Saturday, 6 August 2011

Expanding in Pakistani Food Sector

Author: Awais Bilal

According to investors guide book by European commission (2005)
there are some negative perceptions among the international including European public about Pakistan. Pakistan have shown a remarkable ecno0mic and political development since late 1990's .Pakistan is a major country recognized by the international community and has a population of about 150 million.

The statistics provided by Agri-food, past, present and future report Pakistan August (2005), only quarter of 7 million can afford consumer base for process of imported food, still Pakistan provides a market larger than Canada for consumer goods. Pakistan's economy has been steadily growing for the past 6 years and it has the highest annual growth rate in south Asia.

New business opportunities for EU Companies in Pakistan (2005) tells us that Pakistan has close political and economical relations with middle east ,central and south Asia ,because of its geographical location.A lot of international companies have been operating successfully in Pakistan for more then 20 years .The main multinationals in the country are in oil and gas exploration and production ,electrical engineering, the pharmaceutical ,food and chemical industries .

According to Pakistan exporter guide (2004) Pakistan holds the world 9th largest market, estimated 149 million customers Pakistan's food sector is changing frequently as traditional habits an lifestyles are shifting .Retail sales of processed food is expending by 10 % per year in recent years, and currently are estimated approximately about USD 1.4 billion. There are western style fast food chains reflecting a rising popularity with such eating style. Pakistan is generally considered to be a price sensitive market because most of the consumers prefer imported food items or western fast food for both quality and status reason.
One of the very attractive reasons for any food company to go to Pakistan is changing life styles and influence of foreign media and increasing awareness of health principles particularly among educated, middle and upper income urban customers. Pakistan's food processing industry is also large and is growing. Currently the sector accounts 17% of Pakistani manufacturing output. The food processing sector produced an estimated USD 6 billion in products during 2003.

According to Agri-Food report (2005) there are some important facts about Pakistani market regarding a new food company expansion. These facts will help companies to make there decision.

• In Pakistan there are three big consumer markets one is Karachi with a population of 10 million people, Lahore with 5.7 million people and Faisalabad with 2.1 million people.
• An average Pakistani consumer spends 42% of his income on food.
• Consumer food sales are expanding at a rate of 10% annually.
• Super markets are gaining popularity and currently account approximately 10% of retail food sale.
• In recent years Pakistan has also eased trade barriers to attract more foreign companies to do investment in Pakistan. Rules and regulations have made more transparent and tariffs have been reduced.

Another positive point which makes Pakistan a suitable country for food companies is expansion in its agriculture sector. Agriculture sector is a dominant sector of Pakistan's economy. Total area of Pakistan is 22million hectares and 12million hectares are cultivated the most important crops Pakistan produces are wheat, rice, cotton and sugar cane which account 37% of the total value added in agriculture. In year 2002-2003 agriculture sector grew by 4.2% .the live stock sub sector which is 39% of agriculture grew 2.9% in the recent past. Because of these factors it would be very easy for any company to expand there as there won't be any need to import any thing from else where. New business opportunities for EU Companies in Pakistan(2005)

If a company decides to go ahead with this proposal they should also understand Pakistani culture. It is absolutely different from English culture .A definition of culture is ‘the collective programming of the wind which distinguishes one group from another.
Lane. HN Distefano.J J, Maznevski.ML(1997)

Pakistan's official name is' Islamic republic of Pakistan' and it is indicated that it is an Islamic state and Islam is the dominant religion. More than 97% of Pakistanis are Muslims only 3% are other religion people. Islam was the basis to form Pakistan as the partition of British India. Islam widely influences social life in Pakistan. In Pakistan religion, state and society are conjoining. For Muslims around the world Islam is not just a religion or a private affair but a law affecting all parts of life.

There is little or no consumer market for pork products and alcoholic beverages because they are prohibited in Islam. GREEGS has to take care of another very important thing that's halal meat. According to Muslim faith meat they eat should be halal. Which is that meat which has been slaughtered in the manner described by Shiria. New business opportunities for EU Companies in Pakistan(2005)

McDonaldalds and KFC are working in Pakistan and they only use Halal meat.
Because of this Muslims living in UK don't eat McDonald's meat here in UK but do eat it in Pakistan.
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