Michael Hussey, Senior Manager International Dairy Ingredients, Bord Bia – Irish Food Board
Pakistan’s population is estimated at 210.7 million people and is growing by 1.4% per annum. It is the sixth most populous country in the world. Some 37% of inhabitants live in urban areas. Pakistan is in Southern Asia, on the Arabian Sea, between India on the east, Iran and Afghanistan on the west, and China to the north.
Consumption of commercially produced dairy products in 2018 is estimated at 1.95 billion litres in LME (Liquid Milk Equivalent) terms. Fat filled milk powder (FFMP) products (made locally and imported) is the largest single product category accounting for 480 million litres of consumption in LME terms. Liquid milk (mainly UHT) and ‘liquid tea whiteners and dairy liquids’ each account for a further 400 million litres LME, while 70 million litres of consumption is for other consumer products including butter, cheese, yoghurt and cream. Imported ingredients destined for use outside the dairy sector are estimated at 600 million litres LME. The most important commercial dairy product categories are UHT milk, tea whiteners and milk powder.
Most of the larger dairy processors produce milk powder during the flush season. This is mainly SMP for reconstitution and is used in the off-season. Nestlé Pakistan has also been packing retail milk powder since 1990 and dominates the branded retail market. Initially it packed a full cream milk powder under NIDO brand but over the years has migrated to vegetable fat based alternatives. Millac Foods also produces FFMP for sale both in bulk and retail packs. Engro Foods Limited (Friesland Campina) also produced FFMP in the past but not currently. In November 2018 it launched OLPER’S full cream milk powder though this is currently imported from Malaysia (with whom Pakistan has a free trade agreement).
In addition much of the fat filled milk powder imported in bulk is sold through the traditional trade for consumption in the home. Bulk powder is sold to wholesalers, which in turn sell in smaller volumes to retailers. Loose sale (by scoop) is not a significant feature of the market. Instead wholesalers and retailers tend to sell in standard size, printed plastic bags, though with little control over the accuracy of the on pack product description or origin.
Total consumption of FFMP in 2018 is tentatively estimated at some 60,000 tonnes of which 40,000 tonnes is from Nestlé, 5,500 tonnes from Millac Foods and 14,500 tonnes imported in bulk.
Over the past number of years Pakistani dairy processors have innovated with low cost dairy formulations to convert lower income consumers of loose milk to packaged products. The first such product was TARANG liquid tea whitener (also called tea creamer or coffee creamer) launched by Engro Foods Limited in 2007. While UHT is mainly produced from local raw milk, liquid tea whiteners are made with imported SMP and added vegetable fat. The category grew rapidly as other milk producers launched tea whiteners including CHAIKA and QUDRAT (both from Shakarganj) TEA MAX (Haleeb), CHAI MIX (Nurpur), DOSTEA (Fauji Foods) and MILLIN (Premier). Typically they sell in smaller pack sizes (e.g. 250ml) to appeal to consumers with limited purchasing power. As a result, SMP imports have grown from 10,097 in 2008 to 64,193 tonnes in 2017 with a step change in volume in 2015: in 2014 36,508 tonnes were imported while each year since over 60,000 tonnes has been imported. This may present an opportunity for Irish exporters as the overall consumption grows and dairy processors develop new added value product propositions.
Imports of FFMP have grown by 22% per annum on average over the past decade from 2,332 tonnes in 2008 to 14,016 tonnes in 2017. In 2008 Ireland was the dominant supplier accounting for some 64% of volumes. Over the period three main competitor countries have emerged and overtaken Ireland in market share. These are the Netherlands with 34% of imports in 2017, Poland with 21% and Malaysia with 20%. Ireland’s share has dropped to 15%. Despite this Ireland has managed to grow volumes of FFMP as the market grew.
For further information on the market please contact Michael.hussey@bordbia.ie