Long-term goals: After struggle, taking one step at a time

Better years ahead due to restructuring and improvement, says Engro Foods CEO

KARACHI: After the struggle in restructuring its distribution network and improving the milk-collection system, Engro Foods is hoping that a new dawn is around the corner.

The subsidiary of Pakistan’s largest private-sector conglomerate – Engro Corporation – had been struggling with its distribution system until mid-2013, which hurt its growth and dampened plans for the future.

But, keeping long-term growth in mind, the issues were fixed with the CEO terming the current year when the local foods giant makes a comeback.

The company, however, has no plan of expanding business beyond dairy products — at least not anytime soon.

“When we founded Engro Foods, it was decided that it would mainly be a dairy company,” said Chief Executive Officer Sarfaraz A Rehman in response to a question about the company’s long-term plans.

When asked about expansion plans, Rehman said they were not thinking beyond dairy products. “There is still a lot of room to grow within the dairy sector – beverages, yogurt and powders for example,” he said.

Rehman added that the company set up a plant for powdered milk earlier this year, an indication it will first enter the powdered milk section. There is a lot of untapped potential in this segment, he said.

No yogurt yet

Though it plans to focus on dairy products, the company may not launch its own brand of yogurt in the near future.

“The decision to launch yogurt will depend on the country’s energy situation. We have already learned a lot from the experience of our ice cream venture.”

Though it may take them a while to launch their own brand, the company is already selling yogurt at Mabrook shops, the Karachi-based retail chain of Engro Foods that sells loose pasteurised milk. The company calls it a pilot project.

“This pilot project [Mabrook] will continue for another year before we make a final decision,” said the CEO. “It has not been easy to open more stores.”

There are already 20 Mabrook outlets in the city. The company plans to add about 20 to 25 more shops by the end of the year. The company has shied away from disclosing its ultimate plans about Mabrook but insiders suggest it has set aside significant amounts to support this business.

In the past, Rehman suggested that the dairy industry should move towards the next stage of development, which is pasteurisation. With better regulation of loose milk, this idea may not be far-fetched.

“There has been a lot of talk about a minimum pasteurisation law recently. If such a law is implemented, Mabrook will certainly have the early mover advantage,” he concluded.

Published in The Express Tribune, October 13^th, 2014.

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