Cpp Report.pdf

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Transcript of Cpp Report.pdf

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2.OVERVIEW OF THE SPICE INDUSTRY

OF PAKISTAN

Food industry around the globe comprisesa niche within itself, referred to as ‘spices’.

According to the American Spice Trade Association, “today spices have become known as

any dried plant product used primarily for seasoning purposes. This all-inclusive definition

seems to cover a wide range of plants like herbs, spice seeds and even dehydrated

vegetables and spice blends.”1 

Putting spices in a Pakistani perspective, they also comprise the authentic recipe mixes used in

traditional cuisine. The Pakistani spice industry can be divided into branded and unbranded industry.

SMEDA found out that there are about7000spices and salt grinding units operating in Pakistan,60%of 

1American Spice Trade Association, [online] Available at: http://www.astaspice.org .

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which are rural based2. But with the emergence of modern industrial units, the share of these rural

based units is decreasing.

Spices form a substantial portion of Pakistan’s business in terms of imports

and exports.

2.1. Major Food Exports of Pakistan

2.2. Major Food Imports of Pakistan

S.No. COMMODITIES FY2011 VALUE

(in Million PKR)

1 Animal or Vegetable Oil/fats 20,165.7

2 Wheat Un-milled 7367.4

3  Food and Live animals  13,835.6

4  Tea  15030

5  Spices  5733

2Based on the estimates of the existing spice business operators.

S.No COMMODITIES

FY2011 VALUE

(in Million PKR )

1  Rice  11,821.0

2  Fish and Fish Preparations  2,482.0

3  Fruits  2287.4

4  Spices  1935.0

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Since the last decade, there has been tremendous growth in the spices industry of Pakistan. In the

recent past, many new companies have been setup due to high growth prospects in this industry. To be

at par with local and international demands, these companies have come up with secure packaging and

branded packs, with technological changes having quite an impact. However, growth in this industry

revolves around quality, promotion and distribution network.

“The following illustration gives an understanding of how work is routed in a conventional spices

processing, packing and marketing business:

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processing, packing and marketing business:

(SMEDA)” 

There are many factors behind increased demand of spices in Pakistan; a major factor is the changing

lifestyles of people who now prefer ready to use ingredients over traditional home made spices.  Also,

spices have always been in demand due to the sub-continental style of cooking where quality spices are

termed synonymous with good food. However, according to SMEDA report 2006,sudden increase in

demand for spices has never been experienced implying that the growth has been steady and is

dependent on:

“Pop ulation growth in both urban and rural area.

Ratio of younger people in the population (according to 1998 census 64% belongs to age group

of 15 to 34).

Increase in urban life phenomenon.

Preferences shifting from popular homemade curries to ready to use curries. ” 

2.3. DRIVING FORCES

The spice industry of Pakistan is a very difficult industry to compete in. The two main reasons of this

difficulty are low price competition and involvement of many unbranded suppliers. Brands, whether

branded by a food company, retailer’s brand or unbrand ed and open commodity merchants including

indirect competitors in the business of providing ready to cook, ready to eat, canned/ processed food

directly and indirectly compete against one another.Because the price sensitive buyers prefer to buy

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unbranded spices as they provide a local touch, it becomes difficult for major players of the industry

who deal in branded spices, to attract more buyers. A major factor that creates competition in this

industry is brand loyalty because certain taste attitudes can only be satisfied with certain brands. Apart

from this, some of the major driving forces in the Pakistani spice industry are changes in societal

concerns, lifestyles and attitudes, product innovation and changes in who buy the product and how they

use it.

2.4. KEY SUCCESS FACTORS

An organization’s key success factors (KSFs) can be related to any of the following six categories:

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40%

60%

Market Share

Branded and packed Rs. 8

billion

Loose spices Rs. 10 to 15

billion

An organization’s key success factors (KSFs) can be related to any of the following six categories:

technology, manufacturing, distribution, marketing, skills and organizational capability. Apart from

these, there can also be other KSFs for a company. All the aforementioned factors apply to the spice

industry and their individual importance cannot be denied in making industry players successful over the

long term.

2.5. BRANDED SPICE INDUSTRY

According to SMEDA market share of spice industry in Pakistan is as follows:

Brand Business Volume Estimated Market Share

Branded and packed  Rs. 8 billion  40%

Loose spices  Rs. 10 to 15 billion  60%

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Some of the major players in this industry are Shan, National, Mehran, and Chef’s Pride etc. New players

have also come up which includes Habib, Kitchen Secrets (with brand name Rivaayat) etc. The prices of 

the branded packs are around30%more than unbranded ones.

Pakistan does not exist among the major spices exporters, and hence presents a great opportunity and

enormous potential for investors to invest in this sector

2.6. MAJOR INDUSTRY PLAYERS

Major players of packed spices in the industry are:

Shan Foods

National foods

Other players in the industry are:

Chef’s Pride 

Mehran Foods

Ahmed Foods

Habib Foods

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Zaiqa Foods

Kitchen Secrets

It sometimes becomes difficult for firms to compete and this is one of the main reasons due to which

many firms leave the industry.  A noteworthy players were there in the market in the last decade but

has closed down it operations now.The vital reasons due to which the firms might leave the industry are

low consumer response to the company’s offerings due to dissatisfaction, high brand loyalty already

towards other brand/player, not shifting to other brands, and monetary and trade concerns. Despite

these possible reasons, there are number of players who have survived the stiff competition and have

come out successful.

Market share of branded packs, according to SMEDA are: 

Brand Market Share In %

Shan Foods  50%

National Foods  35%

Chef’s Pride 10%

Others 5%

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