Engro Foods Canada set to make profit next year

Published: August 9, 2012

The brand (Al Safa Halal) was acquired by Engro Foods in May 2011, a first-of-its- kind offshore venture by a Pakistani conglomerate.

KARACHI: Engro Foods Canada is poised to post a profit next year by increasing availability of its halal meat product line in major chains of retail outlets across the North American continent, Engro Foods CEO Afnan Ahsan said on Wednesday.

The total size of the halal meat market in North America, which includes Canada and the United States, is estimated at $290 billion.

Al Safa Halal is a halal meat brand of Engro Foods Canada and its subsidiary Engro Foods USA, LLC. The brand existed for over 10 years before it was acquired by Engro Foods in May 2011, a first-of-its-kind offshore venture ever undertaken by a Pakistani conglomerate in the $632 billion global foods business.

So far, Al Safa Halal is running in loss. It posted a loss after tax of Canadian $313,000 for January-March 2012, according to Engro Corporation’s directors’ report to the shareholders.

“The total revenue for the first half of 2012 is C$5.8 million,” Ahsan told The Express Tribune, adding that the company is expected to become profitable in 2013.

Current losses are not reflected in the financial performance of Engro Foods. Rather, they are consolidated in Engro Corporation’s financial statements in view of the prevailing corporate laws, according to which a company must remain profitable for three years before acquiring an offshore entity.

“From next year onwards, books of Engro Foods will show the financial performance of Al Safa Halal separately,” he said.

The Halal meat market in North America is highly fragmented, according to Ahsan. Top 10 players collectively have less than 15% share of the Halal meat market, he added. In the segments of chicken, beef, pizza and vegetable, Al Safa Halal currently offers 18 products in Canada and 21 products in the US.

Its presence in the US is clearly not as strong as in Canada, although the former is a 10 times bigger market than the latter. While Al Safa Halal products are available in the outlets of at least 12 leading retail chains across all major cities of Canada, they are available in the US mostly through ethnic stores. The reason for its deeper footprint in Canada is that Al Safa Halal was originally a Canadian company, Ahsan said.

Still, roughly 80% business of Al Safa Halal in Canada comes from ethnic stores. “First-generation immigrants tend to buy food from ethnic stores. But their second generation, which is more integrated into the mainstream society, is likely to buy food from major retail outlets,” he noted.

Estimates say that 83% of all food purchases in North America are carried out in major retail stores. Al Safa Halal aims to increase the share of major retail outlets in its revenues in Canada to 50% in the next five years.

In the US market, however, its products are available mainly in the tri-state area of New York, New Jersey and Pennsylvania. New markets for Al Safa Halal in the US are Chicago, Los Angeles and major cities of Texas, which have a concentration of Muslim population.

Among the top five North America-based management positions in Engro Foods, four are held by people of Pakistani origin. The only white Canadian, who is chief operations officer, was retained by Engro Corporation upon its acquisition of Al Safa Halal, where he had already been working in the sales division.

“Of the 27 people Engro employs in North America, we have people from Iran, Sudan, Ethiopia and Venezuela. I think three or four of them are non-Muslims,” he said, adding that the company is an equal opportunity employer.

Published in The Express Tribune, August 9th, 2012.

Reader Comments (7)

  • Yusuf
    Aug 9, 2012 - 5:36AM

    Work Toward Building A Major ” Food Company.” Go Worldwide.

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  • Dr. Doolittle
    Aug 9, 2012 - 9:23AM

    Food, yes. I suppose its the only thing we are good at and can compete internationally.

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  • Haris Farooq
    Aug 9, 2012 - 10:49AM

    Best of luck.

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  • Tasneem
    Aug 9, 2012 - 12:44PM

    Engro should first manage affairs at home then look outside. It is the highest leveraged group in the country, with loan to Bnaking sector over Rs 110 billion. Any hiccup and Banking sector (and public investor) will be in a serious trouble.

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  • U
    Aug 10, 2012 - 4:52AM

    Al Safa’s product is indeed sold through small stores which generally sell at higher prices than big box stores. In comparison Maple Lodge which also is a major player in Halal Market in Canada does much better because its product is sold through both small and big outlets.

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  • Ch. Allah Daad
    Aug 10, 2012 - 7:13AM

    Figure of $290 billion is an exaggeration. North American market is around $17 billion.

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  • Haroon Rashid
    Aug 16, 2012 - 11:08AM

    Engro’a acquisition in Halal food acquisition is appreciable. Engro earned all this in subsidised gas operated fertisliser unit, which is now running into losses. The share holders cannot afford the luxury of diversification to loose money in off shore investments with some trail and error. Halal/Kosher food is a huge market for Muslim and Jewish community worldwide. The companyoo should see the world wide leaders as India and Brazil in the water buffalo market with major market share and very established. You have to have policies for procurement and joint ventures with international companies as Brazilian giant, and Indian giants for market access and sourcing with your brand name, or distribution in order to make quick profit. The market for Halal food is non Pakistani. Please do see the Indian leading suppliers and Brazilian giant how they work, operate and profit. Get their distribution rights for the Middle East, North America, SAMENA region. As every shareholder is very sacred. The money should be invested in no trail and error business. OK.

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