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Confectionery Industry

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Submitted By raza007
Words 1116
Pages 5
4/14/2015
4/14/2015

Umer Rizwan
Umer Rizwan
S.M.RAZA
S.M.RAZA
Faiq Mehfooz
Faiq Mehfooz
Arsalan Waseem
Arsalan Waseem
CONFECTIONERY IN PAKISTAN

CONFECTIONERY IN PAKISTAN

Table of Contents OVERIVEW 2 CONFECTIONERS 2 BAKERS 2 TRADE BODY 3 DEMAND: 3 SUPPLY 3 RAW MATERIAL AND ITS SUPPLY 4 MARKET ASSESSMENT: 5 MARKET SIZING AND LENDING POTENTIAL 5 OWNERS PROFILE 7 BUSINESS CYCLE 7

OVERIVEW
Confectionery is the art of making confections, which are food items that are rich in sugar and carbohydrates. In general, though, confectionery is divided into two broad and somewhat overlapping categories, bakers' confections and sugar confections. Bakers' Confectionary, also called confectionery, includes principally sweet pastries, cakes, and similar baked goods. In the Middle East and Asia, flour-based confections are more dominant.
At present, bakers and confectionery segment in Pakistan is relatively less organized. Pakistan’s confectionery industry has enjoyed an emerging and growing trend in the recent past yet its size and growth pattern has been far inconsequential compared to other countries of Asia-pacific region. The industry has grown with an average annual rate of 6.5 to 7.5 % during 2002-2008. Domestic brands dominate the market accounting for more than 85% of total value sales of the industry. The industry as a whole can be divided between two broader sectors namely organized sector (branded segment) and un-organized sectors (generic segment). The branded segment is more of monopolistic in nature where there are nine prominent, active players in the competitive landscape of this sector. However 80% of the industry’s share is being enjoyed by the five companies listed below. The Key players in this industry are:
CONFECTIONERS
* EBM (English Biscuit Manufacturers (Private) Limited) * Coronet Foods (Private) Ltd * Continental Biscuits (LU) * Montgomery Biscuits * Silver lake * Mehtab Industry (Krunchi).
BAKERS
* Dilpasand * United King * Sohny Sweets * Nirala Sweets, * Ideal Bakers, * Copper Kettle,
Our main focus in this report will be on the unorganized or generic sector and its product which includes Bakery biscuits, Nimco, sweets, potato chips and other products.
TRADE BODY
There are two prominent trade groups involved in this industry namely, 1. Pakistan Biscuit & Confectionery Manufacturers Association 2. Pakistan Food Association
DEMAND:
According to Pakistan Biscuit & Confectionery Manufacturers Association, Pakistanis Bakery and Confectionary Industry has grown with an average annual rate of 6.5% to 7.5% during 2002-2010. The demand for products is subject to raw material prices and changing consumer trends. Driven by advertising initiatives, consumer preferences are continually changing in favor of new packaged products, chocolates and other snacks. Independent retailers and wholesalers are still the largest delivery channel to customers. Foreign or imported brands as well as large scale local confectionery companies are successfully targeting the lower segment of the market by introducing low end products between the price range of PKR 5 to PKR 25. The demand is still quite high for traditional occasions such as religious and weddings. Although considering rising inflation, economic instability and reduction in consumer purchasing power makes it increasingly difficult for the middle class to afford such products and thereby reducing consumption.
SUPPLY
The supply of other food products (Bakers and Confectioners) is currently sufficient to fulfill customer needs but in such an industry opportunity, growth and higher sales are achieved through a demand pull generated by introducing new and innovative products, product substitution and varied packaging. The industry has grown rapidly over the last decade with numerous household brand names emerging on the scene and gaining success. However, challenges for future growth and new entrants are: increasing prices of raw material, high dependency on advertising and brand creation, excise and import duties on raw materials.

RAW MATERIAL AND ITS SUPPLY
Major Raw materials required are, * Flour * Sugar * Grains * Eggs * Dry fruits * Wheat * Oil, Ghee * Milk * Butter * Vegetables
Most of the business owners rely on the same suppliers to meet their business needs, except for a few who place reliance on many suppliers or are not satisfied with their suppliers. Raw Material needs are met locally buying from the same location or same city, although the number of suppliers mostly comprises from two to five or even more, but predominantly the segment relies on same suppliers for their material needs.

MARKET ASSESSMENT:
At present, the Baker and Confectioners segment in Pakistan is part of the relatively unorganized segment with sales being primarily generated via bakeries, shops, cafe’s, hotels and restaurants.
The Other Food Product segment is largely dispersed across various cities of Pakistan, predominantly consisting of small and medium bakeries which continue to operate using an outdated manual and labor intensive model with limited or no use of technology. The main reason for lack of automation in this segment is due to non-availability of funds to the small Bakery and confectionary owner for purchase and installation of such equipment.
MARKET SIZING AND LENDING POTENTIAL
Businesses are widespread throughout various locations in rural and urban regions in the country, following tables presents a locations in different cities. The list reflect the major portion where bakers and confectioners are present.

KARACHI LOCATIONS FOR BAKERS AND CONFECTIONERS | AREA | No. Of Establishments | KARACHI | | Defence | 40 | Clifton | 25 | Tariq Road | 25 | Bahadurabad | 20 | Saddar | 50 | Gulshan e Iqbal | 50 | Gulistan-e-Johar | 30 | Nazimabad | 30 | F.B Area | 30 | Korangi | 30 |

LOCATIONS FOR BAKERS AND CONFECTIONERS | AREA | No. Of Establishments | MULTAN | | Saddar Multan | 20 | Railway | 10 | Altaf Town | 5 |
MULTAN

LAHORE LOCATIONS FOR BAKERS AND CONFECTIONERS | AREA | No. Of Establishments | LAHORE | | Gulberg | 30 | Model Town | 30 | Defence | 25 | Allama Iqbal Town | 15 | Walton | 20 | Johar Town | 30 | Badami Bagh | 10 | Mughal pura | 20 | Wapda Town | 20 | FAISALABAD LOCATIONS FOR BAKERS AND CONFECTIONERS | AREA | No. Of Establishments | FAISALABAD | | Peoples Colony | 30 | Samanabad | 20 | Jinnah Colony | 20 | Sir Syed colony | 30 | Christian Town | 20 | Rehmania Town | 20 | Ayub Town | 10 | Madina Town | 10 | Kohinoor Town | 10 |
OWNERS PROFILE
The business owners in consist mainly of people in the age group of 31-40 years. Due to the labor intensive and manual nature of work, education is not considered as a major factor for business owners. Predominantly businesses are run by families, preferring family members to undertake organization functions.

BUSINESS CYCLE
The segment experiences cyclical trends due to seasonal sales, traditional occasions such as religious and wedding occasions give significant rise to sales. The segment is also affected by fluctuation in raw materials prices for producing bakery and confectionary items. Businesses suffer from general increase in prices which in turn causes reduction in sales.The businesses mostly rely on existing customers and referrals by existing customers depending mainly on word of mouth.
Supplier (Raw Material)
Raw Material / Ingredients
Bakers/ Confectioners
Customer
Supplier (Raw Material)
Raw Material / Ingredients
Bakers/ Confectioners
Customer

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