Investment, consumption climate sloping upward in Pakistan.

Byline: Ahsan Nisar

Rising urbanization and growing middle class are key drivers of FMCG business in the country

In Pakistan, a large middle-class section, some 60 per cent of which is young, has been emerging and it looks for quality products and services with an expectation for value for money. In major cities like Karachi, Lahore and Islamabad, Pakistan's rising middle class consumers are driving sales of international brand name products and services. New mega shopping malls are being opened by real estate developers and retailers. Although Fast-Moving Consumer Goods (FMCG) sector is mainly dominated by MNCs, there are a few local players that are giving tough time to their MNC counterparts.

Pakistan is one of the top countries adding 20-years old men and women to its workforce; these are the people establishing families, getting new jobs and helping market sizes grow. Without taking pricing into account, the market size in Pakistan has also grown in terms of volumes. Increasing urbanization and the growing middle class are key drivers of the FMCG business. Urbanizing in Pakistan is faster than other developing countries. The country's population is growing at under 3 percent, while the rate of migration to urban centers is even higher.

This rise in consumer demand has spurred the growth of supermarkets across major urban centers, which include, but are no longer limited to Karachi, Hyderabad, Multan, Lahore, Faisalabad and Islamabad. Such superstores are getting larger and asking manufacturers for broader brand portfolios in order to serve their customers better. The shelves are large with more sophisticated and developed categories in which more products could be stocked than ever before.

An interesting comparison should be local supermarket chains such as Imtiaz Super Market against their MNC counterpart Hyperstar (a local version of French Carrefour managed by UAE's Majid Al Futtaim group). Both Imtiaz and Hyperstar are perceived to be big discount stores with ample parking spaces where one can do their grocery and other shopping under one roof. As per an estimate, the yearly turnover of Imtiaz is from Rs 60 billion to Rs 80 billion. In the past few years, Imtiaz has...