DAIRY PRODUCTS AND ALTERNATIVES IN PAKISTAN - ANALYSIS

Country Report | Sep 2022

EXECUTIVE SUMMARY Market Sizes

Dairy products and alternatives in 2022: the big picture Sales of Dairy Products and Alternatives
Retail Value RSP - PKR billion - Current - 2008-2027
Rising prices due to high inflation during 2022 meant that the population Pakistan
became even more price-sensitive. This created issues for the leading players in during
products and alternatives as they faced rising costs at a time when consumer spending 516 Forecast
was under pressure. Faced with pressure on their spending, consumers became more 1,200
careful about their spending on dairy products and alternatives, although the essential
and traditional status of many products such as milk, yoghurt and ghee, categorised
under cooking fats, meant that demand was relatively inelastic in the face of cost 1,000
pressures. This could be seen most clearly in baby food as parents are generally very
interested in providing their babies, infants and young children with the highest- 800
quality products that they can afford, especially if these products have been has
prescribed or recommended to them by doctors or other medical professionals,
irrespective of the price. However, in most dairy categories, the shift that is being seen 600
away from unpackaged and towards packaged products slowed down during 2022 as
many consumers looked to reduce their food budgets. Strong, well-recognised brands 400
benefited from the situation as consumers became less open to experimentation,
while innovation becoming less important consideration for leading brands as they
focused instead on catering to more basic needs. 200

In the foodservice channel meanwhile, the removal of COVID restrictions led to further 0
growth in foodservice volume sales across most categories in 2022 after 2021 saw a 2008 2022 2027
robust recovery from the sales declines registered at the peak of the COVID-19
pandemic in 2020. Among the categories to register the most robust foodservice
volume growth in 2022 were cheese, cream and yoghurt. Sales Performance of Dairy Products and Alternatives
% Y-O-Y Retail Value RSP Growth 2008-2027
Key trends in 2022
With consumer spending under pressure due to high inflation and the rising cost of 14.8% Forecast
living during 2022, demand shifted towards more economical packaging presentations 20%
and more cost-effective products. In particular, larger pack sizes with lower unit prices
became a major trend in categories such as yoghurt while in categories with higher
average unit prices, smaller pack sizes became more popular as consumers look to
reduce spend per purchase by opting for products with lower retail selling prices. 15%
Consumer attention also shifted towards products with longer shelf life, which
benefited shelf stable products and, in particular, dairy products that have been
subjected to UHT processing. Within this context, powder milk and coffee whiteners
are widely used in the preparation of tea, the most popular hot drink in Pakistan, and 10%
these are seen as representing excellent value for money due to their very long shelf
life. At the same time, shelf stable milk is the dominant category in drinking milk
products. However, in other dairy categories, the perishable nature of products means 5%
that consumers have shifted towards purchasing them in low quantities more
frequently in order to avoid spoilage, an important consideration in the country with a
relatively low household penetration of refrigeration appliances.
0%
Another important trend that emerged in dairy products alternatives in Pakistan 2008 2022 2027
towards the end of the review period was the increasing interest in a wider range of
more exotic dairy products that have previously held only niche appeal. This is largely
due to the growing influence of Western culture via social media, especially TikTok,
and broadcast media, especially the country’s most popular television channels, as well Sales of Dairy Products and Alternatives by Category
as the experiences of the increasing numbers of Pakistanis who are travelling and living Retail Value RSP - PKR billion - Current - 2022 Growth Performance
abroad. For instance, in cheese there has been a proliferation of European variants of
both hard cheese and soft cheese such as cheddar and mozzarella, among others, while Baby Food
88.9
flavoured yoghurt is becoming more popular, although this category still has a long way
to go to match the popularity of plain yoghurt. Dairy
426.7

Competitive landscape Plant-based Dairy

-
Nestlé Pakistan Ltd remains the leading player in dairy products and alternatives, ahead 0% 15% 25%
of FrieslandCampina Engro Pakistan Ltd. Nestlé has a very strong position in most dairy
DAIRY PRODUCTS AND 515.6 CURRENT % CAGR % CAGR
categories and its MilkPak brand benefits from very high levels of consumer awareness ALTERNATIVES YEAR % 2017-2022 2022-2027
and its status as a household name. Nestlé also leads in baby food and this is largely GROWTH
due to the success of its local milk formula manufacturing operations. Nestlé is the
manufacturer of the two leading formula brands in Pakistan, Bunyad and Nido and
these are widely recognised brands that are preferred among mass consumers due to
their reputation for high quality and economical prices. MilkPak meanwhile was the
key pioneer in shelf stable milk and the brand has been able to maintain very wide
recognition and high sales over the years. Although Nestlé faces stronger competition

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due to the constant entry of myriad new players, the company maintains a very strong Competitive Landscape
focus on marketing campaigns and innovation, with new regular launches a key part of
a strategy.
Company Shares of Dairy Products and Alternatives
% Share (NBO) - Retail Value RSP - 2022
Channel developments
Nestlé Pakistan Ltd 35.3%
While smaller local grosses remains the dominant retail distribution channel for dairy
products alternatives in Pakistan, the channel is slowly losing ground to supermarkets FrieslandCampina Engro P... 17.7%
and hypermarkets. While small local grocers remain integral to the retailing of all types Dalda Foods (Pvt) Ltd 7.1%
of dairy products alternatives due to the central role that they play in the lives of many
consumers, especially those living in rural areas, the outlet networks of leading Shakarganj Food Products... 5.6%
chained hypermarkets and supermarkets are expanding in urban areas across the Haleeb Foods (Pvt) Ltd 5.2%
country. This means that the numbers of consumers who have access to supermarkets
and hypermarkets is growing at a time when rapid urbanisation and expansion of the Fauji Foods Ltd 3.6%
affluent urban middle-class are underpinning major changes in the retailing landscape Wazir Ali Industries Ltd 2.8%
in Pakistan. At the same time, e-commerce is growing steadily, although it remains a
Morinaga Milk Industry C... 1.6%
very minor retail distribution channel for dairy products and alternatives. This is mainly
because e-commerce currently exists only in urban areas and remains virtually Dairyland (Pvt) Ltd 1.5%
unheard-of in rural areas, catering only to affluent urban dwellers who have busy Pakola Products (Pvt) Lt... 1.3%
lifestyles and sophisticated wants and needs.
Millac Foods (Pvt) Ltd 1.3%
After suffering a devastating blow due to the restrictions placed on the ability of
Global Brands Marketing 1.1%
Pakistanis to socialise outside of the home at the peak of the COVID-19 pandemic, the
country’s hospitality industry continued to recover robustly towards the end of the Abbott Pakistan Ltd 1.0%
review period. This led to strong growth in foodservice volume sales across dairy Adam's Milk Foods (Pvt) ... 0.9%
products alternatives during both 2021 and 2022 as the complete removal of lockdown
restrictions led to huge numbers of people dining out far more often. Thus, foodservice Upfield Pakistan Pvt Ltd 0.5%
volume sales have now exceeded pre-COVID-19 levels in almost all relevant categories Gebr Woerle GmbH 0.3%
of dairy product and alternatives.
Mead Johnson Nutrition C... 0.2%

What next for dairy products and alternatives? Arla Foods Amba 0.1%
Kraft Heinz Co 0.1%
\The forecast period is expected to see strong sales growth across dairy products
alternatives, where the rising demand expected to be underpinned by rapid Others 12.9%
urbanisation, the growth of Pakistan’s affluent urban middle-class and general
improvements in the distribution of packaged dairy products, largely due to the
expansion of supermarkets and hypermarkets. In particular, spreading concerns about
hygiene among an increasing proportion of the Pakistani population are set to feel the
ongoing and significant shifting away from unpackaged dairy products sold via informal Brand Shares of Dairy Products and Alternatives
and semi-formal channels and towards formal sales of packaged dairy products. In % Share (LBN) - Retail Value RSP - 2022
addition to the desire to ensure that dairy products are transported and sold in sanitary,
temperature -controlled conditions that eliminate the chance of spoilage, MilkPak 15.2%
contamination and adulteration, consumers are increasingly interested in the Olper's 14.6%
convenience that packaged your product represents, especially within the context of
Dalda 6.1%
the increasingly hectic lifestyles of busy urban professionals.
Nido 4.5%
However, one area of dairy products alternatives that is not expected to perform well
during the forecast period is plant-based dairy. While this category is believed to have Lactogen 4.3%
enormous growth potential in the country, currently plant-based dairy is very far from Cerelac 4.2%
realising anything close to its full potential due to very low levels of consumer
Qudrat 4.0%
awareness or understanding of these products. Indeed, plant-based dairy products are
currently available only in a small number of upmarket retail outlets in affluent areas of Tullo 2.8%
major cities and high prices mean that the consumer base for such products remains Haleeb 2.7%
very limited. This is largely due to all plant-based dairy products in Pakistan being
imported and the complete absence of affordably priced locally manufactured options. Everyday Powder 2.6%
Tea Max 2.4%
DISCLAIMER NurPur 2.0%
Bunyad 1.8%
Forecast and scenario closing date: 1 August 2022
Tarang 1.6%
Report closing date: 30 August 2022
Dayfresh 1.5%
Analysis and data in this report give full consideration to consumer behaviour and Good Milk 1.4%
market performance in 2022 and beyond as of the dates above. For the very latest
insight on this industry and consumer behaviour, at both global and national level, Dostea 1.4%
readers can access strategic analysis and updates on www.euromonitor.com and via the Dairy Omung 1.3%
Passport system, where new content is being added on a systematic basis.
Pakola 1.3%
Others 24.3%
SOURCES
5-Year Trend
Sources used during research include the following: Increasing share Decreasing share No change

Summary 1 Research Sources

Official Sources ABM Dairyland

Agri Bus ines s Pa kis ta n
Agrocha rt
As ia n Development Ba nk
CEIC
CSD
FAO

© Euromonitor Interna onal 2023 Page 2 of 4

Official Sources ABM Dairyland
FCCI
Federa l Boa rd Revenue
GAIN Report (Globa l Agriculture Informa tion Network)
Globa l Agricultura l Informa tion Network
IFC (interna tiona l Fina nce Corp)
Interna tiona l Growth Center
Inves t Pa kis ta n
JCR VIS
Na tion Ma s ter
PACRA Pa kis ta n
Pa k-Da iry Info
Pa kis ta n Burea u of Sta tis tics
Pa kis ta n Burea u of Sta tis tics (PBS)
Pa kis ta n Federa l Budget
Pa kis ta n Sta nda rd for Qua lity Control Authority (PSQCA)
Pa kis ta n Sta tis tica l Boa rd
PARC
PERI (Punja b Economic Res ea rch Ins titute)
Sindh Sta tis tica l Depa rtment
SP Globa l
Sta te ba nk of Pa kis ta n
Sunny Medico
World Integra ted Tra de Solution
Trade Associations Ca mpden & Chorleywood Food Res ea rch As s os ia ction Group
Pa kis ta n Da iry As s ocia tion
Univers a l Tra ders As s ocia tion
Trade Press Ary news
Aurora Da wn
Aurora Ma ga zine
BBC News
BR
Bra nds yna rio
Bus ines s Recorder
Bus ines s Recorder Da ily
Bus ines s Recorder officia l
Bus ines s Recorder Pa kis ta n
Da ily DAWN NEWS
DAILY DAWN News Pa per
Da ily Expres s Tribune
Da ily Times
Da wn News
DAWN NEWS Pa kis ta n
Da wn News Pa per
Expres s
Expres s Tribune
Fina ncia l Da ily
Food Journa l Pa kis ta n
IFC
Ka ra chi News
Kha leej Times
Live News Articles
Ma rket Forces
Metti Globa l
Na tion
Na tion Pa kis ta n
Na tion, The
News Da ily
News Interna tiona l
News Tribe, The
News , The
Pa k Obs erver
Pa k Tribune
Pa kis s a n
Pa kis ta n Obs erver

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 Official Sources ABM Dairyland
Pa kis ta n Toda y
PK Times
Profit Ma ga zine Pa kis ta n Toda y
Profit Pa kis ta n Toda y
Profit toda y
Reuters
Tribune, The

Source: Euromonitor Interna tiona l

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