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Pakistan Food and Drink Report Q4 2011
Business Monitor International, Sep 2011, Pages: 81
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.
Without a developed tourism sector and without the presence of a formal food retailing sector to support demand for consumer goods, Pakistan’s near-term growth in the consumer-facing sectors is arguably hinged on two factors, namely remittance inflows and food inflation. Although BMI expect remittance growth to moderate over the coming quarters due to external headwinds in developed markets such as the US and the UK, remittance inflows are likely to sustain healthy growth momentum in the near future. On another positive note, inflationary pressures have been losing steam in recent months, which should prompt more consumers to loosen their purse strings. These positives should keep domestic demand well-supported over the coming months. Despite these near-term positives, Pakistan remains beset by a destabilising insurgency, a chronic lack of electricity generation capacity and an unskilled labour force – all of which are likely to prove medium-term hurdles to sustained economic development. This will in turn affect the development of the consumer sector
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Headline Industry Data
- 2011 food consumption growth = +6.9%, CAGR forecast to 2015 = +12.8%
- 2011 alcoholic drinks value sales growth = +10.0%, CAGR forecast to 2015 = +7.5%
- 2011 soft drinks value sales growth = +6.3%, CAGR forecast to 2015 = +6.4%
- 2011 mass grocery retail sales growth = +13.7%, CAGR forecast to 2015 = +15.2%
Key Company Trends
A Long Way To Go Before Attaining Established Halal Status: Pakistan’s massive Muslim population, coupled with the fact that per capita food and protein consumption levels are still considerably low, translate into tremendous room for growth in the halal market as halal food consumption accelerates off a low base. However, given the lack of established infrastructure, it could take a while before Pakistan can develop an extensive halal food-processing sector and establish itself as a strong player on the global halal trade arena. Nonetheless, BMI believe Pakistan will continue to take baby steps towards building its foothold in the global halal trade industry. In September 2009, Pakistan sought a visit from Malaysia’s Halal Industry Development Corporation. Officials wanted to combine Pakistan’s agricultural strength – despite its relative lack of food-processing expertise – with Malaysia’s burgeoning status as a halal food production hub to explore opportunities in the estimated US$600bn global halal food industry.
Tea Sector Set for Growth: In June 2010, Tata Global Beverages, the drinks subsidiary of the diversified Indian conglomerate, announced its intention 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 a 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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