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Pakistan Food and Drink Report Q1 2007Published by: Business Monitor International Published: Mar. 1, 2007 - 64 Pages Table of Contents
AbstractWhile Pakistan remains at the foot of BMI’s Retail Business Environment Rankings, marking it out as one of the Asia Pacific region’s least attractive investment opportunities for the eighth consecutive quarter, it seems astonishing that it should also have opened the world’s largest milk-processing plant this quarter, backed by Swiss food and beverage giant Nestlé. In our newly published Q107 Pakistan Food & Drink Report, BMI examines how the country has managed to attract a project of this scale and what implications it might have for the short-term future of the country’s food and beverage industries.Nestlé’s 2mn litre-a-day Lahore facility is just one facet of its US$371mn 10-year investment plan for Pakistan. The multinational, along with Dutch major Unilever and US soft drinks giants Coca-Cola and PepsiCo have been among those willing to take the risks associated with investment in Pakistan - low consumer spending and a challenging business environment among them - in pursuit of the moderate short-term gains. Nestlé, however, has gone one step further and has almost formed a mutually beneficial relationship with Pakistan’s economy. Not only do projects of this nature - notably largely absent from our Food & Drink Company Developments chapter in most quarters - contribute enormously to job creation, Nestlé has also enacted a high profile Corporate Social Responsibility programme aimed at providing assistance to the country’s most disadvantaged groups and, less altruistically of course, building its brand beyond those limited areas in which its consumer goods have exposure. An expansion-driven, brand-building Nestlé evidently benefits Pakistan’s rural communities, especially its milk farmers who have edged away from their peers in other agricultural sub-sectors due to the level of foreign investment, and accordant government interest, the dairy industry has received. But, what does it mean for the food and drink industry on the whole? Nestlé’s change of its name from Nestlé Milkpak to Nestlé Pakistan demonstrated that it was not in Pakistan solely for the milk trade. Unilever would be right in thinking that its own dominance of the small but growing packaged and branded foods sector could soon be jeopardised by Nestlé’s thirst for diversification, while Coca-Cola and PepsiCo will also be keeping a close eye on any of the Swiss firm’s future forays into the soft drinks sector. However, Nestlé’s continued emergence can only be good for industry growth, and subsequently for both consumers and retailers. A more dynamic and competitive industry will force prices down and marketing expenditure up, thus driving consumer interest in a highly price sensitive market. BMI’s five-year forecast for Pakistan’s soft drinks industry ably demonstrates this. We are forecasting volume sales growth of 30.6% to 2011, but value sales growth of just 14.6% over the same period, due to an early focus from manufacturers on shifting volumes to the detriment of value sales. As consumer interest in branded food and beverage goods grow, retailers will spot a stronger opportunity in retailing not just essential items, but a broader range of products, and this sector will too be stimulated. Get Full Details About This Report >> |
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