Newly published market report: Pakistan Food & Drink Report Q4 2009

PRLog (Press Release) - Nov 29, 2009 -
Pakistan is no longer rooted to the foot of  BMI's Asia Pacific Food & Drink Business Environment Ratings table for Q209, after overtaking the Philippines to move forward one place into second last position. The country's large population somewhat compensates for its weak industry dynamics and has attracted two of the world's largest food and drink manufacturers,  Unilever Pakistan and  Nestlé Pakistan. Both declared their 2008 earnings in Q109, as discussed in  BMI's recently published  Pakistan Food & Drink Report for Q209. Unilever Pakistan, one of the country's largest food and drink companies, recently reported profits after tax of PKR1.98bn (US$25mn) for the year ended December 31 2008 - a 22.22% year-on-year (y-o-y) increase. The company operates across a variety of segments including hot drinks and ice cream. However, the company's ability to get its products to the market is severely hampered by the country's undeveloped mass grocery retail (MGR) sector.  Carrefour and its Middle Eastern Franchise partner  Majid Al Futtaim announced plans in Q109 to invest in around ten hypermarkets over five years, in a move that could help address this shortcoming. Nestlé Pakistan, Pakistan's other large food and drink company, posted profits of PKR1.55bn (US$19.53mn) for the year ended December 31 2008 and a y-o-y sales increase of 17%. The company has been growing its range of products and has developed a significant presence across a number of food categories, particularly dairies. Similarly to Unilever, it stands to benefit from the development of the MGR sector. The presence of Unilever and Nestlé does not hide from the fact that Pakistan continues to suffer from desperately low food and drink consumption levels, a reliance on imported food products and an unstable political climate - all of which are likely to continue weighing down on its ability to attract foreign investment. It remains to be seen whether potential new entrants take any comfort in the fact that the country is now in possession of  IMF funds which should promote greater fiscal prudence going forward.  BMI is forecasting a 29.77% increase in food consumption in US Dollar terms between 2008 and 2013, albeit from a very low base, which is reflected by our estimate that per capita food consumption was only US$133.7 in 2008. While the country is expected to post steady GDP growth through to 2013, the gains are unlikely to trickle down to the lower-income consumers, and are therefore likely to widen what is already a severely uneven distribution of wealth. Investors and consumers alike will be hoping the government delivers on its commitment to develop the country's agricultural sector, which would have the effect of boosting incomes and reducing the country's reliance on costly imported goods.
         


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