DID YOU KNOW?

FMCG Sales worth

USD 9.8 Bn
680FMCG
KStores
With growth of 3.2% over last
year
Soft Drink Sales worth
USD 2 Bn With MT growth of
9%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Pakistanis consume 3.3 Bn

litres of Soft Drinks every
year! Modern Trade Sales growth is
12.9% vs. previous year
Cooking Fats Ghee worth Detergents worth
USD 1.2 Bn
Pakistanis are one of the
USD 0.6 Bn
Powdered Detergents contribute
largest consumers of 55% vs. bars
Cooking Fats!
Source: *Nielsen Census **Nielsen Retail Audit 1
 MACROECONOMIC OVERVIEW
A population of
Gross Domestic Product of
207.8 Million
Growing at 2% per annum
US$ 283.7 Billion
Expected to grow by a further 5.27% by
54% of population is 24 years or the end of 2017
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

below

Pakistan Consumer Confidence Index

Global 106
Average
104 104 104
103 103
102 102 102
101 101 101
99 99
101
97 97
96 96 96 99 99
98 98 98
97
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q2 2017
2
 OVERALL ECONOMY IS IMPROVING

GDP growth rate Services sector Highest contribution to

2017 is 5.3% contributes 60% growth is from services
sector (6%)
GDP Growth vs. PY GDP – Breakup Sectoral Growth vs. PY
5.3% 6.0%
5.8%
5.6%
4.5% 20% 5.2% 5.0%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

4.1%
4.4%

3.5%

60% 21% 2.1%

0.3%

2015 2016 2017 Agriculture Industry Services

Agriculture Industry Services

2015 2016 2017

Source: Economic Survey of Pakistan 3

 PAKISTAN – Market of 199 million consumers
• More than half population belongs to Rural areas with almost equal • 54% of both males and females are on the 15 to 39 age bracket, with
gender Split 72% literacy rate in males and 50% in females

Age Group % (Male & Female)

Population (Millions)
Separate Bases (100%) for Male & Female
120% 220
195 199 60+ 6.2 6.5 Literacy Total
100% 192 200 Male Rate (%)
80% 180 Rural Female
50 - 60 6.6 6.6 Male 71.6
61% 60% 59%
60% 160 Urban Female 49.6
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

40 - 49 10.7 10.5
40% 140 National

20% 39% 40% 41% 120 30 - 39 15.7 15.6

54% 54%
0% 100
20 - 29 18.4 18.4
2015 2016 2017
Young
15 - 19 9.8 9.8 Consumer
Gender Split Market
10 - 14 10.4 10.4
48%
52%
Male Female 0 -9 21.3 22.2

Source: 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
• Pakistan Bureau of statistics “Social Indicators of Pakistan – 2016”
• Economic Survey of Pakistan 4
 Stable Inflation and Increased Earnings

Per Capita Income has increased during 2017 as compared to last year
Most of the income expenditure accounts for food followed by Housing & utility

Inflation Per Capita Income Income Expenditure – 2016

5.3%
1629
4.5% 4%
4.3%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

5%
3.9% 4.1% 2% 6% 37%
3.5% 3.3% 2%
1531
2.8% 1514 5%
3%
2.1%
6.4% 23% 9%
3%
1.1% 1%
Food & Bev.
Tobacco & Alcohol
Clothing & Footwear
2014-15 2015-16 2016-17 2014-15 2015-16 2016-17 Housing & Utility
Furnishing & Housing Maintainance
PCI Health
Food Non Food Total Transport
Source: Communication
• Pakistan Bureau of statistics “Household Integrated Economic Survey”– 2016” Recreation
• Economic Survey of Pakistan 5
 Premiumization Agenda – Premium Sells!
More than half the respondents strongly/somewhat agreed that…

48% are
60% respondents in Buying premium products makes them feel good…
spending Pakistan are better
more on off financially vs 5
groceries yrs ago
This is the second …makes them feel confident…
69% have
highest across the access to
region improved
technolog
61%
have
y …shows others they have good taste…
access to
better
educatio
33% have
n
access to
…and that premium products are worth the money
premium
products …but a majority also says that…
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Willingness to pay a premium Premium claims are simply a way for brands to charge more money
Highly Willing for a product that… Somewhat Willing
Clothing/s... 42
Personal electron... 40
Comes with high Dairy produ... 37
52% 39%
quality Hair C... 35
/safety standards Fruit j... 34
Rice/ gr... 34
Contains organic
Body C... 32
47%
/all-natural 43% % Meat or sea... 31
Pakistani
30 consumers are
ingredients

W
Coffee... 29
willing to pay premiuam

C
P

P
n
g
n

b
y

g
o

y
e

e
s
s

r
il
li

t
Home entertainm... 29
Provides superior function Ice Cream/Frozen novel... for 28products if they meet
45% 45% 28
or performance
Bread/ baked g...
their
27
sustainability and
Vita... 25self-esteem needs
Cosme... 25
Contains environmentally Oral C... 24
38% friendly materials 51% Cookies/ Crackers/ Bisc... 24
W 24 6
 Premium Categories have been growing at much higher pace!

Share Of Premium Face Care manufacturers= 45% | +6.1% VS LY

Total Face Care Growth = 26.8%

Premium Face Care Growth = 46.8%

Share Of Premium Laundry Detergents brands

= 50% | +2.0% VS LY
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Total Laundry Detergents Growth = -2.3%

Premium Laundry Detergents Growth = 1.8%

Share Of Premium Chocolates brands

= 68% | +7.4% VS LY
Total Chocolates Growth = -6%

Premium Chocolates Growth = 5.4%

Source: Nielsen Retail Audit data ending Aug’17
7
 MODERNIZATION OF THE TRADE IN PAKISTAN
Primary Shopping Mission
Pantry Stocking
Modern
Trade
accounts PKR 71 bn
for 8% of
FMCG sales
IMT (Hypermarkets) 1.24 69%

Local Modern Trade 1.98

Other Shopping Missions
Growth
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

observed Pantry Restock (Top Up) 18%

in Modern 21% Everyday Needs & Urgent Items 8%
Trade Traditional Trade 12.81
Leisure Shopping 2%

Shoppers seek promotions in store

Convenience Stores 6.20

9%
universe
increase
How often do consumer shop in respective store type ? 70%
Avg. per month

Pantry Stocking – Monthly grocery trips to the outlets Consumer behavior in Modern Trade Stores 8
 Shoptainment-an evolving Culture
Shopping today has become much more than what it was – it is increasingly a source
of family fun, entertainment and recreation
We see new plazas and malls opening up having not only space to host supermarkets and branded retail outlets but also food
courts, children’s play areas, cinemas and other recreational facilities

LUCKY ONE MALL PACKAGES MALL EMPORIUM MALL

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Play Areas Food Courts Cinemas

9
 Growing digital landscape

Content
Smart Phones Connectivity
Consumption

15% household penetration & Streaming videos/dramas

growing…
44 million 3G/4G
subscribers and social media
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Around 8 in 10 smart phone 51% increase in last 2 years applications are the most
users are aged 21 – 30 years popular

Device used for Internet

82% 15%
On smart phones On laptops/PC
3 hours are
spent online per
day on average

10
Source: Nielsen Consumer Market Monitor 2016, PAS, PTA
 Digital revolution happening
- 37 mn internet users
Pakistan Despite penetration of only 18%, Pakistan
has world’s 20th largest internet user base

Mobile Broadband
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Penetration Social media Google

Google.com & Google.com.pk

of Pakistani >25 million users rank amongst the top3 sites

92% internet users

subscribe to
in Pakistan visited in Pakistan

Mobile Broadband

11
 A LOOK AT THE Pakistani MOTHER: ADAPTIVE
APPROACH, INNOVATIVE TECHNIQUES
Pakistani mothers come across as more adaptive in their parenting approach, always looking to
infuse new and innovative tactics into their tried and tested protocols

Evolution of Pakistani Families

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Inclusive Parenting Look for solutions

Flexible and Modern Moms who
are open to trying out new
things – lower sense of social
pressure and a cosmopolitan
environment adds to sense of
exposure and awareness
Involved Fathers
Looking for creative solutions
Fathers are closely involved
that allow them to
everyday parenting including
incorporate elements that
taking on many direct
suit their own priorities and
responsibilities and chores
family preferences into the
specific to the children regular set up and structure

12
 Parenting styles reflecting the PAKISTANI mother
evolution of the style of upbringing & transition in style of parenting from traditional, strict &
controlled outlook to new age, responsible indulgence acceptable equally to mother & kids
NEW AGE
Fun, Creative Eat & Play Innovative, Informed,
Nutrition That’s Fun and Good

STYLE OF UPBRINGING
With Good Routine Food
Both Playing With A Cheese
Squeeze Bottle To Decorate Competing on the latest mobile
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Food game, munching baked

snacks
CONTROL STYLE OF PARENTING INDULGENT
Tasteful , Traditional
Forced/ Sneaked in
Basic Nutrition
Strict Nutrition

Mom Adding Modifier To The Mom Feeding The Kid Chocolate

Kid’s Morning Glass Of Milk Flavored Cereal / Milk

TRADITIONAL 13
 Millennials a growing market
Millennials contribution 27% to our population show huge potential and brands to focus on
them
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

51% 49%

DIGITAL SOCIAL PRO DISCOUNTS INFORMED HEALTH AND

INCLINATION ANIMALS & PROMOS PARENTS FITNESS LOVE

14
 Rural Market will be the Game Changer
Rural Market Dynamics

RURAL: Average Monthly Household – Urban Household Size – 2016

Income & Expense
45,283 6.47
30,110 41,529
38,923
26,452 27,414 6.31
24,094 33,581

6.03
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

2013-14 2015-16 2013-14 2015-16 National Urban Rural

Income Exp
Income Exp 45.6 Rural Monthly Consumption Expenditure – Commodity Group
42.1

21.6
18.5

9.8
7.1 6.8 6.37.0 6.65.3
4.13.6 5.0
1.92.1 1.82.2 1.41.3
Source:
Food & Bevs Housing, Utility Clothing & Foot Health Transport • ComPakistan BureauEducation
m unication of statistics “Household
Recreation &Integrated Economic Survey”–
Tobacco Misc 2016” 15
 Rural Market will be the Game Changer
Rural Market Dynamics

Sales of motorcycles in the rural regions are higher

Growing expense on clothing, household an d than urban centers with preference for more
expensive models. (Source: https://www.thenews.com.pk/print/182402-Rural-markets-
recreation Untapped-goldmines-of-potential-growth)

59% of Pakistan’s
Largerpopulation
household size but lower income vs “Remote areas have started showing growth, led by
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

the expansion in cellular networks, increasing

urban awareness of the usage of voice and data
connections and availability of mobile handsets at
affordable prices”Source: https://tribune.com.pk/story/1298601/semi-urban-rural-areas-
lead-growth-cellphone-services/)

Tractors sales continue the upward trajectory with

sales growing by 115% YoY in August 2017.
(https://propakistani.pk/2017/09/14/pakistan-witnesses-auto-boom-sales-grow-25-yoy/)

Source:
• Pakistan Bureau of statistics “Household Integrated Economic Survey”– 2016” 16
 Rural Growth Dynamics

Rural Market size Rural Growth = 8%

= PKR 2.7 bn 4x the Urban Growth
27%
HPC goes strong with Soaps,
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Shampoos, Detergents
growing faster in Rural
…and in F&B:CSDs, UHT
Milk, Cooking Fats & Oils
see higher growths
Rural Urban

Source: Nielsen Retail Audit Value data ending MAT AUG’17 17

 Value for money proposition is the Key for Rural Market
Rural consumers are value seekers…

A Hair wash for Rs 5 In Rural drive penetration and growth

with double patta sachet growing at 56% in Rural through small packs
market
While urban consumers prefer medium to
Up to 4 cups of tea with a Rs 10 tea large packs
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

whitener with 125ml segment growing at 17% Urban Pack Size Volume Contribution

Effortless stain removal in Rs 10 50%

Rs 10 price segment contributes 21% to category

volumes in Rural Pakistan 33%

Ticky packs for Rs 5 54%

Contribution of this segment to Biscuits category is

50% in Rural volume sales 35%

Source: Nielsen Retail Audit ending MAT Apr’17 18

 RURAL OVERVIEW

Rural Household Category Penetration Top Durables Owned in Rural

Toilet S... 94% Durables No. of Households

Laundry Deterg... 92% Iron 85%

Sham... 88% Basic Phone 54%

Television 52%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Cooking Fats/... 87%

Manual Washing Machine 47%
Soft Drinks... 83%
Gas Stove 29%
Bisc... 79%
Electric Juices 28%
Tea 76%
Feature Phone 26%
Salted Sn... 56%
Motor Bikes 24%
Recipe M... 45% Sofa Set 21%

Ju 41% Refrigerator 20%

19
 Media Habits – Rural

47% Television is watched on average

Watch television
atleast once a day for 2 hours a day
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

6%
Use Internet
27%

18%
TV Channels watched

15%
13%
11%

1%
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