Pakistan's fast-moving consumer goods: huge prospects and opportunities.

Byline: Arooj Asghar

Emerging Asian markets have had a significant impact on the growth of the fast-moving consumer goods (FMCG) segment. The region's FMCG consumers pack a powerful punch: around a third of Nestle and Procter and Gamble's global sales growth between 2014 and 2018 came from emerging Asia. According to a study, emerging market consumers make up less than one-third of global revenue for the 15 largest multinational FMCG manufacturers. However, consumer spending in these markets is expected to grow about three times as quickly as that in developed economies. By 2020 such spending will reach US$6 trillion and account for nearly half of total consumer spending. Similarly in Pakistan, consumer product market has expended many folds in recent years.

Indeed, for both large foreign and smaller domestic FMCG firms, participation in the FMCG segment requires a long-term view when it comes to investment and presence, along with sustainable growth. It is also necessary for FMCGs operating in Pakistan to be flexible enough to respond to local dynamics, while simultaneously establishing or maintaining close distribution hubs and creating a powerful marketing presence. Unilever, Nestle, Procter and Gamble, L'Oreal and the Coca-Cola companies were the top FMCG multinational corporations (MNCs) operating in Pakistan in 2018.

Household consumption drives the majority of sales in the FMCG segment. Growth in this segment has increased considerably in Pakistan in recent years, due in large part to long-term trends such as a growing urban middle class with rising disposable incomes and changing consumer preferences for traditionally Western products.

Pakistan's packaged food sales, the largest categories of which are dairy, bakery, and fats and oils, posted a compound annual growth rate (CAGR) of over 12% over 2003-18, reaching US$2.5 billion in 2017. The packaged food segment was expected to sustain this momentum. In addition to the increase in demand for packaged food sales, between 2013 and 2018 Pakistan's expanding middle class also created a rising demand for tissues, hygiene and other FMCG products, which also recorded a growth in value during the period, as well as beauty and personal care sales. It is being said that country would likely to see significant growth in terms of sales volume in the FMCG segment. It is observed that Pakistani consumers are allocating more disposable income to lifestyle products, especially food and durable...