept of branded products due to lack of awareness; women mostly used standard napkins or plain old cotton for personal hygiene. Giving an example of a famous brand that is currently advertising its product on TV, he said, the company carried out an awareness campaign on the sidelines of their ad campaign.
The source, however, acknowledged that their sales for feminine hygiene products have increased, linking it to various factors.

Today’s consumers, the source said, have developed more sophisticated shopping habits because they have got more money. Raw fabric or cotton, the alternate option, has little to no cost while branded products have a cost; the source said – an indication that these women are willing to spend on quality. These products, the source said, are a convenience for working women and even come in small sachets that are affordable by the low income sectors.

The source, however, did not rule out the media’s role as far as awareness is concerned. Media has helped increase awareness about feminine hygiene products, he said. It, therefore, amplified demand for such products.

Unlike both FMCGs and advertising agencies, the working women, The Express Tribune spoke to, disagreed if their choices were affected by ad campaigns. According to these women – one of whom does not even have a TV at home – they are not bothered about ads as long as their trusted brand does not compromise on quality. These women, however, agreed that it is their own or family’s income, which made it easy for them to choose between cheap raw fabric and costly feminine hygiene products.

“In the past, I would spend on necessities only,” said one woman, adding, “but now I have to maintain my personality because I work so I spend on luxuries as well. I have become more brand-conscious.”

HopeWins Junior said...

"..franchises Tutti Frutti and Fruz"

Dr. Haq,

I love to play the Devil's Advocate, so here goes:

A franchise is mostly a "brand value" play.

All these western franchise-owners do is provide local pakistani franchise-members with a list of approved vendors and marketers.

The Pakistani franchise-member then has to raise the capital to purchase, setup & operate everything.

So what will Pakistan gain from this?
1) No real major foreign investment has come in, as Pakistani franchise-members will have to raise the money locally for every branch.
2) No real technology has been transferred, as pakistanis already knew how to make dahi/lassi/kulfi etcetera.
3) All that is happening is that foreign vendors will sell approved equipment into Pakistan and Pakistan will then have to pay annual franchise fees & comissions year after year for eternity.

So, in light of all this, how is this "franchise arrival" a matter for celebration for our country?

The people who should be celebrating are the foreign suppliers of the approved-equipment and the foreign branded-franchise owners.

Please comment.

Thank you.

Riaz Haq said...

Franchisers are attracted to Pakistan because they see an opportunity to profit from a growing consumer base in an emerging economy with rising DISPOSABLE INCOMES, a sign of increasing prosperity of a rising number of people.

Franchisers offer training in operations ad quality control, bring know-how in brand retailing, help raise capital or provide capital themselves, create local supply chains and create lots of local jobs.

Franchisees are part of the SME sector which is usually the BIGGEST employer in most countries.

The learning from the franchising process spawns local expertise in value addition through branding and marketing of all sorts of products ranging from food to apparel and accessories and various services.

Already, a number of local retail brands are popping up...names such as K&N chicken, Shezan juices, Junaid Jamshed, Bareeze, Chinyere, Working Woman, Kayseria, Leisure Club, Shahnameh and Urban Culture, etc.

Riaz Haq said...

Here's some interesting tidbits from a Dutch website about Pak middle class:

Over 80% buy no more than a single pair of shoes a year
A survey conducted by Gallup Pakistan during May 2012 found that 62% of respondents purchased just one pair of shoes for personal use during the previous 12 months. An additional 21% did not purchase any shoes at all during this period. According to Euromonitor International estimates, unit sales of shoes in Pakistan rose by 75.4% between 2006 and 2011, with real value sales increasing by 27.1%, to US$805 million.
Just how big is the middle class?
Writing on, Saki Sherani argues that “two parallel universes existing side by side in Pakistan: an expanding middle class with a voracious appetite for consumption, and a [larger] swathe of population that is increasingly food-insecure.” The consensus estimate is that around 40 million people fall into the former category, but taking the black economy into account, he estimates that the true figure is actually 70 million. He adds that “In absolute terms, it is the fourth largest middle class cohort in Asia, behind China, India and Indonesia. Affluent, educated, urbanised, and increasingly 'globalised,' Pakistan's middle class is not only growing, but is already a voracious consumer.” He also cites an e-mail he received from a friend who recently visited the country: “This place is rocking. The pizza parlours, coffee houses, swank new malls are all packed, brimming with consumers. It took us nearly a month to get a reservation in Karachi's top restaurant!” According to Euromonitor International data, the proportion of Pakistanis with an annual disposable income of at least US$10,000 (at purchasing power parity) increased from 29.2% to 52.3% between 2006 and 2011.
M-commerce: huge potential but many obstacles remain
Speaking to The News Pakistan, against the backdrop of the 5th International Conference on Mobile Banking in Pakistan, which took place in Karachi during mid March, Lito Villanueva of Visa International said that there was huge potential for m-commerce in Pakistan because most people are still unbanked and the rate of mobile penetration is relatively high. However, Amer Pasha, country manager of Visa Pakistan cautioned that levels of financial literacy were still low, even among literate people. He added that most shopkeepers and traders “prefer cash so that they can remain in the undocumented economy.”
Skin creams popular during winter
A survey conducted by Gallup Pakistan during January 2012 has found that 91% of Pakistanis use some method to protect their skin during the dry winter months. 57% said they used cream or lotion to protect their skin, while 24% claimed to use oil, and 8% soap or facewash, while 2% utilised homemade remedies. According to Euromonitor International data, value sales of skin care products in Pakistan were worth US$92.9 million during 2010....

Riaz Haq said...

Here's Bloomberg on outsize returns of KSE-100:

The KSE 100 Index, the benchmark for Pakistan’s $43 billion equity market, rose 7.3 percent in the past three years when adjusted for price swings, the top gain among 72 markets worldwide, according to the BLOOMBERG RISKLESS RETURN RANKING. Pakistan had lower stock volatility than 82 percent of the nations including the U.S. (SPX) Over five years, Pakistan’s risk- adjusted returns ranked eighth.

The country’s 190 million people are boosting purchases three times faster than Asian peers as higher rural incomes and record remittances outweigh fighting on the Afghan border, violence in Karachi that led to at least 2,100 deaths this year and power outages that sparked rioting. The region’s fastest earnings growth may increase economic stability, according to Karachi-based Atlas Asset Management Ltd. Foreign investors added to holdings for five straight months, lured by Asia’s lowest valuations and biggest dividend yields.

“Stocks are very cheap and there are some very good businesses in Pakistan,” said Andrew Brudenell, whose HSBC Frontier Markets Fund has returned 18 percent this year, beating 92 percent of peers tracked by Bloomberg, and holds more shares in the country than are represented in benchmark indexes. “We still think there’s some positive growth to come from the markets.”

Earnings in the KSE 100 index advanced 45 percent during the past year, the largest gain among 17 Asian equity indexes, and this month hit the highest level since Bloomberg began tracking the data in 2005.

Consumer spending in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia, according to data compiled by Euromonitor International, a consumer research firm. While the growth in Pakistan may slow to 6.6 percent in 2012, it will still exceed the 5.3 percent pace in Asia, according to Euromonitor estimates.

Engro Foods Ltd. (EFOODS), a Karachi-based seller of dairy products, reported a 214 percent jump in net income for the third quarter, while Unilever Pakistan Ltd. (ULEVER), a unit of the world’s second- biggest consumer-goods company, had a 36 percent gain, according to data compiled by Bloomberg.

Dividends in Pakistan have also climbed at the fastest pace in the region. Payouts increased 49 percent in the past 12 months, giving the KSE 100 index a dividend yield of 6.6 percent, double the 3.3 percent average in Asia, Bloomberg data show.
Foreign investors have purchased a net $153 million of Pakistan shares since the beginning of July, according to data from the Karachi Stock Exchange. Overseas holdings amount to about 20 percent of the bourse’s free float, or shares available for trading, according to Adnan Katchi, the head of international equity sales at Arif Habib Ltd.

Bond investors are also growing more confident. Pakistan’s international debt, rated Caa1 at Moody’s Investors Service, or seven levels below investment grade, has returned 32 percent this year, according to JPMorgan Chase & Co.’s Next Generation Markets Index. Yields hit a two-year low of 8.5 percent on Oct. 26.


The country is luring more of the world’s biggest consumer brands as spending increases. Debenhams Plc (DEB), the U.K.’s second- largest department-store chain, and Nine West Group Inc., a seller of women’s shoes and handbags owned by New York-based Jones Group Inc. (JNY), opened their first Pakistan outlets this year.....

Riaz Haq said...

Here's an ET story on Unilever targeting Pakistan market as a priority:

It is a global food and consumer goods giant that serves over 2 billion consumers every day in more than 180 countries around the world, but Unilever’s global management team is convinced that the key to their future success lies in 16 emerging markets, of which Pakistan is one.

Paul Polman, the CEO of Unilever, and Harish Manwani, the chief operating officer, visited Pakistan on Tuesday in what appears to be part of their global push to gear the company’s growth strategy towards emerging markets. “We want to be in every market with more than 100 million consumers,” said Manwani. “And we want to be in every market where the purchasing power of the consumer is growing. Pakistan meets both of those criteria, the first one by quite a lot.”

About 56% of Unilever’s revenues come from emerging markets, a number that Manwani says could rise to as high as 75% over the next few years. In Pakistan, the company operates two subsidiaries, Unilever Pakistan and Unilever Pakistan Foods, both of which are publicly listed on the Karachi Stock Exchange. For the year 2011, the company’s Pakistani subsidiaries earned combined gross revenue of over Rs73 billion, or about 1.3% of the global total for Unilever.

Growth in Pakistan is significantly higher. While Unilever’s global revenues grew by around 5%, revenues in Pakistan grew by a much stronger 9.9%, even when taking into account the rupee’s depreciation against the euro, the company’s global reporting currency. In Pakistani rupees, gross revenues of both companies grew by nearly 17%.

But it is not just the current growth figures that appear to be attracting Unilever’s attention to Pakistan, but rather what is clearly a rapid expansion of the Pakistani middle class, which is causing purchasing power – and thus the propensity to buy branded products – to rise among a wide and diverse array of Pakistani consumers. Unilever is increasingly finding that it is selling its products to everyone from the bank CEO who works on Karachi’s II Chundrigar Road to the small shop owner in rural Sanghar to the grain merchant in a small town outside Sialkot.
Malik said that the company is actively trying to reach consumers in small towns and rural areas, well beyond the larger cities in the country. The company reaches 50,000 retailers in rural areas, said Malik, a number that keeps on expanding rapidly.

That focus on rural consumers appears to be part of the global strategy: Paul Polman said that Unilever’s connection to farmers and rural communities is part of its efforts to integrate its business strategy with social responsibility. “Over 40% of the world’s population is in agriculture. We want to integrate over 500,000 of them into our global supply chain. They tend to be more reliable suppliers and help us reduce our volatility. In turn, we provide them with a better livelihood,” said Polman.

Unilever’s global CEO was effusive in his praise of the team in Pakistan. “The water conservation techniques pioneered in Pakistan will now be replicated in Unilever factories around the world,” he said. “Pakistan has always provided us with talent, and is in fact exporting talent. Over 55 Pakistanis are now working in senior positions in Unilever all over the world.”...

Riaz Haq said...

Here's a Dawn story on growing retail sector in Pakistan:

Karachi’s Dolmen City Mall is a large, plush building that would not be out of place in Dubai. Heavily fortified with security guards, the interior is impressive, with its cavernous corridors and gleaming marble floor – a far cry from the hustle and bustle of the city’s other shopping areas.

Newly arrived from London earlier this year, Karachi residents were insistent that I must see this wonderful new addition to the city. When I did, it was something of a home from home. In addition to high end local clothing brands were a whole plethora of foreign stores, from Mango, to Next, to the Body Shop. Many (though not all) of these are British imports.

The latest to open its doors was Debenhams, stalwart of the British high street, which this year became the first international department store in Pakistan with its branch in Dolmen. It joins other UK brands such as Next, Early Learning Centre, Accessorize and Monsoon.

So what is behind the influx of foreign stores to Karachi’s high streets? Internationally, Pakistan is not viewed as an obvious market for retail brands due to security concerns – both real and perceived – and the attendant difficulties of doing business.

However, the numbers tell a different story. The retail sector is one of the fastest-growing in Pakistan, and is expected to grow at a rate of 7 per cent per year until 2015. To give some indication of the growth it has already seen in recent years, compare the market value in 2006 – £19124.1 million – with 2010, when it had increased to £26541.2 million.

Yasin Paracha runs Team A Ventures, the company which holds the franchises for UK brands Debenhams, Next, Early Learning Centre, Accessorize, and Mothercare. He explains that the historic ties between the two countries means that British brands have instant recognition in Pakistan.

“People in our target market are used to travelling to London frequently,” he says – many people will have visited the UK as tourists, students, or on family or business visits.

Indeed, the growth of this target market – young, urban, and with significant disposable income – is crucial to increased retail operations in Pakistan. The urbanized middle classes are a steadily growing group.

Of Pakistan’s 180-million strong population, around 55 million live in cities such as Karachi, Lahore, and Faisalabad. Consumerism is on the up, fuelled by a recent boom in consumer banking and the media industry, and encouraged by ever-increasing investment from both local and foreign chains. Traditionally, many people in this target market have preferred to do much of their shopping abroad, meaning that they are already predisposed to foreign brands.

But what about the security risks for new businesses? Karachi, in particular, is home to outbreaks of sectarian and ethnic violence, terrorist attacks, and a high instance of crime including extortion rackets.

“Of course it’s a concern for new investors,” says Paracha. “On the surface of it, a lot of brands are hesitant, but when they first make the trip to Pakistan, they are reassured because they realise that the things on the ground are very different from what they see in the media.”

However, the situation cannot be ignored. “One has to be cautious,” Paracha continues. “You can’t go into a very aggressive expansion because you can’t deny the security issue, especially in some cities. But so far we have not had a major negative impact on our operations.”

The visible success of household names like Debenhams and Next in Pakistan is likely t encourage other British brands to see the country as a potentially viable market. In addition to this, there is a concerted drive from the UK government to encourage British investment in Pakistan, due to a bilateral trade agreement between the two countries....

Riaz Haq said...

Here's a Forbes piece on Millat tractors in Pakistan:

Almost a year after floods devastated Pakistan, swamping 5.8 million acres of farmland and displacing millions of people, Ashaq Malik, who grows cotton, sugarcane and wheat on 865 acres in Punjab province, has reason to feel optimistic. After nearly a third of his land was inundated, today he is seeing a strong harvest. "As soon as the water level fell down, we started reconstructing the houses and working on the fields," says Malik. "Today there is no problem with the crops."

Companies that service the agriculture sector are also thriving in the rebound, none more than Millat Tractors of Lahore, which also manufactures other farm gear. Last year Millat earned 2.3 billion rupees ($29 million) on sales of $263 million, a 40% increase from the previous year. In the first quarter of 2011 profits grew 52% from the same period a year earlier..

To buy his 150,000 shares, Ansari--then a 39-year-old general manager--sold a plot of land, liquidated his retirement funds and borrowed money from his father. "It was a lot of money to me back then," he says. "Today it's like a lottery coming your way. The value has increased many, many fold since then."

Today the public, including Millat's 1,600 employees, owns 42% of the company; management and kin 28%; and banks and other institutions the rest. Employees are prosperous because of stock dividends and their salaries. Most of Millat's employees pay income tax--a sign of affluence in Pakistan--and have their own cars.

Riaz Haq said...

Here's bloomberg on fast food craze in Pakistan:

...Local and overseas business groups are queuing up to buy franchise rights in Pakistan for an array of popular food sold from Los Angeles to Kuala Lumpur, driven by rising demand from a booming middle class in South Asia’s second-biggest economy after India. Pakistanis increasingly flock to American food outlets even as ties between the two nations are strained by U.S. drone missile strikes in the northwest of the country.

Johnny Rockets Group Inc., another American fast-food group based in Aliso Viejo, California, that operates or franchises 68 hamburger restaurants in 16 countries, Second Cup Ltd., a coffee shop chain based in Missisauga, Canada, with over 360 cafes and Malaysia’s MammaRoti and PappaRoti are set to open their first stores in Pakistan this year.


Fatburger joins Hardee’s Food Systems Inc., headquartered in St. Louis, Atlanta-based cinnamon roll maker Cinnabon International Inc., The Noodle House of the United Arab Emirates, and five foreign frozen yoghurt chains that opened their first outlets in the world’s sixth-most populous nation since 2011. Consumer spending in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia, according to data compiled by Euromonitor International, a consumer research firm.

...Pakistan’s middle class has doubled to 70 million people in the past decade as booms in agriculture and residential property, as well as jobs in telecom and media have helped people prosper, according to Sakib Sherani, chief executive officer at Macroeconomic Insights in Islamabad.

Franchising is also booming as businesses battling Pakistan’s record energy outages seek alternatives to factories that can’t run without adequate power, said Samiullah Mohabbat, chief executive officer of Fatburger Pakistan and the country representative for the World Franchise Association. Mohabbat received over 100 queries this year from entrepreneurs wanting to buy franchise rights for international food chains.

The number of foreign food franchises in Pakistan will “easily double” in the next two years as more coffee houses and casual dining outlets enter the country, Mohabbat said. About two dozen foreign food franchises operate in Pakistan since Louisville, Kentucky-based Yum! Brands Inc.’s Pizza Hut opened two decades ago, followed by the same company’s KFC in 1997 and Oak Brook, Illinois-based McDonald’s Corp., the world’s largest restaurant chain, the following year.

KFC plans to open 40 more stores in Pakistan over the next five years to expand its network of 64 outlets in 18 cities, said Rafiq Rangoonwala, chief executive officer of Cupola, the company with the franchise rights for KFC, the biggest fast-food chain by outlets in Pakistan.
Salt Lake City-based Mrs Field’s Original Cookies Inc., that opened an outlet in Lahore in 2011, plans to start 15 more this year, said Rashed Siddiqui, franchise owner.

Second Cup will open its first outlet in Islamabad within the next six months and Red Mango Inc., a Dallas-based frozen yoghurt retailer, will enter Pakistan this year, Mohabbat said.

Fullerton, California-based Tutti Frutti Frozen Yoghurt, that has 20 outlets in Pakistan since opening in late 2011, plans to start 100 more this year, said Naeem Niazi, director for international business development at Wellspring Industry Inc., owner of Tutti Frutti.

Pakistanis spend 90 billion rupees ($924 million) a year on eating out at the 20,000 restaurants nationwide because of a paucity of other entertainment facilities, said Nauman Mirza, founder and chief executive officer of Food Connection Pakistan, an online restaurant guide.

Riaz Haq said...

Here's Shan COO's interview with PakistanToday:

Tell our readers about Shan Foods (Pvt.) Ltd. that you joined in July, 2007.
FAISAL MUBIN GANATRA: The journey of Shan’s remarkable success starts from 1981, when the dream of one man became a reality. A visionary entrepreneur, an avowed humanist and a committed philanthropist, Shan Foods (Pvt.) Limited CEO Muhammad Sikander Sultan, helped pave the way to success by pioneering in the spice business. “We are one of the most reputed food company and a powerful global brand with presence in more than 63 countries across 5 continents.”
Shan Foods has been governed by its core values. They shape the culture and define the character of Shan, forming the foundation on which its employees perform and make decisions. Long term thinking, integrity, mutual respect, pragmatism, openness to diversity, passion for quality and delighting consumers in accordance to the Islamic laws remain at the core of our company culture.”
“By the grace of Almighty Allah, our Islamic culture and value remain our single most important competitive advantage”.
Company’s vision is to become a global food company offering premium quality innovative products which delight our consumers. “We are determined to reach every kitchen by diversifying into growing food categories through innovative, healthy and safe products for the ultimate delight of our consumers”,
Shan Foods is committed to producing top quality products. To do so, we pay a higher price compared with our competitors for premium raw materials. We are also the only second company in the Asia Pacific region that uses Cryogenic Technology to preserve the taste, texture and aroma in order to ensure our spices & foods are bacteria-free. Finally, we use food-grade nitrogen & aluminum foil packaging to preserve freshness and quality (V Lock Freshness). Our dedication to producing the highest standard products and our belief in long-term mutually beneficial relationships means we are happy making nominal profits: that is a key reason for our survival and prosperity.
In 2006, our CEO Mr. Sikandar Sultan and BOD’s decided to induct a professional team for the survival of brand, sustainable growth and transformation into a corporate company. When I joined Shan Foods, it was being run as a sole proprietorship, but we had a plan that by January 2008 we would start business as a Private Limited concern which I have been responsible for. I started as Chief Financial Officer and have been heading business operations for the last 1.5 years.
Today, Shan is Pakistan leading Food Company with its products being appreciated globally and continues to introduce new products that better cater to the changing needs of the consumers. In order to take advantage of growth opportunities, Shan has now enhanced its production capacity even further with the manufacturing units installed in United Arab Emirates (UAE) and Saudi Arabia and United Kingdom.

PAKISTAN TODAY: What difference did the induction of professionals make? What is the secret of Shan Foods success?
FAISAL MUBIN GANATRA: Shan has been growing since it was founded but the professional team that was added to the company in 2006 has had a huge impact on the company practices. By implementing a new set of procedures and cultivating a new corporate environment, Shan has become an increasingly transparent company with proper systems in place and a culture respect, trust, transparency and sharing information at all levels of management. This change has reaped benefits in 2011-12, our turnover was double what we made in 2009-10. The secret of our success lies in the upholding of our values & the belief that change comes from the top....

Zak said...

Good job Riaz Sahib!

Anonymous said...

Franchises currently in Pakistan:

1. Baskin Robbins

2. Dunkin Donuts

3. Subway

4. McDonalds

5. Hardees

6. Expo Center

7. GNC

8. Google (Still Blocked)

9. IMAX (Approved)

10. MSN (Still Blocked)

11. Vonage (Currently Blocked)


13. CNN

14. Gloria Jean's

15. Tesco

16. Debanham's

17. Makro

18. Carrefour

19. Metro

20. Fatburger

21. Sheraton

22. Holiday Inn

23. Days Inn

24. Fedex

25. Marriot

26. Ramada

27. KFC

28. Nando's

29. Papa John's

30. Pizza Hut

31. Dominos

32. Ebay

Franchises Expected:

1. Starbucks

2. Planet Hollywood

3. Burger King

4. Hard Rock Cafe

5. Hilton

6. Kumon

7. Taco Bell

8. Yahoo

9. Walmart

10. Little Caesars

11. Chillis

Riaz Haq said...

Here's Daily Times on rising rice exports:

KARACHI: The total rice exports from Pakistan including basmati and non-basmati rice have risen above the $1 billion mark during seven months of this fiscal year (July 2012 to February 24, 2013), which in terms of weight stands at 2.142 million tonnes.

The full fiscal year’s export target of $2 billion seems achievable as up till now more than $1 billion exports have been met.

“Efforts of the Rice Exports Corporation of Pakistan to boost export of Pakistani rice has started yielding positive results as Tanzania has emerged as a potential market for Pakistan’s non-basmati rice,” said Rice Export Corporation of Pakistan (REAP) Acting Chairman Rafique Suleman. During the last seven months of the current fiscal year a total quantity of 95,349 metric tonnes has been exported to Tanzania, whereas last year during the same period the export was 25,484 metric tonnes.

It may be recalled that recently Pakistan’s rice export to China has marked an increase as record volume of non-basmati rice 72,623 metric tonnes to China worth $30 million in just one month (January 2013) was exported during the current fiscal year.

“China has become a major market for Pakistani non-basmati rice over the period of time, which
has greatly encouraged exporters of the commodity to accomplish further success in that territory.”

Similarly Pakistani rice export to countries like Sri Lanka and Kenya has also showed marked improvement.

Basmati rice is in great demand in Sri Lanka and Sri Lankan exporters are willing to import more basmati rice from Pakistan.

Suleman said that efforts are underway to push export of Pakistani rice to substantial level as it is fast gaining popularity across the globe, which is evident from the fact that it is currently exported to more than 100 countries.

Furthermore, exporters are also endeavouring to explore many new markets to enhance and increase the export and in this regard REAP chairman and vice chairman, and leading rice exporters visited Gulfood, Dubai (February 25 to 28, 2013) to explore new business opportunities and promotion of Pakistani basmati rice.

He thanked the commercial sections of Pakistan in East African Countries and especially High Commissioner for Pakistan in Tanzania Tajammul Altaf for his efforts for the promotion of Pakistani rice exports into East African countries. As per the official statement of Tanzania Ministry, they will be able to cover the consumption by local production up to 2018. Altaf informed on phone that last year the total imports from Pakistan were worth $50 million and this year we have achieved $100 million.\03\02\story_2-3-2013_pg5_13

Riaz Haq said...

Here's a BR story on Pakistan becoming the second largest food donor to WFP:

Pakistan has emerged to be the second largest donor to the United Nations World Food Programme (WFP) consequent to its donation of 75,000 metric tons of wheat to it.

WFP Coordinator for the programme, Amjad Jamal giving details of the country's support said the contribution valued at approximately US$25 million, has placed Pakistan as WFP's second largest donor country so far this year.

The assistance, he said has been announced at a time when critical funding shortages threatened the provision of emergency food assistance to almost one million displaced people in the country's north-west.

The wheat will be milled, fortified and then provided to families displaced by security operations or only recently able to return to their homes in the Federally Administered Tribal Areas (FATA).

Combined with much-needed contributions from other donors, it will allow WFP to distribute a full cereal ration to these groups until the end of the year.

Jamal mentioned that a shortage of resources had forced WFP to reduce rations from January.

This latest contribution follows sizeable in-kind donations from the federal government and provincial governments of Sindh and Balochistan last year.

More than 70,000 metric tons of wheat was successfully delivered to both displaced and flood-affected communities in 2012, following a highly positive response from other donors to WFP's appeal for complementary "twinning" funds.

WFP's emergency response to the needs of displaced communities in the north-west is implemented under a new relief and recovery operation for Pakistan, launched on January 1, 2013.

Aiming to assist about 8 million people at a total cost of US$540 million over the next three years, the operation also seeks to improve economic opportunities and promote social inclusion in FATA, boost community resilience in disaster-prone locations, and prevent and treat moderate acute malnutrition among young children and women in the country's most food-insecure districts.

WFP's partnership with the Government of Pakistan contributes to the National Zero Hunger Programme, drawing on the successes of other countries in the fight to eradicate hunger and undernutrition.

"This very timely contribution is greatly welcomed and demonstrates the Government's ownership of the development process and commitment to helping its people," WFP Country Director and Representative in Pakistan Jean-Luc Siblot, was quoted to have said.

The last thing, he said WFP want to do is to cut assistance for the poorest and most vulnerable, and this wheat will help us to restore the food basket to a level that fully meets basic needs.

International donor community is also expected to provide some US$23 million needed for WFP to mill, fortify, transport and distribute the wheat.

Additional funds will also be required to purchase other commodities in the food basket, including specialised nutritious products for young children.

WFP is the world's largest humanitarian agency fighting against hunger worldwide. Each year, on average, WFP feeds more than 90 million people in more than 70 countries.

Riaz Haq said...

Here's a Nation newspaper article on food marketing in Pakistan:

FOOD marketing is such a process that usually brings together the producer and consumer. The marketing of even a single food product can be a convoluted process involving many producers and companies. For example, Pakistan has seen a fabulous growth in frozen foods market by the development of the ice-cream segment. The frozen food ice cream segment’s market size enormously expanded as a result of two entrants: a multinational company and a large local company.
Product development is systematic, commercially sloping way to develop products and processes satisfying a known or alleged consumer need. There are four basic stages for every product development process: product strategy development, product design and development, product commercialisation and product launch or post-launch. The vital test of product development occurs in the market and a new product can only be considered flourishing if it is a market and financial success.
There are three historical phases of frozen food marketing: the transportation phase, the distribution phase and the capacity of the retailers.
Today foods are not anticipated to merely satisfy hunger and to endow with necessary nutrients for humans but also to prevent nutrition-related diseases and improve physical and mental well-being of the consumers. The increasing demand of such ‘functional foods’ can be explained by the increasing cost of healthcare, the sturdy increase in life expectancy and the desire of older people for enhanced quality of life in later years.
Product development is now indispensable to scrutinize the issue of what constitutes a new or innovative product. Newness of a product may be judged differently according to those who pick it.
To mull over food product sales it is essential to look at the retail sector; this sector is characterised by intense competition and the dominant position held by supermarkets in many regions of the Pakistan. There is competition not only for sales between retailers but competition between food product suppliers. Pakistan has about 200,000 stores in the urban markets. These account for 90pc of the trade.
The development of the frozen food industry impacts farmers. The farmer directly benefits as he gets a better price, whether he owns a cow/buffalo or grows wheat and grains used in poultry feeds, or produces fruits and vegetables.
Pakistan has abundant sources of raw material. It is the 4th prevalent producer of milk and is one of the top ten producers of poultry in the world. 40pc of the horticulture produce is exhausted in post-harvest losses.
The global market of frozen vegetables alone is more than $3 billion with Japan and USA as the biggest importers of frozen vegetables while Malaysia imported $23 million worth of frozen vegetables in 2004.

Riaz Haq said...

Here's a Nation report on Nestle's $104 million investment in Pakistan:

AHORE – SALMAN ABDUHU - The Nestle Pakistan has announced the completion of its new milk powder drying facility plant with additional investment of $104 million at Nestle Sheikhupura factory.

Nestlé Executive Vice President and Operations and Globe System In-charge Joze Lopez, who is on three three-day visit to Pakistan, inaugurated the $104 million Egron Project and visited the whole plant.

Lopez, addressing the opening ceremony, said that the existing Milk Powder Plant has now been modified with new technology and has an additional yearly capacity of 30,000 tons. The power generation capacity and waste water management system have also been upgraded and additional filling lines have been set up, he added.

He stated the Nestlé is the largest food and beverage company in the world and the Sheikhupura dairy, juice and water factory embodies Nestlé’s increased investment in Pakistan. As part of its three-year plan to expand the production capacity in the country, Nestlé has invested a total of $148 million over the past two years in various factory expansion projects to meet rising consumer demands.

He added that wherever Nestlé is present, the company works and invests in the long term. We are convinced that in order to be successful in the long-term we have to create value for our shareholders, as well as for society. This Creating Shared Value approach encourages businesses to create economic and social value simultaneously by focusing on the social issues that they are uniquely capable of addressing. He observed that Nestlé Pakistan is committed to creating shared value for the communities it works and lives with. The company has made many contributions in this regard, by providing free technical and veterinary advisory and training support to thousands of dairy farmers in the milk districts who now have more sustainable opportunities to gain their living.

Lopez said, “Pakistan is an important growth market for us and we are dedicated to meet the growing demands of our consumers. Major capacity increases, such as the one just inaugurated in Sheikhupura, allow us to constantly upgrade our facilities to the latest standards in global technology.”

MD Magdi Batato, on this occasion said that Nestlé Pakistan is the leading food and beverage company in Pakistan and meets international standards in the manufacturing of its products. In 2012, the company grew by 22 per cent to reach an annual turnover of Rs79 billion (Approximately $800million). Nestlé Pakistan is serving the Pakistani consumers since 1988 and it also associates itself with 200,000 farmers in collecting milk and engages in a number of rural development programme for community development.

“Our reality is ‘Har Dam Pakistani’, (Every Moment Pakistani) and we are delighted to provide our consumers with products manufactured in Pakistan. More than one million Pakistanis, mostly dairy farmers, participate in our value chain and this investment is a further commitment to Pakistan and its people, and to our vision of providing Behtar Kal Hamara, (A Better Tomorrow For Us) to all,” said Magdi Batato, Managing Director, Nestlé Pakistan.

Riaz Haq said...

Here's a Bloomberg story on Pakistan govt's politically motivated decision to export more sugar:

A shipping subsidy and lower excise tax linked to the export of as much as 1.2 million metric tons of sugar by Pakistan may lead to low inventory and high domestic prices, a unit of the U.S. Department of Agriculture said.

The decision by Pakistan’s Economic Coordination Committee of the cabinet and the Federal Board of Revenue “is being heavily criticized as a politically motivated move by the government to garner support from the sugar industry in the upcoming elections,” the USDA’s Foreign Agricultural Service said in a report posted today on its website.

Stockpiles may drop to a “precariously low level” of 400,000 tons, down from an average of 1 million tons in the past five years, according to the report.

On March 6, the coordination committee approved an inland freight subsidy of about $18 a ton on exports of as much as 1.2 million tons after previously setting the quota at 895,000, according to the report. The federal excise duty on domestic sales was lowered to 0.5 percent from 8 percent to provide an increased incentive to export, according to the report.

“The government efforts to increase the competitiveness of Pakistani sugar in the international market by means of providing direct payment to millers for export could be a violation” of World Trade Organization obligations under an agriculture accord, according to the report.

The government of President Asif Ali Zardari became the first civilian administration to complete its full term. General elections are scheduled for May.

Riaz Haq said...

Unilever announces $514 million investment in Pakistan, reports News Tribe:

Karachi: Unilever Plc., through its wholly owned subsidiary, Unilever Overseas Holdings Limited on Tuesday committed to invest circa €400 Million (US$514m Million, Rs.50 Billion) in acquiring the 24.92% of issued shares in its Pakistan subsidiary, Unilever Pakistan Limited, that it does not already own.

This follows price and buyout threshold determined by the Special Committee constituted at the Karachi Stock Exchange as per applicable delisting regulations.

€400 Million is the single largest foreign direct investment in the recent history of Pakistan and underlines Unilever’s commitment to a business established in the country in 1948.

For the last 65 years, Unilever has been working to create a better future every day for millions of Pakistanis, with brands and services that help people make sustainable living a common place. There is hardly a household that does not daily use one of its 27 brands in the home care, personal care, foods, beverages and ice cream categories.

It directly employs 2,000 individuals in addition to generating a further 6,000 jobs in the value chain. Over 95% of what it sells is manufactured in Pakistan. The company ranks as the Most Preferred Employer amongst business graduates.

Under the Unilever Sustainable Living Plan, the company focuses on improving health and well-being, enhancing livelihoods and reducing the environmental impact.

The aforementioned investment is subject to approval by Unilever Pakistan’s shareholders at an Extraordinary General Meeting to be held shortly.

Riaz Haq said...

Here's an excerpt of Express Tribune report on LG Electronics investment in Pakistan:

“We have decided to expand our operations by enhancing production capacities to capture growing consumer demand in Pakistan,” said DY Kim, President of LG Electronics Gulf, while talking to The Express Tribune on Thursday.
“Currently, our production in Pakistan is only limited to televisions and LCDs, but in a couple of months we will start producing other household items like microwaves and washing machines,” he added.
LG Electronics is a global leader and technology innovator in consumer electronics, mobile communications and home appliances with 117 operations around the world.
LG achieved global sales of $49 billion in 2011. It is offering products in four segments – home entertainment, mobile communications, home appliances and air conditioning & energy solutions.
In Pakistan, LG is increasing investment to enhance production capacity, but Kim did not divulge exact figure and only said it would be in billions of rupees.
The company is looking to compete with Samsung, which has increased its market share in recent years.
“We want to give consumers with some other option and we are hopeful this will not take much time,” Kim said.

Riaz Haq said...

Here's an ET report on global consumer products' giant P&G's expansion plans in Pakistan:

KARACHI: Procter and Gamble (P&G) has identified Pakistan as one of its top 10 emerging markets – that include emerging economies like Brazil and India – and the country will be the focus of it attention for further investments, P&G Pakistan Communications Manager Omeir Dawoodji told a group of journalists during a visit to the company’s state-of-the-art manufacturing facility at Port Qasim on Thursday.
Dawoodji was tight-lipped regarding the amount P&G plans to invest. He, however, confirmed that the Cincinnati, Ohio-based consumer goods giant wants to expand its manufacturing footprint in the country.

Dawoodji did not disclose the cost of setting up the Port Qasim plant, currently manufacturing the Ariel brand, but emphasised that P&G intends to make it a mega-manufacturing facility and utilise it for manufacturing other brands as well. The company markets over 300 brands globally, but its Pakistani subsidiary only deals in eight brands.
P&G Pakistan had acquired a huge piece of land for the manufacturing facility, which was inaugurated in 2010, but it utilised about 20% of the acquired land only, leaving enough space for further expansion.
It has been 185 years of growth for the now $85-billion company and further growth has to come through emerging markets, Dawoodji said, explaining why Pakistan is important for the company’s global parent.
The manufacturer of some of the leading brands like Pampers, Always and Safeguard has had tremendous growth during the past three years. P&G’s revenue for the year ended June 2012 was Rs22 billion, about 50% increase over the previous year.
The fiscal year 2012-13, too, will be a high growth year for P&G Pakistan, the company’s country head Faisal Sabzwari told The Express Tribune in a recent interview.
In a sign of its long-term commitment to the country, the Pakistani arm of the consumer goods giant has replicated its global strategy of incorporating the use of renewable energy sources for energy conservation, reducing water consumption and recycling the waste as demonstrated during the plant’s tour.
The facility at Port Qasim has been designed to use skylight during the day with a lot of windows built both in the office and the factory areas. They have been able to reduce their energy consumption by 12% during the last two years, the officials at the site told the media.
The reduction in water usage was about 46% as they have planted palm trees and used gravel instead of grass for the landscape to conserve water. “We put less than 2% of our waste to landfill,” an official said. About 97% of the waste generated is put to beneficial reuse, he said.
“The Port Qasim plant is our pride among the 75-plus plants P&G operates all over the world,” Dawoodji said while highlighting state-of-the-art features of the plant. “Goods manufactured at this facility can be exported to countries with rigorous quality standards.”

Riaz Haq said...

Here's an ET story on Burger King planned franchises in Pakistan:

As anticipated for long, Burger King is finally coming to Pakistan, most likely in mid-2014, as MCR Pakistan, the franchisee of Pizza Hut in Pakistan, has entered into a master franchise agreement with Burger King Worldwide Inc, The Express Tribune has learnt.
While BK and MCR didn’t disclose the details of the agreement, sources familiar with the matter said that the bidding took place in Dubai a few weeks ago. Three parties, including a Dubai-based investor, participated in the bidding, which went in favour of the MCR Group.
There is not much skilled staff in the market, which may require engaging foreign trainers and the company hasn’t yet identified locations. According to the Dawn ad, BK’s first outlet will be opened in Karachi.

Related ET story on fast food:

The fast food boom in Pakistan is a really practical example. It was well-received by the local community and now enjoys healthy growth and stellar profitability despite fierce competition.
Introduction of multinational food franchises, initiated in the 1990s, was in the midst of non-existent local fast food restaurants. Today, the trend is spreading fast and the industry experts believe this to be just the beginning for the flourishing industry.
Some reasons for the spectacular rise of the industry are that Pakistani middle-class has welcomed the cuisine due to variety of bargain deals, products, atmosphere, attitude and strict hygiene standards, not to mention more disposable income.
“It is true that the middle-class is now the priority for many franchisers. At lease for us (McDonalds) the middle-class is the real target as they spend more on fast food of their disposable income,” said Sohail Malik, country manager of McDonalds Pakistan, while speaking to The Express Tribune. “With the introduction of plenty of choices available in the industry, the masses have gained awareness and this awareness is the key to healthy competition, he added.
Marketing is the other key for franchises to grow their respective businesses. Previously amid insignificant competition, the restaurants did not really latch on to the importance of marketing, but it is completely inverse in the present scenario as competition has grown and major international brands such as Hardees Incorporated, Fatburger and Kentucky Fried Chicken already operate in the country.
“Tough competition also proves to be a blessing for the consumers because of the choices and great bargain and promotional deals available,” said Bilal Hanif, a fast food enthusiast.
As far as the growth of the industry is concerned, according to McDonalds Pakistan’s country director, this is just the beginning...

Riaz Haq said...

The trend of online shopping has witnessed rapid growth recently with several retail market portals springing up.
But, a recent increase in their penetration into far-flung areas has also boosted future prospects of the e-commerce market. What used to be limited to metropolitan cities has now spread to semi-urban and rural areas of the country. This is another potential market not only for shopping portals but also for fast moving consumer good (FMCG) companies, due to better availability of internet facilities throughout the country.
Online shopping portal,, claims that online shopping websites have penetrated into the rural areas. In a recent survey, they revealed that around 48% of all orders placed in the first six months of 2014 were outside of Pakistan’s biggest cities – Karachi, Lahore and Islamabad.
“Half the world’s population will have internet access by 2017, showcasing the potential of e-commerce in the future,” said co-founder Muneeb Idrees. “It is also expected that the number of mobile-connected devices will surpass the number of people. These statistics represent the expanding ecosphere of e-commerce.”
Established in August 2012, is a project of Rocket Internet, the world’s largest incubator. The portal is currently offering over 400 brands in 200 cities across Pakistan. After the initial success, other venture capital firms took notice and starting initiating contact with local businessmen in the industry to fund entrepreneurs.
The website gets receives their highest number of orders (six per cent) from Ghotki, a semi-urban area in Sindh. The highest basket size across the country was from Lala Musa in Punjab, doubling the average order size of Lahore.
“In general, more than half our orders are from outside Karachi, Lahore and Islamabad,” said Idrees. “People in smaller towns have access to social media and television. They learn about new products, but don’t have malls in their cities to buy these products.”
The e-commerce market in Pakistan is estimated at around $25-30 million, in comparison to the total retail market of approximately $42 billion. Internet availability, along with introduction of branchless banking through cellular technology, has done wonders for the market.
According to estimates, branchless banking transactions have witnessed a growth of 327% during 2011-13. is one of the few businesses utilising mobile commerce in Pakistan with great numbers. The management said that 20% of the transactions of the portal take place via mobile phones.
FMCG giant Unilever recently entered in an agreement with to use its marketing reach all over Pakistan for its beauty and personal care products. The management thinks that this deal could be vital for the retail industry as previously no FMCG had seriously looked into the e-commerce sector.

Riaz Haq said...

Nestle Pakistan Ltd., a unit of the world’s biggest food company, has started selling pasteurized fresh milk in a pilot project as it seeks to develop a new segment in the South Asian country’s $23 billion dairy market.
The company has been delivering plastic pouches of milk to 100 homes in Lahore for the past three months on motorbikes and three-wheeler taxis.
“It’s like when we started with our water gallons 20 years ago, which started with delivery to offices and households, it starts small and then spreads,” Nestle Pakistan Chief Executive Officer Magdi Batato, 56, said in an interview at the company’s headquarters in Lahore. “There is a potential, but it’s still niche in my view.”
Nestle wants to diversify in the world’s fifth-largest milk market, where 95 percent of dairy products sold are unprocessed with people buying the liquid raw and then boiling it. Companies already sell milk in ultra-high temperature form that has a longer shelf amid long hours of energy outages in the blackout-prone nation.
Pakistan’s dairy industry has a value of about 2.3 trillion rupees ($23 billion) a year, according to Zoya Ahmed Zaidi, an analyst at AKD Securities in Karachi. She projects the sector will increase in value by about 10 percent over the next five years.
‘Right Direction’
Engro Foods Ltd., a Pakistani dairy and juice company, discontinued branded shop sales of fresh, pasteurized milk after about a year in the southern city of Karachi in December. The company was hampered by the city’s frequent power outages, said Nauman Khan, research head at Foundation Securities.
Nestle is “going in the right direction as demand is rising for branded products with the upper-middle class becoming more hygiene-conscious.” Amreen Soorani, an analyst at Karachi-based JS Global Capital, said by phone. Home delivery “is more convenient and makes it more accessible.”
Pakistan’s sale of processed drinking milk products are projected to have more than double in the past five years to 134.6 billion rupees in 2014, and are forecast to reach 203 billion rupees by 2019, according to Euromonitor International.
Batato said he expects the Pakistani processed milk market to grow to 7 percent or 8 percent in five years. “It won’t be a step change like Turkey.''
Turkey gave farmers incentives to sell milk to documented processing companies as part of its efforts to join the European Union, which boosted the share of the pasteurized-milk sector to 70 percent from 10 percent, according to Batato.
Pakistan’s middle class more than doubled to 84 million in 2002-2011, bringing almost half the nation into that segment for the first time, according to a study by Dr. Jawaid Abdul Ghani, a professor at the Karachi School for Business and Leadership, published last year.
Full Capacity
Nestle started its Pakistani operations in 1988 in a joint venture with Milk Pak Ltd. before taking over management of that company four years later, according to company’s website. About 80 percent of revenue is generated from milk and nutrition products including baby formula and cerelac, while the rest comes from water and beverages, according to data compiled by Bloomberg.
The company’s powdered milk plants in Pakistan are running at ‘‘full capacity,” Batato said. “We are taking every single drop. There is an opportunity to import tactically a bit, but this is not our business model.”

Riaz Haq said...

“#Pakistan is all set to become one of the top global markets of #motorcycles" #Yamaha President Hiroyuki Yanagi … Yamaha Motor Pakistan (Pvt) Ltd, a newly formed company with 100% equity from Yamaha Motor Company, Japan, is expected to produce 30,000 units in year 2015.

The factory has been established with an initial investment of Rs5.3 billion and its current production capacity is 40,000 units per year. It has hired 200 employees in the first phase.

In its initial phase, the company has introduced the “YBR125” model, a 125cc engine motorcycle, with a network of 140 dealerships in different parts of the country. Equipped with new technology, industry analysts say the initial price of YBR125 (Rs129,400) is competitive enough for its rival models in the market. Pak Suzuki’s GS150 is available in Rs128,500 while Atlas Honda’s CG125 and CG125 Deluxe is available in Rs102,900 and Rs124,000, respectively.

Japanese Ambassador to Pakistan Hiroshi Inomata said that the presence of the top leadership of Pakistan in the inauguration ceremony signifies the importance of the investment Yamaha has brought into Pakistan.

“We appreciate the efforts of the government of Pakistan in bringing FDI in the country. We believe this is a win-win situation for both Japan and Pakistan,” Inomata added.

Board of Investment Chairman Dr Miftah Ismail said the middle class of Pakistan was growing at a rapid pace. From the current level of 70 million, it will touch 100 million by 2025, making Pakistan one of the top six countries with the largest middle class in the world, he added.