1. The document discusses Pakistan's dairy industry, highlighting that Pakistan is the 4th largest producer of milk globally and has a large domestic market and potential for export.
2. It notes that most milk production is distributed informally while processed milk makes up only 7% of the market, indicating opportunity for growth. Several prominent dairy companies in Pakistan are profiled.
3. Key trends are that ambient UHT milk and powdered milk segments are expected to grow at double-digit rates in the coming years, while chilled dairy will also experience high growth. The document evaluates strategic options in Pakistan's dairy sector.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online from Scribd
1. The document discusses Pakistan's dairy industry, highlighting that Pakistan is the 4th largest producer of milk globally and has a large domestic market and potential for export.
2. It notes that most milk production is distributed informally while processed milk makes up only 7% of the market, indicating opportunity for growth. Several prominent dairy companies in Pakistan are profiled.
3. Key trends are that ambient UHT milk and powdered milk segments are expected to grow at double-digit rates in the coming years, while chilled dairy will also experience high growth. The document evaluates strategic options in Pakistan's dairy sector.
1. The document discusses Pakistan's dairy industry, highlighting that Pakistan is the 4th largest producer of milk globally and has a large domestic market and potential for export.
2. It notes that most milk production is distributed informally while processed milk makes up only 7% of the market, indicating opportunity for growth. Several prominent dairy companies in Pakistan are profiled.
3. Key trends are that ambient UHT milk and powdered milk segments are expected to grow at double-digit rates in the coming years, while chilled dairy will also experience high growth. The document evaluates strategic options in Pakistan's dairy sector.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online from Scribd
1. The document discusses Pakistan's dairy industry, highlighting that Pakistan is the 4th largest producer of milk globally and has a large domestic market and potential for export.
2. It notes that most milk production is distributed informally while processed milk makes up only 7% of the market, indicating opportunity for growth. Several prominent dairy companies in Pakistan are profiled.
3. Key trends are that ambient UHT milk and powdered milk segments are expected to grow at double-digit rates in the coming years, while chilled dairy will also experience high growth. The document evaluates strategic options in Pakistan's dairy sector.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online from Scribd
Download as pptx, pdf, or txt
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Location & Supply Chain
Business Economics
Private & Confidential
Invest Capital Markets Limited
Private & Confidential
Invest Capital Markets Limited
Exploring & Creating Markets
United Kingdom
Pakistan Strategically Located
Cross Roads Ideally placed to supply dairy products to regional countries at competitive prices Supply 4th largest producer of milk in the world with an annual production of approx. 42 billion liters Demand One of the largest consumers with a per capita consumption rate of 201 liters per annum approx.
Most of the procurement takes place at the household level or collection centers 6.5 million households are involved in this industry
Industry Facts
Nestle & Engro collect milk from over 500,000 households on daily basis Competition in collections process Ensuring quality and preserving milk for extended period requires significant capex Securing and developing continuous supply is critical
Private & Confidential
Invest Capital Markets Limited
Building Synergies End-to-End Solution Households Distribution & Retail Branding & Marketing Technology & Business Infrastructure Processing Milk Collection & Commodity Procurement
Consumers
Investor Strengths High consumer recognition & acceptability Network of one national distributor and 180 sub-distributors Established consumer brands like Sensodyne, Macleans, Eno, Iodex, etc. State of the art technological infrastructure
Potential Partner Established infrastructure for milk collection Ensuring high quality during collection process Strong processing capabilities Experience of handling malted products. Invest Capital Markets Limited 6
Well developed R&D infrastructure and on-ground quality human resource.
Private & Confidential
Potential Partners
Leading Player in the industry Trend Setter Owns Milo An established brand Recently launched Nesquick Focus on High Value Added segment Leading player in UHT Milk Segment Started in 2005 Aggressive Strategy Highly Leveraged Future Plans Powdered Milk & Nutrition Products Distress Situation Failed to keep pace with Nestle Milk Collection & Quality Issues Established Footprint Butter Renowned Brand Lack of presence in Powdered Category Started in 2005 Limited Operation Milk Collection & Quality Issues Distressed Situation Private & Confidential
Strong History Quality milk collection capability Presence in Powder Segment Leading Bulk Supplier Has plans to launch similar product
Prior knowledge of making Horlicks
No conflict of interest/Potential competition
Invest Capital Markets Limited
Dairy Industry of Pakistan
Private & Confidential
Invest Capital Markets Limited
Dairy Industry of Pakistan- Overview
1 Pakistan is the fourth largest producer of milk, during year 201011 46 million tons of milk was produced with consumption of 37 million tons.
Livestock and agriculture sector contributes over 21% to the GDP and the milk economy is about 27.7% in value terms. The Milk production is expected to grow 2% annually due to the high domestic and the export demand The milk produced is mainly distributed in raw form through informal channels however the processed industry is only 7% of the tradable milk. Thus there is great opportunity and potential to grow the processes milk business. 9
Approximately 60% to 70% of the demand is fulfilled by domestic manufacturing while the remaining 30% to 40% is met by imports. 6.5 million households are involved in dairy farming in Pakistan reason being the population in Pakistan is mostly saturated in rural areas and they consider it a secure source of income.
Private & Confidential
Invest Capital Markets Limited
Milk Production System
There are two different types of milk marketing systems in the country Organized dairy sector: this segment occupies very low share but as the trend changed, processed milk industry became the key driver of the overall growth of the dairy industry as they constantly reinvestments and diversification of product portfolio Traditional milk marketing: Small scale milk producers in rural and unban areas collect milk and distribute them directly to the house holds or milk shops
Milk Production Farmer Retention
Tradable
Wastage
Unprocessed Milk (93%)
Processed milk (7%)
Ambient UHT (4%)
Gawala (41%)
Nearly 16% of milk produced is wasted in transportation and other inefficiencies in the industry.
Milk Shop (35%)
Chilled Dairy (0.5%)
Industrial sweets (17%)
Powder (2.6%)
Private & Confidential
Invest Capital Markets Limited
10
Processed Milk Segments
Processed milk can be further segment into following categories:
Ambient UHT This segment contributes only 4% in the total tradable milk
segment. The market size was 790 millions as of December 2010.
Chilled Dairy Ambient UHT Chilled Dairy Powder The first entry in branded yogurt segment was done by
Nestle. Yogurt is a widely consumed milk form in Pakistan which is present at Pakistans dining table.
Powder This segment holds approximately 3% market share. Tea Whitening 27%
Infant Nutrition 18%
Growing up and all purpose 55%
Powder Milk Segmentation
Private & Confidential
Invest Capital Markets Limited
11
Past and Future trends of Growth
Ambient UHT: Industry volumes have
Volume in million liters
grown at a CAGR of 10% from 20062010 and a similar trend is expected going forward. In future the growth expected is 11% as conversion from loose milk to UHT industry is expected to grow at a rate faster than the overall milk market. Powder: Conversion from loose milk to
1400 1200 1000 800 600
powder milk is still a very small part of the overall milk trade in Pakistan. The segment is expected to grow at a respectable rate of 14% in next five years. Chilled Dairy: this segment has grown
400 200 0 2005 2010 2015
at a CAGR of 19% in last five years and will continue to grow at an expected CAGR of 11% Private & Confidential
Ambient UHT
Powder
Chilled dairy
Invest Capital Markets Limited
12
Prominent Players- Engro Foods
The Company started operations in 2006 and has become a major player in the Food Industry of Pakistan in a span of few years The company has captured a noticeable share of 39% with launches of multiple products. The companys business segments are divided into juices and dairy products. Engro Foods has achieved unprecedented success in the UHT dairy industry by achieving market leadership The dairy farm of the company is the one of the largest dairy farm of Pakistan currently having 1259 imported animals and producing 20000 liters of milk. The company products are highly consumer preferred items. Omor has grown by 100% in FY10 with a volume of 12.2 million liters and a market share of 17%. Thus the company future prospects are bright Invest Capital Markets Limited 13
Market Share
Business segments
Market leader
Current status
Future Growth
Private & Confidential
Prominent Players- Nestle Pakistan
Within the food sector, Nestle has been a shinning star all along as it provided so far a gigantic appreciation in its market capitalization of almost 200% since Jun10. Market Share In UHT market the company stands with the market share of 32%. The companys business segments are divided into dairy products, notional products and beverages The company is the market leader occupying approximate 65% market share The company is producing various dairy products beside packaged milk like fruit yogurt, raita, nestle yogart and powder milk (Nido). The company is expected to grow at a CAGR of 20% in future.
Business segments
Market leader
Current status
Future Growth
Private & Confidential
Invest Capital Markets Limited
14
Prominent Players- Shakarganj Foods Product Ltd
Shakarganj Food Products has developed an elaborate system of collecting milk directly from the farmers on a daily basis, ensuring freshness of the product Market Share After Engro and Nestle the company occupies the highest share. The company is producing dairy products as well as juices. The highlights of the dairy product are Good milk, Good slim milk, cream and Desi ghee. The fresh milk thus collected is processed using state of the art UHT (ultra high temperature) technology and aseptically packed in Tetra Pak filling machines Nearly 80 percent of the total raw milk is supplied from companys dairy plant. The plant packing capacity at the time of acquisition was 75,000 litres per day of UHT liquid milk and 5 metric tonnes per day of powder milk. Various value added food products, including dairy and fruit products, are in different stages of development. New products are planned for launch in future. Invest Capital Markets Limited 15
Business segments
Dairy segment
Current status
Future Growth
Private & Confidential
Prominent Players- Haleeb Foods
Haleeb Foods was established in 1986 and its first product was Haleeb milk. Since then, it has continued to grow and occupy market share by offering new products Market Share The company occupy's approximately 5% to 6% market share The company has wide verity of dairy products under its brand name. The UHT products include haleeb milk, tea max, Skims and dairy queen. Beside this company also produce flavored yogurt, skims powder milk, ghee cheese and butter Apart from its extensive nationwide distribution networks, Haleeb Foods is also serving several export markets including South Korea, Bangladesh, Afghanistan and the Central Asian states The company expects positive growth through innovative marketing and expansion plan
