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Pakistan Food and Drink Report Q4 2010
Business Monitor International, Sep 2010, Pages: 56
Business Monitor International's 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.
The outlook for Pakistan’s food and drink industry and its consumer has taken a major hit following the devastating floods of August 2010. Up to one third of country, including its core state of Punjab, have experienced either moderate or severe flooding, and around 1,500 people have lost their lives. However, that is merely the tip of the iceberg when it comes to the long-term damage that was caused and the negative impact this is expected to have on economic growth and the food and drink sector. Not only have millions of Pakistanis been made homeless, but the floods will also serve to push up food prices, curtailing consumer spending. There is also the danger that farmers will miss the fall planting season, which could lead to a new cycle of shortfalls starting in 2011, further pushing up food price inflation.
Headline Industry Data
- 2010 food consumption = +7.5%; forecast to 2014 = 36.3+%
- 2010 soft drink sales = +9%; forecast to 2014 = +30.2%
- 2010 tea sales = +10.1%; forecast to 2014 = +43.8%
- 2010 mass grocery retail sales = +10.4%; forecast to 2014 = +42.7%
Key Company Trends
Possible Acquisitions in the Dairy Sector – In late May, it was reported that one of the Middle East region's largest dairy firms, Almarai, is believed to be lining up an acquisitional entry into Pakistan, with reports linking it to Haleeb Foods. Any deal would likely be overseen by Almarai and PepsiCo's International Dairy and Juice Limited (IDJ) joint venture. Although Pakistan remains distinctly unappealing from a regulatory point of view, it still carries significant long-term promise. With organised competition lacking (generally good for price margins), Pakistan can potentially offer suitable companies rapid returns on their investment. Almarai is reportedly looking to invest as much as US$500mn in Pakistan.
Tea Sector Set for Growth – Tata Global Beverages, the drinks subsidiary of the diversified Indian conglomerate announced in June its intentions to increase its share of the packaged tea market in Pakistan to 10% from 7%. Tata is relatively new to the market and its small footprint gives it considerable room for growth, particularly as Kenyan imports dominate the sector, giving Tata valuable competitive differentiation. However, the undeveloped distribution infrastructure and a fragmented retail industry complicate supply chain management and make brand building and product penetration a challenge.
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