Executive Summary

Pakistan is an agricultural country. According to Ministry of Food, Agriculture and livestock, agriculture accounts for 20.9 percent of the GDP. Dairy industry contributes 49% to the agriculture value and 11% to the GDP. Annual production of milk is 35.25 Billion liters in the country; But the Processed milk is only 4% of the total production.

Like other countries Dairy is not a dedicated profession of the people, farmers is associated with dairy and agriculture at the same time, Profitability for the farmers is very less. Infrastructure is not developed, cooling tanks and other facilities are not available, and the large part of milk production is wasted. There is a multi-hierarchal distribution system of the milk; the farmers are not getting reward of their work. All these factors are making this industry unattractive for the farmers and the industry is no developing up to the mark.

Only 4% of the total milk production is processed and used in urban areas of the country. According to Pakistan Dairy Development Authority

· Only 0.52 Billion liters UHT and 0.5 Billion liters pasteurized milk is available in the country.

· In urban areas 4.7 Billion liters milk is provide by Gawalas.

· 1.27 Billion liters processed milk is sold by the milk shops.

· There is a potential of about 5 billion liters of milk sold in the urban areas.

· In urban areas people are more health and quality conscious, the income level of urban population is also good so this segment has potential for UHT and Pasteurized milk.

Nestle is the world largest food company and nestle MilkPak is Nestlé’s famous UHT milk brand. Nestle Milkpak has south Asia’s biggest Plant at Kabirwala. It is targeting upper and middle class. It is differentiating its brand by adding Iron and Vitamin “C”.

The Nestle MilkPak is following growth strategy. The immense competition is going in the market; it is recommended that Nestle Milkpak should invest more in milk business and other value added milk products. In this way Nestle Milkpak can fulfill the local demand by locally processed milk and milk products instead of the imported milk products. Nestle has brand recognition throughout the world and they can export milk powder and other value added products in future. 　

Unilever

Unilever is an Anglo-Dutch multinational corporation that owns many of the world's consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever N.V. has its head office in Rotterdam, while Unilever PLC has its head office in the Unilever House in the City of London and its registered office in Port Sunlight, Wirral, Merseyside.[3]

Unilever is a dual-listed company consisting of Unilever NV in Rotterdam, The Netherlands and Unilever PLC in London, United Kingdom. This arrangement is similar to those of Reed Elsevier and Royal Dutch Shell prior to their unified structures. Both Unilever companies have the same directors and effectively operate as a single business. The current non-executive Chairman of Unilever N.V. and PLC is Michael Treschow while Paul Polman is Group Chief Executive.

Unilever's main competitors include Pepsico, Procter & Gamble, Nestlé, Danone, Kraft Foods, S.C. Johnson & Son, Reckitt Benckiser and Henkel.

History of UnileverUnilever's corporate mission – to add vitality to life – shows how clearly the business understands 21st century-consumers and their lives. But the spirit of this mission forms a thread that runs throughout our history. Timeline

19th century

Although Unilever wasn't formed until 1930, the companies that joined forces to create the business we know today were already well established before the start of the 20th century.

1900s Unilever's founding companies produced products made of oils and fats, principally soap and margarine. At the beginning of the 20th century their expansion nearly outstrips the supply of raw materials.

1910s Tough economic conditions and the First World War make trading difficult for everyone, so many businesses form trade associations to protect their shared interests.

1920s With businesses expanding fast, companies set up negotiations intending to stop others producing the same types of products. But instead they agree to merge - and so Unilever is created.

1930s Unilever's first decade is no easy ride: it starts with the Great Depression and ends with the Second World War. But while the business rationalises operations, it also continues to diversify.

1940s Unilever's operations around the world begin to fragment, but the business continues to expand further into the foods market and increase investment in research and development.

1950s Business booms as new technology and the European Economic Community lead to rising standards of living in the West, while new markets open up in emerging economies around the globe.

1960s As the world economy expands, so does Unilever and it sets about developing new products, entering new markets and running a highly ambitious acquisition programme.

1970s Hard economic conditions and high inflation make the 1970s a tough time for everyone, but things are particularly difficult in the fast-moving consumer goods (FMCG) sector as the big retailers start to flex their muscles.

1980s Unilever is now one of the world's biggest companies, but takes the decision to focus its portfolio, and rationalise its businesses to focus on core products and brands.

1990s The business expands into Central and Eastern Europe and further sharpens its focus on fewer product categories, leading to the sale or withdrawal of two-thirds of its brands.

The 21st century

The decade starts with the launch of Path to Growth, a five-year strategic plan, and in 2004 further sharpens its focus on the needs of 21st century consumers with its Vitality mission.

Company Vision

The four pillars of the vision set out the long term direction for the company – where they want to go and how they are going to get there:

We work to create a better future every day We help people feel good, look good and get more out of life with brands and services

that are good for them and good for others.

We will inspire people to take small everyday actions that can add up to a big difference for the world.

We will develop new ways of doing business that will allow us to double the size of our company while reducing our environmental impact.

We've always believed in the power of our brands to improve the quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities. We recognise that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.

Company Mission

Unilever's mission is to add vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

Brands

Food Brands Personal Care Brands

Home Care Brands

Becel, Flora Axe Cif

Bertolli Dove Comfort

Blue Band Lifebuoy soap& Shampoo Domestos

Heartbrand Lux Omo

Hellmann’s Amora Ponds Radiant

Knorr Soup/ Noodles Rexona Sunlight

Lipton Tea Signal, Close up Surf Excel

Slim-Fast Sunsilk Wheel

Supreme Tea Vaseline

Wall’s Clear Shampoo

Fair& Lovely

Imperial

Unilever in Pakistan

The Unilever Pakistan Limited (UPL), formerly Lever Brothers Pakistan Limited was established in Pakistan in 1948. The town of Rahim Yar Khan was the site chosen for setting up a vegetable oil factory. Unilever Pakistan is the largest FMCG company in Pakistan, as well as one of the largest multinationals operating in the country. Now operating six factories at different locations around the country. The Unilever's Head Office was shifted to Karachi from the Rahim Yar Khan site in the mid 60's.

Unilever Blue Band Margarine

Blue Band is made from high quality vegetable oils, so it is an important source of essential fats and vitamins A, D and E for which there are not many other dietary sources. A thin layer of spread on bread every day makes a big contribution to the healthy growth and development of the whole family.

Unilever is the world’s leading manufacturer of margarine. Blue Band, a world renowned brand that was launched in Pakistan more that 20 years ago. It is a good source of 7 essential vitamins (A, B1, B2, B6, B12, D3 and E) that are necessary for healthy growth and development, both for children and adults.

Key facts

Vitamin A helps maintain good vision and healthy skin. Vitamin B1 helps to boost energy in your body

Vitamin B2 provides energy from carbohydrates

Vitamin B6 helps nerves and forms red blood cells 

Vitamin D is good for bones and teeth 

Vitamin E helps to protect against heart attack and cancer     

Range

Blueband 50 g

Blueband 100 g

Blueband 200 g

Blueband Tub 250 g

Competitors

The main competitor of Blue Band Margarine is:

Nurpur Butter

Competitive Advantage

Blue Band Margarine never compromises on quality.

Blue Band Margarine’s extensive milk collection system ensures that the milk you get is of the finest quality.

Blue Band Margarine’s products are available in every city and town

Unilever is using the latest technology in its production units.

Unilever makes milk powder of the surplus milk in winter and converts this milk powder into UHT milk in summer.

Demographics of Pakistan

Pakistan is a small country with limited resources. But the population of Pakistan is 180,000,000. Pakistan has 6th number in population in the world.

Population and Growth

· Population: 180,000,000 (2008 EST.)

· Growth rate: 1.828% (2007 EST.)

· Birth rate: 27.74 births/1,000 population (2007 EST.)

· Death rate: 8 deaths/1,000 population (2007 EST.)

· Net migration rate: -1.24 migrant(s)/1,000 populations (2007 est.)

Age Structure

· 0-14 years: 40% (male 33,293,428; female 31,434,314)

· 15-64 years: 56.9% (male 48,214,298; female 46,062,933)

· 65 years and over: 4.1% (male 3,256,065; female 3,542,522) (2007est.)

· Sex ratio at birth: 1.05 male(s)/female

· under 15 years: 1.06 male(s)/female

· 15-64 years: 1.05 male(s)/female

· 65 years and over: 0.92 male(s)/female

· Total population: 1.05 male(s)/female (2007 EST.)

Literacy:

Definition: Over the age of 15 and can read and write.

· Total population: 54% (2004 EST.) · Male: 60% · Female: 40% 　

Population of Major Cities of Pakistan

Cities Population

Karachi 15 Million

Lahore 9 Million

Rawalpindi 3 Million

Faisalabad 2.6 Million

Multan 1.6 Million

Gujranwala 1.3 Million

Hyderabad 1.3 Million

Islamabad 1.3 Million

Peshawar 1.0 Million

Pakistan Milk Market/Industrial Analysis

Pakistan’s economy is predominantly agrarian in nature.

Agriculture accounts for 20.9 percent of the GDP.

43.4 percent of the total work force is from agriculture sector and it is the main source of livelihood for 66 percent of the country’s population living in rural areas.

Growth in the agriculture sector registered a sharp recovery in 2006-07 and grew by 5%.

Pakistan is the 5th largest milk producing country in the world.

An estimated 33.25 billion liters of annual milk is produced.

Approximately 50 million animals managed by 8 million farming households.

Contribution of the livestock sector to Pakistan’s GDP is at 11% while the processed milk sector contributes about 0.43 per cent.

The milk economy represents 27.7%2 of the total value of the

Agriculture sector.

Total Target Market Of Milk 180000000

Annual Production Of Milk

(Billion Liters) 33.25

Total market of Gawala (96%) Billion liters 31.92

Total EXISTING market of processed milk (4%) Billion Liters 1.33

Need Analysis (UHT and Loose Milk)

Predicted Supply of Fresh and UHT Milk

YearSupply of fresh milk

(Million liters)

Supply of UHT milk

(Million liters)

2007-08 33805.10 557.72

2008-09 35495.25 648.43

Projections of Fresh Milk Production and Consumption Up to 2008 – 09

Years Annual Production

(million liters)

Annual Consumption

(million liters)

2008-09 35495.25 36361.25

2009-10 37669.75 38188.92

　

About 1.02 billion liters milk is imported.

Projections of UHT Milk Production and Consumption up to 2008– 09

YearAnnual Production

(million liters)

Annual Consumption

(million liters)

2008-09 648.43 353.71

2009-10 753.89 372.05

Our projections show increasing deficits in fresh milk production and increasing surpluses in UHT milk market in the run up to 2009-10, which suggests that the industry should get ready to face challenges.

The analysis shows that Pakistan’s milk yields are very low, and even simple management of feed (proper timing, proper mix and so on) can increase yield substantially. This requires intervention at two levels:

a) The farmers need to have better knowledge of feed management. This can be done by involving milk plants and provincial livestock departments who can provide training and extension services to dairy farmers.

b) The feed industry needs to be developed substantially to provide better quality animal feed at affordable prices. Currently we do not have sufficient supply of high quality nutrients and additives, especially in rural areas. A specific package needs to be developed with the help of the government and in partnership with the private sector that would facilitate and encourage the development of a modern feed industry. Further, the vast potential of using molasses as concentrate in animal feed also need to be taped. 　

　

Milk Flow Channels in Pakistan　

Dairy Farmer

Formal sector 4% Share

Informal Sector 96 % Share

Gawala (Milkman)

　

Retailer

Milk Collector

Distributor/Retailer

Milk Processing Plant

Milk Collection Agency

Customer

　

Industry SWOT Analysis

Strenghts:

· Pakistan dairy industry is the World’s fifth largest industry

· Pakistan Dairy Industry is Cheaper than Austrai, America and other deveolped countries.

· Farmers are engaged in agriculture and dairy at the same time.

· By-product of Agriculture is used in Dairy

· By-product of dairy is used in agriculture.

Weaknesses:

· Poor profitability for farmers.

· Lack of contact for farmers to the market mechanism.

· Poor dairy infrastructure in rural areas.

· Lack of education among the farmers is making it difficult to change farm and dairy management systems.

· Lack of knowledge about optimal feed.

· Lack of a cold chain to protect milk quality.

· Lack of access to well trained support service staff such as

Veterinarians.

· Despite the huge volume of milk produced in Pakistan, processors find it hard to procure sufficient milk to meet future consumer demand.

· Increasing demand for imported products.

· The product range offered to consumers is not well developed.

· Production of milk falls to 55% of peak production at its lowest point in mid-June.

· The demand increases 60% during June compared to December when the milk supply is ample.

Opportunities:

· There is an opportunity for companies to introduce value-added products like shrikhand, ice creams, paneer, khoya, flavored milk, dairy sweets, etc.

· There is a phenomenal scope for innovations in product development, packaging and presentation.

Threats:

· Very low quality milk is provided by the milkmen to dairy farms which is a very big threat for the entire market.

· The shortage of milk providing animals is also a threat for entire milk industry.

Milk Supply Chain in Pakistan　

Consumer

Gawala (Milkman)

Halwai (sweet shop)

De-creamer

Milk Collector

Dairy Farmer　

Retailer

Milk Industry of Neighbour Country (India ):

Strenghths:

· Demand profile:

Absolutely optimistic

Margins:

Quite reasonable, even on packed liquid milk.

· Flexibility of product mix:

Tremendous with balancing equipment, you can keep on adding to your product line.

· Availability of raw material:

Presently, more than 80 per cent of milk produced is flowing into the unorganized sector, which requires proper channelization.

· Technical manpower:

Professionally-trained, technical human resource pool, built over last 30 years.

Weaknesses:

· Perishability:

Pasteurization has overcome this weakness partially. UHT gives milk long life. Surely, many new processes will follow to improve milk quality and extend its shelf life.

· Lack of control over yield:

Theoretically, there is little control over milk yield. However, increased awareness of developments like embryo transplant, artificial insemination and properly managed animal husbandry practices, coupled with higher income to rural milk producers should automatically lead to improvement in milk yields.

· Logistics of procurement:

Woes of bad roads and inadequate transportation facility make milk procurement problematic. But with the overall economic improvement in India, these problems would also get solved.

· Problematic distribution:

Yes, all is not well with distribution. But then if ice creams can be sold virtually at every nook and corner, why can’t we sell other dairy products too? Moreover, it is only a matter of time before we see the emergence of a cold chain linking the producer to the refrigerator at the consumer’s home!

· Competition:With so many newcomers entering this industry, competition is becoming tougher day by day. But then competition has to be faced as a ground reality. The market is large enough for many to carve out their niche.

Opportunities:

"Failure is never final, and success never ending”. Dr Kurien bears out this statement perfectly. He entered the industry when there were only threats. He met failure head-on, and now he clearly is an example of ‘never ending successes! If dairy entrepreneurs are looking for opportunities in India, the following areas must be tapped:

· Value addition:

There is a phenomenal scope for innovations in product development, packaging and presentation.

Given below are potential areas of value addition:

Steps should be taken to introduce value-added products like shrikhand, ice creams, paneer, khoa, flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility in the market place along with opportunities in the field of brand building.

Addition of cultured products like yoghurt and cheese lend further strength - both in terms of utilization of resources and presence in the market place.

A lateral view opens up opportunities in milk proteins through casein, and other dietary proteins, further opening up export opportunities.

Yet another aspect can be the addition of infant foods, geriatric foods and nutritional.

· Export potential:

Efforts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT treaty, opportunities will increase tremendously for the export of agri-products in general and dairy products in particular.

Threats:

· Milk vendors, the un-organized sector:

Today milk vendors are occupying the pride of place in the industry. Organized dissemination of information about the harm that they are doing to producers and consumers should see a steady decline in their importance.

The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are fundamental and weaknesses and threats are transitory. Any investment idea can do well only when you have three essential ingredients: entrepreneurship (the ability to take risks), innovative approach (in product lines and marketing) and values (of quality/ethics).

The Indian dairy industry, following its deli censing, has been attracting a large number of entrepreneurs. Their success in dairying depends on factors such as an efficient yet economical procurement network, hygienic and cost-effective processing facilities and innovativeness in the market place.

All that needs to be done is: to innovate, convert products into commercially exploitable ideas. All the time keep reminding yourself: Benjamin Franklin discovered electricity, but it was the man who invented the meter that really made the money.

Market Segmentaion of Nestle Milkpak

· Geographic Segmentation:

Milkpak has segmented the market on the basis of Geographic segmentation and its target market is major populated cities of pakistan

· Demographic Segmentation:

Nestle Milkpak is also segementing the market on the basis of Income level of the people. Three Income level has been defined; Higher, middle and lower income classes.

Targeting

Urabn areas of the country

Upper and Middle income class

Situation Analysis

Awareness:

Top of the mind recall

Due to strong brand positioning and effective advertising, Milkpak has highest awareness level.

Brand Awareness (%)

Milkpak 43

Haleeb 38

Olpers 9

Dairy Queen 7

Good Milk 2

Nurpur 1

Market Share (%)

Good Milk 1

Milk Pak 45

Dairy Queen 9

Haleeb 22

Olpers 17

Nur Pur 4

Others 2

　

The table shows that Milkpak has the highest market share due to its consistent quality.

Market Trends

• The growth of processed milk is increasing by 20% annually

• People are getting more quality and health conscious with the passage of time

• Due to impurities of Gawala milk, people are attracting towards processed milk

Key factors are:

• Changing lifestyle

• Influence of foreign media

Market Potential

• At an average, a Pakistani consumer spends 42 % of income on food

• Consumer often prefer branded food items for both quality and status reasons

• Per capita real GDP has increased at an average of 5.6 % per annum during the last three years• This increase has led to a rise in average income of people and an increase in consumer spending.

SWOT Analysis (Nestle Milkpak)

Strengths:

· Strong Brand image:

Nestle has been serving the Pakistani consumers since 1988, and it has built a strong brand image due to its quality products.

· Quality product:

Nestle Milkpak is known as the best UHT milk in Pakistan due to consistency in quality.

· Solid Financial position:

Nestle Milkpak’s annual turnover is Rs.30 Billion which provides it a financial edge over its competitors.

· Strong supply chain network:

Nestle collects Milk directly form the farmers instead of relying on the contractors. And it distribution is also very strong. In this way it has a complete control over its supply chain.

· Qualified work force

· Commitment to High Quality Products

· Focus on research and development

Weaknesses:

The target market of Nestle Milkpak is upper middle and high class because lower middle and poor class cannot afford to buy UHT milk due to its premium price. This is the only weakness of Milkpak.

Opportunities:

Estimations of UHT Milk Production and Consumption up to 2008– 09

YearAnnual Production

(million liters)

Annual Consumption

(million liters)

2008-09 648.43 353.71

2009-10 753.89 372.05

The projected values of UHT Milk consumption and production are obtained from the ARIMA model.

• More people are coming towards processed milk because loose milk is dangerous for health due to a lot of contamination.

• Growth of processed milk is increasing with 20% annually so Nestle Milkpak has the opportunity to capture a large share of market.

Threats:

• Two main competitors Haleeb and Olpers are main threat for Milkpak especially the Olpers is growing very fast.

• Inflation is getting higher and higher so the purchasing power of the people is decreasing day by day.

• There is no entry barrier for new entrants as the Olpers has come in the market.

Positioning Strategy

• Functional Positioning

Nestle Milkpak has adopted the functional positioning strategy like:

“Khaalis He Sab Kuch Hai”

“Wohi Qudarti Maza”

“Jaan Banaoo”

Differentiation

Addition of IRON and Vitamin “A & C”

Marketing Mix

Product:

• Quality Product

Nestle Milkpak has the largest market share due to its consistent quality.

• Product Style and logo

Nestle Milkpak is available in different product range and stylish packaging.

• Product Lifecycle

Nestle Milkpak has been in the market for a very ling time and it is at maturity stage.

Price:

• Competition Based Pricing

Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.

Placement:

Distribution Channels:

Milkpak is not sold directly to consumers and the complete distribution process is followed. It uses indirect channels for distribution like:

ManufactureràDistributoràWholesaleràRetaileràConsumer

Promotion:

• Focusing on health conscious people in their advertisement.

Promotion Mix

• Advertisement

• Public relations

Marketing Strategy

Nestle is pursing growth strategy. They have invested $ 70 billion at Kabirwala Plant and they are planning to invest $ 381 billion in the milk business.

Recommendations

· The immense competition is going in the market so Nestle Milkpak should penetrate more and more in the market.

· Only 4 % milk is being processed and 96% people are using loose milk so Nestle Milkpak has the opportunity to capture a large share of the market through more creative advertising and other promotional activities.

· Nestle Milkpak should invest more on research and development because customers using loose milk are getting a lot of contaminations especially in urban areas so Nestle Milkpak can provide awareness to people in this aspect.

　

　Bibliography

Mr. Imran Rasool: Executive Marketing, Nestle MilkPak.

Mr. Shehzad Anwar: Assistant Area Sales Executive Nestle Milkpak.

Mr. Mustafa Zaidi: Joint Director Research and Development, Lahore Chamber of Commerce.

Dairy reports:

White Revolution by Pakistan Dairy Development Company

Year book 2006-07, By Ministry of Food, Agriculture and Livestock.

Websites:

http://www.google.com

http://www.wikipedia.com