High Inflation leads to increase in value sales
In 2013, the economy in Pakistan was affected by high inflation. A weak currency, increasing cost of fuel, energy crisis and increasing cost of agriculture further fed into a weak currency. In 2013, most of packaged good categories were predicted to record moderate growth in volume terms. Additionally, many lower-income consumers turned to unpackaged food and economy brands. As lower-income consumers could afford the same brands they switched to unpackaged food to fulfil their needs.
Convenience factor leads to adoption of packaged and frozen processed food
Consumers started to demand quick and convenient food products due to busier lifestyles. Most of the consumers are shifting to packaged food or frozen food because it was considered more hygienic and healthier as compared to the unhygienic food from roadside stalls and dirty markets. Many consumers increasingly switched from unpackaged milk to hygienic and healthy packaged milk over the review period.
Domestic companies pose strong competition to multinationals
Although multinationals like Nestlé Pakistan Ltd and Unilever Pakistan Ltd continued to maintain the lead, domestic manufacturers started to offer tough competition. Since most the domestic companies offer products that are aligned with consumers’ preferences, they were increasingly preferred. Domestic companies also benefited from a good understanding of consumers’ needs, enjoyed wide distribution networks, cost-efficient supply chain and offered products at an affordable price point. In 2013, domestic companies such as Engro Foods (Pvt) Ltd, being a local manufacturer, added the Pakistani logo to its advertisements to make an emotional connection with consumers.
Supermarkets/hypermarkets continue to gain share from traditional grocers
Chained supermarkets and hypermarkets continued to expanding rapidly in Pakistan in 2013. Many consumers started to buy products from these channels because of the availability of many brands and a comfortable shopping environment. To leverage on the potential, international players such as Germany’s Metro Cash & Carry (MCC) and France’s Carrefour entered the country. Many retailers also entered into joint ventures with local companies to set up retail stores. For instance, MCC Pakistan and Makro-Habib Pakistan (a leading local wholesaler) completed their merger in June 2012 and the merged entity is likely to operate nine wholesale centres in four major cities.
Positive growth expected in both retail value and volume terms
Social and economic problems such as political instability, flood and high inflation are expected to limit the growth of packaged food in Pakistan. Staples such as spreads, and oils and fats, noodles and dairy will record strong volume growth, as manufacturers are likely to focus on economy brands. Indulgence and luxury products, in contrast, would face challenges, as consumers might prefer to stay away from premium and non-essential packaged food products.
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The Packaged Food in Pakistan market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Packaged Food in Pakistan?
- What are the major brands in Pakistan?
- As economic prospects slowly improve, are consumers starting to eat out more and spending less time cooking at home?
- How is private label performing in the wake of retail consolidation and the global economic hangover?
- Do consumers want value for money or added value?
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This industry report originates from Passport, our Packaged Food market research database.