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Consumer products industry poses new challenges

The products sold directly to consumers are called consumer goods. Anything purchased by the average consumer like fruits, vegetables, washing machine, television sets to a laptop computer from the markets is part of the consumer business industry. A staple industry represents a continuous required product used by the common man. Food and personal hygiene items are two examples considered part of a staple industry whether in manufacturing or retail sales. Today, Pakistan is confronted with new challenges and emerging issues in the highly competitive world of consumer products, which is more complex, well-connected and fast-moving than ever. Whereas, it creates enormous opportunities and even enhances risk factors. The products and services actually constitute the consumer sector. The sector may also be divided into consumer staples and consumer discretionary goods and services. Consumer staples include food and beverage products, household supplies and any other items that are used on a regular basis due to ordinary use.

The companies in the consumer products industry are aligning technology in creative and efficient ways to optimize customer engagement and influence the consumers. The country has to be braced for both the risks and opportunities involved in today’s consumer products environment. What the country needs is the well-planned strategy to cope with the future challenges. For example, the key areas which need to be focused on are the improvement of organizational agility, realignment of the value chain, reframing the strategic choices, achievement of greater flexibility in supply chain, digital marketing and deployment of skilled and qualified managers in different markets.

The consumer goods sector includes companies involved with food production, packaged goods, clothing, beverages, automobiles, and electronics. It is a category of stocks and companies that relate to items purchased by individuals rather than by manufacturers and industries. The companies related to the consumer goods industry are developing new and innovative strategies. The innovation and digitization are the key growth trends in the industry. Consumer products companies utilize agile workflows to frame their approach to developing innovative ideas compared to traditional, highly structured and more time-consuming testing methods.

In Pakistan, the Unilever, along with Switzerland’s Nestlé SA, dominates the food market. Its local competitors include National Foods Ltd, a company that makes recipe mixes, desserts, frozen meals as well as condiments; Engro Foods Ltd, a dairy company; Shan Foods and Mitchells Fruit Farms Ltd. Several smaller companies, such as Euro Foods and PK Meat, and private-label packaged foods from supermarkets, are also growing rapidly. In 2016 Koninklijke FrieslandCampina NV, a Netherlands-based foods company, acquired a 51% stake in Engro Foods for euro 420 million. That was reported to be one of the largest private-sector foreign investments in Pakistan.

Last year, Unilever Group disclosed its plan to invest US$120 million at four manufacturing plants in Pakistan over the next two years. The Ango-Dutch consumer products giant had previously invested $500 million in its Pakistani operations in 2013. It makes about 30 brands including Dove and Lifebuoy soaps, Knorr soups, Lipton tea and Cornetto ice-cream in the country.

E-Commerce has brought a significant change in buying behavior of Pakistani consumers in the last one decade. The online dynamics has grown manifolds. In a survey conducted in collaboration with Quantum and Ipsos, Google has revealed key insights into how consumers are making purchases now. The survey report reveals that Google has become the first and last touch point of most consumers in the last decade as they begin their purchase journey. The consumers, spend more time on Google – searching regarding a product – than they spend anywhere else on the internet. The trend of ‘webrooming’ is also increasing in Pakistan, at an exponential pace. Webrooming is the concept of the consumer searching online while present at the store to buy a product.

This month, the Federal government approved the first-ever e-commerce policy framework. As per approved framework, e-commerce is defined as buying and selling of goods or services including digital products, through electronic transactions conducted via the internet or other online communication networks.

Under the policy framework, the policy areas includes — e-commerce regulation and facilitation, financial inclusion and digitisation through payment infrastructure, empowering youth and SMEs through business support programmes and trade development, consumer protection, taxation structure, ICT infrastructure and telecom services in Pakistan; logistics, data protection and investment and global connectivity and participation in multilateral negotiations.

Under the policy, it has been proposed to establish e-Courts for quick processing of consumer cases, establish consumer courts in all districts, establish Independent Alternate dispute resolution mechanism at Federal & Provincial level and include e-commerce disputes in draft Trade Dispute Resolution Act (TDRA). Under the framework, a National e-Commerce Council will be established and the re-export of faulty goods will be allowed.

While approving the framework at the cabinet meeting last week, Prime Minister Imran Khan observed that around 64 percent of Pakistan’s population is under the age of 29 and is thus more open to embrace technology. Furthermore, he highlighted that Pakistan despite having 161 million cellular subscribers, 70 million 3G/4G subscribers, 72 million broadband subscribers and total tele-density of 76.56 percent has not been able to capitalize upon the true potential of its available ICT infrastructure.

Smuggling or illegal trade is the area, which needs special attention of the authorities. The availability of smuggled consumers products is harmful to the local industry. The smuggled goods are mainly affecting sectors including petroleum, tea, mobile phones and auto parts industry. Foreign investors in Pakistan have demanded the government to take measures to check smuggling in the sectors, including tobacco, consumer goods, oil, fabrication, publishing and tyres.

Smuggled goods happen to meet more than half of the consumer demand for petroleum, tea, mobile phones, auto parts, and other major products in Pakistan, upending government’s revenue collection efforts and keeping industrial investments at bay, according to Overseas Investors Chamber of Commerce and Industry (OICCI). Last month, OICCI in a letter to the Federal Board of Revenue (FBR) said, “it is estimated that approximately 60 percent of the total demand for products of over half a dozen sectors of the formal economy, including petroleum, tea, mobile phones and auto parts, is met only through smuggling.

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