Proctor and Gamble: Moving towards local production as country becomes attractive

With large population, Pakistan serious area of focus

KARACHI: The environment to do business in Pakistan has improved consistently over the last two and a half decades, said Procter and Gamble Pakistan Country Manager Sami Ahmed, in a recent interview with The Express Tribune.

Admitting the country still faces many challenges and has a long way to go, the IBA graduate said the overall situation was improving. “It’s relatively easier to do business now; the business environment is more investment friendly.”

Ahmed’s optimism perhaps best explains why one of the world’s largest consumer goods companies has adopted a strategy of using localised manufacturing for its top selling brands in the country.



The Cincinnati, Ohio-based consumer goods giant already has two manufacturing facilities in Hub (Balochistan) and Port Qasim (Karachi) that produce its top selling brands Safeguard and Ariel. The company is now gearing up for local production of its hair care products: Pantene and Head & Shoulders.

The company has already performed the ground breaking at its existing facility in Port Qasim and will soon begin local production of hair care products, according to Ahmed.



The Pakistan operations are very much in line with the company’s global strategy whereby it chose 10 core categories to focus on. “Out of those 10, the company already has a presence in seven categories in Pakistan,” Ahmed said, referring to fabric care, baby care, hair care, feminine care, beauty and personal care, oral care and healthcare.

With Islamabad back on the growth trajectory, P&G couldn’t ask for a better time to expand local manufacturing.

The overall business confidence in the country has improved by four percentage points to 22%, according to Business Confidence Index Survey Wave 11 on account of improved security and a stable macroeconomic situation.

Last year, the Pakistani military launched a massive ground operation against militants hiding in the northern region. It was backed by a targeted operation in Karachi – these operations reduced violence and improved security. On the political front, there is more stability as the second democratically elected government is looking well on course to complete its tenure.

Pakistan’s economy is projected to grow at a seven-year high of 4.5% this year. Remittances increased by 16.5% to reach $18.4 billion at the end of fiscal year 2015 – foreign exchange reserves are presently at an all-time high of $20 billion.

State Bank of Pakistan has been cutting the benchmark interest rate since November, 2014, which is likely to boost economic activity.

On the back of a positive economic outlook and improved law and order, consumer confidence is picking up, say market analysts – all these factors are contributing to business growth, they say.

“The company [P&G] has been experiencing good results in Pakistan,” Ahmed said without disclosing revenues or growth rate – the company had closed FY12 with Rs22 billion in revenue and has been growing in double digits since then.

Explaining the factors driving this growth, the CEO said, “mass consumer goods companies are always focused on the population size.”

Pakistan, Ahmed said, has a huge population, which is moving towards urbanisation at an increasing rate – about 70 million are in urban areas. “These are very young people who are much more open to new categories and ideas, thus, driving the FMCG business,” he said. “This is the reason why Pakistan is a very serious area of focus for P&G.



“We feel that the overall purchasing power of the people and awareness about branded products is increasing. All these factors make the case for the consumer sector,” Ahmed said.

Asked if the country’s population demographics along with stable economic outlook would attract new players to the market, the CEO said, “Pakistan will continue to be an attractive market for international players.”

The writer is a staff correspondent

Published in The Express Tribune, December 7^th,  2015.

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