Frozen food producers vie for local market

KARACHI: Processed and frozen food producers are vying to grab a bigger slice of the huge domestic market with more players entering the arena amid a surge in demand.

These food processors are not only targeting bigger cities of the country but also making inroads into smaller areas as more and more people go towards frozen food to avoid unhygienic conditions at roadside stalls and dirty markets.

Among frozen food items, meat products have led the market with a 60 per cent share. Other frozen products are red meat, fish and parathas.

Chief Executive Officer K&N’s Foods (Pvt) Limited, Khalil Sattar, talking to The Express Tribune said processed and frozen food is a difficult business to run as it is an area in which one enters easily but sustainability matters the most.

Sattar, who is also the founding chairman of the Pakistan Poultry Association, was of the view that growth of the processed food industry is very slow in Pakistan.

However, discussing the growing competition among processed food producers, he said, “I think competition in the local market is healthy, which will not only give more choice to customers but will also help expand the processed food market.”

Market diversity

K&N’s Foods, which started operations in 1997 and deals in chicken food products, has 55 stores in small and big cities across the country, suggesting that processed and frozen food is not limited to mega cities only.

“We have customers in smaller cities as well which shows the diversity of K&N’s business,” he said, adding that though K&N’s has few outlets in smaller cities, it has a strong base of customers who frequently travel outside Pakistan and like processed food.

However, the K&N’s CEO said the processed chicken market constitutes only one per cent of total chicken sales in the country, which is mainly because of costly processing. Citing figures, he added “the processing cost of chicken is Rs30 per kg and we sell processed boneless chicken at Rs380, which we get at Rs350 per kg from the open market.”

Supermarkets like Metro and Makro have also played a key role in attracting customers towards processed and frozen food items in metropolises like Karachi, Lahore and Islamabad.

Seasons Foods, a relatively new entrant which started operations in 2006, is also striving to gain a strong footing in the domestic market. Dawn Foods has already made its presence felt in the frozen food market with its parathas.

Changing lifestyle

Head of corporate affairs Metro Cash and Carry Pakistan, Pervaiz Akhtar, said demand for processed and frozen food is growing particularly because of the changing lifestyle in the country.

Akhtar, whose company has five stores in Karachi, Lahore and Islamabad, said pre-cooked and processed food are in demand as people’s preferences are changing with the passage of time.

“Pakistan is now exporting processed food as well with improved quality,” he said, adding “we also want to make better the production and quality of fresh products along with packaged and processed items.”

“More players are entering the frozen food sector which shows the market is expanding,” said a manager of the frozen food department of a big store chain.

He said cash and carry stores in bigger cities have offered more options to customers, adding that the frozen food market in Karachi has a high rate of growth compared to Lahore.

Unlike other countries, frozen and processed food production in Pakistan is expensive due to high input costs, proving true the popular perception that processed food is expensive in many cases.

The economic slowdown has cast a shadow over sales of processed food over the last two years. However, “this is expected to improve in coming months as the economy rebounds,” he said.

Frozen dairy products of India also find their way into the domestic market. Besides, a large quantity of frozen beef comes through Dubai which has already won a big market, company officials said.

They said though the growing demand for processed food suggests expansion of the industry, electricity shortage is one of the biggest hurdles restricting the growth of the sector.

Published in The Express Tribune, July 26^th, 2010.