DEMAND FOR POTATO SNACKS ARE ACCELERATING
Traditional eating habits of Pakistanis are changing. Processed foods sales are expanding. International quality snacks are growing, particularly among educated, middle and upper income consumers. Increase in income level and improved living standards changing the habits of consumers. Advertising is also helping to stimulate demand for potato snacks.
The Pakistan snacks industry is experiencing an annual growth rate of 20-30 percent per year. Children, teenagers and young people inclination is more towards having snacks. Potato and corn snacks are being a light fast food are becoming popular. Lays has been the largest player in this segment since it entered the market in 2007. By introducing innovative and trendsetting potato chips flavors backed with international quality, Lays became the growth catalyst for the natural potato chips category.
Following are the major and leading producers of Potato Chips (Crisps) in Pakistan:
- Lay’s by Pepsi Co. Inc.
- Oye Hoye by United Snacks
- Kolson by Consolidate
- Krincles by Trading Enterprises
- Golden Chips by Standard Foods (Pvt) Limited
- Super Crisps by Tripple EM (Pvt) Limited
- Smiths by Kohinoor Smith (Pvt) Limited
CHINESE BRANDS TAPPING THE PAKISTANI MARKET
Leading Chinese brands in the Pakistani market see price wars getting stronger in the Pakistani Electronics Industry.
Daraz launched three Chinese mobile brands in Pakistan, Infinix, Injoo and Ophone, Pakistanis for the first time had access to high-quality yet low-priced phones.
These brands see Pakistan as a very profitable market for their low-end phones.
With the growth of 3G/4G subscribers in Pakistan, one should see more of these manufactures entering the country. Many Chinese mobile brands actually offer better features and functionality for the same price than the world’s more renowned brands. Huawei’s mobile phones actually offer a greater RAM for the same price than Samsung. Huawei establishing itself in the global consumer electronics market and it is anticipated that it will keep the price down.
Chinese brands like Haier, TCL and Lenovo already established in the Pakistani TV market. Hisense and Changhong Ruba are the latest Chinese entrants in the scene. All of these brands are offering televisions with 4K, High Dynamic Range performance.
Many of the latest Chinese brands are looking for local retailers in Pakistan to sell their products. They are not investing in Pakistan directly. They want these local retailers to buy their inventory and sell them at a profit. Chinese is in way better than what one get from a global brand.
Samsung, LG and QMobile in Pakistan will be forced to drive down the prices of their mobile phones or offer more exclusive deals.
China is creating $30 billion fund to support the country’s huge electronics supply chain. It is serious about creating its name in the global electronics scene.
LOCAL BRANDS GAIN IMPRESSIVE SUCCESS AGAINST THEIR GLOBAL COMPETITOR
In the country’s population almost 60 percent of which is young, has been emerging and it looks for quality products and services with an expectation for value for money.
A sprawling 1.2 million square feet Packages Mall was inaugurated on Lahore’s Walton Road. This is an elegant Defence neighborhood, attempting to give a new retail experience to Lahore’s large populations.
The Emporium Mall in Johar Town of the walled city has been dominated by a 3.4 million square feet LuckyOne Mall on Rashid Minhas Road in Karachi. The mall is said to be the biggest one in South Asia.
MULTINATIONALS CONSUMER GOODS REJOICING
In the fast-food sector, for example, take Karachi’s 14th Street Pizza. Founded in 2011 by Tanveer Yusuf, this brand with four outlets has achieved the market leader position for offering the best variety in town, beating the more powerful Pizza Hut.
This year, 14th Street achieved 65 percent market shares as compared to Pizza Hut’s 35 percent in takeaway and delivery part. Pizza Hut, with an annual turnover of over Rs 4 billion and 27 stores in Karachi, is still the market leader.
In Karachi alone, currently, there are 518 pizza outlets. They serve Karachi’s (estimated more than 20 million population) middle-class through dine-in, takeaway and delivery channels. Pizza Hut has 73 outlets in Pakistan, with 13 in Lahore and seven in Islamabad.
Pizza Hut’s countrywide market shares were 60 percent. Segment-wise, the Karachi market shares remain 40 percent for dine-in, 35 percent for delivery and 20 percent for takeaway.
In the coming two to three years, 14th Street will open some two dozen stores and is also eyeing overseas markets by offering its franchise.
BIG DISCOUNT STORES
Both Imtiaz and Hyperstar are perceived to be big discount stores with ample parking spaces where one can do grocery and other shopping under one roof.
UK’s Tesco has also recently started its franchise in Pakistan through Alpha store in Karachi’s Ocean Mall in Clifton.
Planet Retail, an international retail forecasting firm, estimates the size of Pakistan’s retail market at $152 billion.
In the past few years, Imtiaz has emerged as the biggest store chain in Pakistan, providing a pleasant shopping experience. Currently, it has five stores in Karachi, with two new ones in the pipeline. Imtiaz’s first Punjab store is at Gujranwala’s King’s Mall and the second store in Faisalabad. Similarly, Hyperstar is also growing and shoppers want to associate themselves with it.
Metro’s annual turnover in 2017 may cross Rs 40 billion as compared to Rs 38 billion in 2016. After its merger with the House of Habib (HoH)’s Makro, it has now nine stores in four major cities of Pakistani – Karachi, Lahore, Faisalabad, Islamabad. Each store is spread over 5,000 square meter area while its sales volume/inventory turnover per store is around Rs 300 million to Rs 350 million. Due to its large set-up and inauguration hiccups, Metro has been unable to dent the local market and is now opening small-format convenience stores.
The average basket size is Rs 7,500 at Imtiaz versus Rs 5,500 at Metro. Food contribution in store sales is 70 per cent at Imtiaz and 80 per cent at Metro while the contribution of non-food items is 30 percent and 20 percent respectively.
Hyperstar has six stores in Lahore, Karachi and Islamabad. Its recently opened store at Emporium is spread on a 7,500 square meter sales area.
A positive trend that is supporting the hypermarkets is the opening of large-sized malls in urban centers of the country.
The Dolmen and Lucky One malls in Karachi, Centaurus in Islamabad and Emporium and Packages malls in Lahore display the trend as the right mix of convenience stores.
Pepsi and Unilever are the biggest suppliers of Imtiaz while Nestle is the biggest supplier of Metro. The average total sales by an Imtiaz store amount to Rs5 billion in comparison with Rs1.8 billion at Metro.
The year 2017-18 may see more shopping malls of varying formats in Pakistan, even in cities like Hyderabad and Faisalabad.
Most people would want to experiment with ‘purchase now and pick later’ online platforms with improved home delivery options. Imtiaz alone has nearly one million home-delivery customers.
TOP TEA BRANDS
Pakistan is the world’s one of the biggest per-capita tea drinking countries. Over one kilograms of tea is utilized per capita every year in Pakistan, which is one of the highest rates of tea consumption in the world.
Brooke Bond Supreme, produced by Unilever, was once the country’s top tea brand. In 2002-03, Brooke Bond Supreme sold 22,000 to 24,000 tonnes of tea a year, according to a marketing professional. Tapal become the largest tea-making firm in Pakistan.
Tapal’s household brands include ‘Danedar’ and ‘Family Mixture’. It sells tea worth an estimated Rs 40 billion a year versus its MNC counterpart Unilever which sells an estimated Rs 35 billion a year worth of tea including the famed Brooke Bond Supreme and Lipton Yellow Label.
Another promising tea brand is Vital. From a humble suburban beginning in Shujaabad, Okara only over a decade ago, this local tea brand has beaten UK’s Tetley by selling Rs 10 billion worth of tea a year to Tetley’s Rs 8 billion a year.
SUCCESS OF BISCUITS
Another interesting success story is Sooper egg-and-milk cookies by English Biscuit Manufacturers (EBM), the largest-selling biscuit brand in the country.
With a diverse portfolio and innovative products in biscuit manufacturing, EMB has been a market leader since 1966.
In 2002, Sooper became the number one selling biscuit across Pakistan, and EBM has not looked back since then. In 2013, sales for Sooper alone crossed the Rs10 billion mark.
Continental Biscuits Limited (CBL) was founded in 1984 as a joint venture with a French food giant Danone.
In 2007, Danone sold their biscuits category to Kraft Foods of the United States. For more than two decades, CBL has been manufacturing and marketing the brand LU. LU household brands include TUC, Candi, Prince, Bakeri, Gala, Oreo and Tiger.
EBM crossed Rs31 billion gross sales volume (GSV) with 48.5 per cent market shares, while its MNC counterpart CBL (affiliated with Kraft Foods) has 22 percent market shares with Rs 14 billion GSV.
DEMAND OF MILK BRANDS
Engro’s Olpers milk brand in a period of 10 years has surpassed 40 years of Nestle’s MilkPak, leaving the latter behind in the competition by achieving about 54 percent market shares in UHT (Ultra High Temperature or Ultra Heat Treatment) category.
Olpers achieved the target in spite of the fact that in the year 2016, its NPS (net proceeds from sales) was Rs44 billion as compared to 2015’s NPS of Rs49 billion – showing a decline of Rs5 billion in a year.
On the other hand, Nestle is Rs110 billion NPS firm with nine percent yearly organic growth and is currently Pakistan’s biggest FMCG (fast-moving consumer goods) MNC.
In confectionery, Ismail Industries – a firm worth Rs14 billion – is a market leader in various product lines against Mondelez International, which is the biggest confectioner internationally.
MNCs still dominate in cola and ice cream. For example, in carbonated soft drinks, Coke and Pepsi are still the market leaders.
After a number of failed attempts, for the first time local cola brand – Gourmet – has also become a noticeable opponent.
ICE CREAM BUSINESS
Unilever’s Wall’s is still the market leader when it comes to ice-cream in Pakistan. Engro Food’s Omore is a tough challenger too with second biggest market shares. Now that Engro Foods has been acquired by the Dutch dairy maker, FrieslandCampina for $447 million, there could be space for another local dairy ice cream brand.