BUTTER AND SPREADS IN PAKISTAN - ANALYSIS

Country Report | Aug 2018

HEADLINES Market Sizes

Butter and spreads records retail volume growth of 1% and current value growth of Sales of Butter and Spreads
7% in 2018, to reach 76,300 tonnes and PKR53.6 billion Retail Value RSP - PKR billion - Current - 2004-2023
Increasing media awareness to propel the growth of margarine and spreads
Margarine and spreads records the strongest retail current value growth of 9% in
54 Forecast
100
2018, reaching PKR1.8 billion
The average unit price increases by 7% in current terms in 2018, due to rises in
transportation, energy and raw materials costs 80

Fauji Foods, Dalda Foods and Unilever Pakistan lead butter, cooking fats and
margarine and spreads respectively in 2018, with value shares of 52%, 45% and 90% 60

Butter and spreads is expected to record a retail value CAGR of 3% at constant 2018
prices over the forecast period to reach PKR62.3 billion in 2023 40

PROSPECTS
20
Shifting consumer preferences will fuel the growth of butter and
spreads 0
2004 2018 2023
The penetration rate of packaged butter and spreads remained limited in 2018
compared with unpackaged products. This is due to the high prices of packaged
products compared with cheaper unpackaged alternatives, which attract most mass
consumer demand. However, rapid urbanisation, increasing disposable incomes and Sales Performance of Butter and Spreads
the improving distribution of brands have facilitated a rapid consumer transition from % Y-O-Y Retail Value RSP Growth 2004-2023
unbranded to branded butter and spreads, especially in urban and semi-urban areas in
the country. Due to growing awareness of brands, along with changing retail dynamics,
with the increasing number of supermarkets and hypermarkets in the country,
7.2% Forecast
20%
packaged butter and spreads will become increasingly popular and easily accessible,
fuelling the growth of the category over the forecast period.

Owing to habitual consumption, cooking fats will continue to dominate 15%

Cooking fats in Pakistan are used as a staple in all kinds of curry-based dishes in large
quantities. Hence, habitual consumption has kept cooking fats dominant within butter
and spreads. The switch from cooking fats to butter and other spreads is slow, both 10%
because it is more economical and because consumers are used to the taste of cooking
fats, and do not get the same traditional flavour from alternatives. Ghee, clarified
butter made from the milk of a buffalo or cow, is popular in rural and semi-urban areas;
however, the usage of ghee in urban households has decreased drastically, due rising 5%
health awareness. Cooking fats also have unpackaged alternatives which compete with
branded alternatives, with the price of the former being much lower. Nonetheless,
there has been a steady shift from unpackaged to packaged cooking fats, due to
0%
increasing consumer awareness about the health and hygiene benefits of the latter. 2004 2018 2023

Increasing media awareness to propel the growth of margarine and

spreads
Sales of Butter and Spreads by Category
Butter and margarine are used interchangeably in Pakistan, as consumer awareness Retail Value RSP - PKR billion - Current - 2018 Growth Performance
regarding the differences between the two remains limited, and both are considered
as butter. Some upper-income households in urban areas prefer margarine for its Butter
1.2
health benefits. However, since most of the butter and margarine brands in the country
do not invest in mass media marketing, knowledge of the difference between the two Cooking Fats
50.5
remains limited. Recently, however, Blue Band marketed itself as margarine in the
market; therefore, consumer awareness increased in the last two or three years. With Margarine and Spreads
1.8
growing awareness of margarine, this category is expected to experience the strongest
growth over the forecast period, mostly owing to rising awareness of the health 0% 5% 10%
benefits of the hydrogenated fats used in margarine compared with the animal fats CURRENT % CAGR % CAGR
BUTTER AND SPREADS 53.6
used in butter. YEAR % 2013-2018 2018-2023
GROWTH

COMPETITIVE LANDSCAPE
Butter in Pakistan remains dominated by a few key players
The tradition of consuming unpackaged milk translates to other dairy products,

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including butter and spreads. Hence, packaged and branded butter and spreads account Competitive Landscape
for a very small proportion of sales, with most consumers based in urban and semi-
urban areas. Consumers are generally brand- and quality-conscious; hence, only a few
brands dominate nationally. Butter and spreads require cold chains and proper Company Shares of Butter and Spreads
refrigeration even after distribution. Hence, entrants into the category remain limited, % Share (NBO) - Retail Value RSP - 2018
and only companies that have distribution networks and cold chain expertise have a
Dalda Foods (Pvt) Ltd 42.5%
presence. Butter is dominated by Adam’s Butter and NurPur, domestic brands that
enjoy strong loyalty. Lurpak, an internationally renowned brand, is famous in urban Wazir Ali Industries Ltd 19.6%
areas, and remains popular for its brand value.
Haleeb Foods (Pvt) Ltd 7.9%

Blue Band enjoys dominance in margarine in Pakistan Unilever Pakistan Ltd 3.1%

Blue Band is the only significant brand in margarine and spreads in the country, owing Fauji Foods Ltd 2.3%
to its strong marketing, financial backing and the distribution network of Unilever Adam's Milk Foods (Pvt) ... 0.7%
Pakistan. The brand was considered by consumers as butter until recent years, when
the company started to actively market Blue Band as margarine. The brand targets Arla Foods Amba 0.2%
young mothers who are concerned about their children’s nutrition, and presents itself Others 23.7%
as an ideal option for the nutritional needs of children. The company actively pursues
promotional campaigns to maintain its brand preference.

Opportunities for new brands

Brand Shares of Butter and Spreads
The competitive environment in butter and spreads remains concentrated amongst a % Share (LBN) - Retail Value RSP - 2018
handful of players due to strong brand loyalty amongst consumers. However, there is
room for new brands, manufacturers and product variants, as the category has plenty of Dalda 42.5%
value to capture from unpackaged alternatives. The promotional strategies of the
leading players emphasise their brands’ nutritional value and encourage regular use of Tullo 19.6%
these products as a lifestyle choice. Promotional campaigns on television and via Haleeb 7.9%
outdoor media are supplemented by effective distribution networks to gain share and
grow the category. Blue Band 3.1%

NurPur 2.3%

Adam's Butter 0.7%

Lurpak 0.2%

Others 23.7%

Increasing share Decreasing share No change

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