Cheese is becoming more popular as an ingredient in a variety of non-traditional recipes. This is due to awareness created through foreign and local cooking shows.
Increases in the urban population, household and per capita income, promotions, and the resulting importance of convenience, together with improvements in the standard of living and lifestyle changes, are expected to contribute to the growth of cheese over the forecast period. With increasing affordability, combined with awareness of the superior product quality of branded products, the shift from unpackaged products is also expected to continue.
Spreadable cheese on bread is increasingly gaining prominence and popularity as a convenient and quick breakfast for children in urban households. Cheese slices are also frequently used in home-made burgers and cheese sandwiches.
Adam’s Milk Foods was the leading player in cheese in 2018, due to the preference for and success of its cheese brands amongst consumers, due to its high quality and versatile formats. Product type and product quality are the most important differentiation points, as consumers tend to be quality- and product-specific instead of brand-specific when buying cheese.
One of the most popular brands in cheese, Happy Cow is famous for its triangular shaped cheese, along with traditional cheese slices. The brand enjoys high consumer recall owing to its wide distribution network.
Independent small grocers remained the largest distribution channel for cheese in Pakistan in 2018, as most of the population has access to these outlets across the country. However, hypermarkets and supermarkets are popular in large cities such as Karachi, Lahore and Islamabad, as the trend for modern retailing is on the rise in urban areas of the country.
Packaged milk saw phenomenal growth until 2012; however, it has since stalled. Growth over the review period remained modest due to changes in industry dynamics.
Consumers in Pakistan are increasingly looking for healthier beverages. Consequently, the consumption of unhealthy drinks is decreasing, paving the way for flavoured milk drinks to grow strongly over the forecast period.
Compared with several regional economies, the share of packaged milk in Pakistan is still very low. Leading manufacturers are promoting growth not only by educating consumers about the health and hygiene aspects of UHT milk, but also getting involved with the government to negotiate the introduction of a minimum pasteurisation law.
Engro Foods faced marketing challenges for both Olper’s and Omung during the review period. Olper’s was involved in the government test of 16 allegedly adulterated UHT milk brands mentioned above, and even though it was found fit for consumption, the brand’s image was damaged.
Pakola was one of the first entrants in flavoured milk drinks. Owing to massive consumer loyalty and the equity of the umbrella brand, the brand has maintained the leading position for several years.
Nestlé Pakistan has a strong lead in drinking milk products with a wide product range. The strong brand loyalty and legacy value of Nestlé Pakistan proved beneficial for MilkPak over the review period, with the brand maintaining its share and growth despite the changing dynamics that hit other brands.
Rapid urbanisation, together with economic improvements in the country, has led to a surge in sales of packaged food. However, packaged yoghurt still accounts for only a fraction of the total yoghurt market, leaving strong potential for growth as consumer preferences develop in favour of packaged products.
Plain yoghurt is used in Pakistan as a staple, with some households consuming it as a condiment, whilst others eat it with bread as part of a meal. Hence, brands strive to capture sales with consistent marketing aimed at switching consumers from unpackaged yoghurt.
Unpackaged sour milk products have a very traditional texture and taste that the average Pakistani consumer enjoys, especially the milk and yoghurt-based beverage lassi; packaged brands of lassi have failed to replicate this. Moreover, unpackaged lassi is topped with a thick layer of pure cream, which adds to the texture and taste of the beverage.
Yoghurt and sour milk products is comprised of standard and economy brands, both of which compete based on convenience and variety. The competitive landscape comprises a handful of leading domestic manufacturers and various other retailer-imported international brands.
Nestlé Pakistan led yoghurt and sour milk products in value terms in 2018. The company was one of the first entrants in packaged yoghurt with its Nestlé Yoghurt and Raita brands.
Yoghurt and sour milk products are mainly purchased in small pack sizes on frequent shopping trips, and not usually as part of monthly grocery shopping trips, due to their short shelf life. For this reason, the main retail channel in 2018 was independent small grocers.
Pakistan’s dairy sector was under the protection of a zero-rating regime with allowable tax refunds until 2016, when the government discontinued this, whilst also imposing 25% regulatory duty on skimmed milk powder, with 20% customs duty already in place. The change in tax policy meant that the industry could no longer claim refunds on value-added tax paid on raw materials used for other dairy products such as coffee whiteners.
The use of cream as a cooking ingredient in traditional and other cuisines is expected to promote the growth of packaged cream in the country. The trend of consuming packaged cream in desserts, pasta and other dishes has been on the rise, especially due to the rising popularity of cooking shows amongst higher-income urban women.
Rapid urbanisation, rising awareness and increasing disposable incomes are expected to move consumers towards packaged coffee whiteners and cream. The shift to coffee whiteners is more widespread, with this product becoming increasingly popular in rural areas due to increased marketing and promotions by brands.
Everyday maintained its lead and saw growth in coffee whiteners in 2018, despite the strong competition. However, many smaller brands, such as Qudrat by Haleeb Foods and Chaika by Shakarganj Food Products, saw significant growth towards the end of the review period.
Coffee whiteners in Pakistan went through a major restructuring over the review period, as the leading brand from Engro Foods, Tarang, lost significant share, especially in 2017 and 2018. Dominated by Tarang for almost a decade, tea whiteners saw increased competition after two big brands, Dostea from Fauji Foods and Cup Shup from Dalda Foods, entered the market and Nestlé Pakistan also aggressively marketed Everyday.
Packaged cream in Pakistan is dominated by three major brands: MilkPak, Haleeb and Olper’s Cream. Whilst the former two have been in the market for decades, Olper’s Cream is relatively new.
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Discover the latest market trends and uncover sources of future market growth for the Dairy industry in Pakistan with research from Euromonitor's team of in-country analysts.
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This industry report originates from Passport, our Packaged Food market research database.