BMI's Executive Summary

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The release of third-quarter and nine-month financial results has continued to highlight the strong growth opportunities available to consumer goods manufacturers in the fledgling but vast market of Pakistan. Likewise, the performance of leading food and beverage companies, coupled with Pakistan's sustained economic growth, has continued to influence BMI's industry growth forecasts in our newly-published Pakistan Food & Drink Report Q108. However, for all these positive signs, there are a number of major negatives – market and country risks and inherent consumer price sensitivity among them.

Pakistan's largest consumer goods company Unilever Pakistan posted its third-quarter and nine-month financial results in November 2007. For Q307 sales were up 7% year-on-year (y-o-y), while profit-aftertax had climbed by 20%. Meanwhile nine month sales growth stood at 10%, while profit-after-tax climbed by 5%. Such results – although shy of Unilever's 20% annual growth target – provide much cause for positivity. Results posted by Nestlé Pakistan support this positive view. For the first nine months of 2007 the company's sales jumped by an enormous 28% y-o-y to reach US$342.3mn.

Sustained internal and foreign direct investment (FDI) into the food and beverage sector, supported by BMI's average annual GDP growth forecast of 6.7% to 2012, a youthful population and steady urbanisation have prompted BMI to revise a number of its industry growth forecasts upwards this quarter. The outlook for the canned food industry – which can exploit rising demand for convenience and consumer fears over food origin and hygiene – and the soft drinks industry – which can capitalise on the aspirational demands of Pakistan's young population – have both been moderately accelerated. Forecast canned food sales growth to 2012 now stands at 46.7%, while soft drinks sales growth to 2012 is forecast to stand at 36.4%. Both have contributed to a per capita food consumption growth forecast amendment to 15.4%.

The downside of all these attractive growth signs is quite simply that they are not yet attractive enough to offset the risks of investing in Pakistan. The country falls at the very bottom of BMI's new Food and Drink Business Environment Ratings, due to both its limits and its associated risks. In limits terms, food and beverage spending levels remain low due to acute price sensitivity among certain consumer groups, particularly those in rural areas. Even though spending levels are forecast to increase, in relative terms this growth will be moderate thanks to the booming economic growth being experienced by many of Pakistan's neighbours. The country's risks outlook is even more problematic than its limits outlook. Such a vast and underdeveloped market poses huge infrastructural challenges, while income inequalities and perceived bureaucracy and corruption remain problems on the economic and political side.

Ultimately, as the report details, Pakistan looks set to remain an attractive market, but only for those with the scale and patience to ride out the still considerable market entry risks.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia/Pacific Business Environment Rankings

SWOT

Pakistan Food & Drink Industry SWOT

Macroeconomic Outlook

Table: GDP And Population

Chapter 2 – Retail

Regional Overview – Private Labelling In Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Pakistan MGR Value Sales By Format – Historical Data & Forecasts

Company Developments

Market Overview

Table: Structure Of Pakistan MGR Market By Number Of Outlets

Table: Structure Of Pakistan’s MGR Market – Sales By Format (US$mn)

Table: Average Annual Outlet Sales By Format (US$mn) – 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy In Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Pakistan Food And Drink Indicators

Industry Developments

Company Developments

Market Overview

Table: Pakistan Agricultural Sub-Sector Production

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales – Historical Data & Forecasts

Industry Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players: Pakistan MGR Sector – 2005 Annual Sales Estimates

Table: Key Players: Pakistan Food & Drink Sector – 2004 Annual Sales Estimates

Regional Company Case Studies

AEON In Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil In Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken In Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft In Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

Tapal Tea

Utility Stores Corporation

Coca-Cola Beverages Pakistan Ltd

Nestlé Milkpak

Unilever Pakistan

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: