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Pakistan Food and Drink Report Q3 2009
Business Monitor International, July 2009, Pages: 63
Pakistan Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Pakistan's food and drink industry.
Pakistan is firmly rooted at the foot of the Asia Pacific Food & Drink Business Environment Ratings table for Q309 after a disappointing quarter that re-emphasised the country’s standing as the region’s least attractive investment market. Our forecast that Pakistan’s GDP will grow by 2.5% in 2009 serves more to highlight its disconnection from the global economy than its ability to withstand the wider economic downturn. Despite the infinite regulatory challenges attributed to operating in Pakistan, this report highlights that with the exception of alcohol, its drinks industry remains fairly buoyant as discussed in the recently published Pakistan Food & Drink Report for Q309.
Pakistan’s soft drinks industry is dominated by the basic carbonate range of traditional giants Coca-Cola and PepsiCo. Although health consciousness has begun to surface, the limited spending power of consumers means the trend has yet to truly impact the soft drinks industry and is likely to remain confined to niche markets for the foreseeable future. With this in mind, the expectation is that the carbonates segment to continue claiming the majority of volume growth.
Between 2009 and 2013, soft drink value sales are to increase by 45.3% to US$263mn as a slight rise in disposable incomes allow consumers to allocate a greater proportion of their incomes to consumption. Considering that Pakistan has a growing population of 164mn, per capita soft drinks consumption is likely to remain very low for the foreseeable future, which although frustrating for incumbent producers, does underline the industry’s potential for both volume and value sales gains over the long term.
Pakistanis are among the highest per capita tea consumers in the world and unsurprisingly the country boasts a stellar tea industry, headed by domestic processor Tapal Tea. The lethargy of the coffee sector means tea processors are likely to completely dominate the hot drinks industry for some time yet (estimates of coffee sales in 2008 were a mere US$4.2mn).
Tapal is well placed to capitalise on forecasts that tea value sales are expected to rise by 45.7% through to 2013 and reach US$797mn. Intriguingly, the size of the tea industry comfortably outstrips that of soft drinks, which is a rarity in most emerging markets (we estimate tea sales to have been three times greater than soft drink sales in 2008). Processors like Tapal will be hoping the government makes good on its efforts to curb illegal tea imports into the country.
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