Edible Oil Industry Pakistan

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REPORT

OF

BUSINESS POLICY

ON

EDIBLE OIL INDUSTRY

TABLE OF CONTENTS

Acknowledgement:4

Edible Oil Industry:5

History:5

INDUSTRY SEGMENTS5
Edible Oil industry and Pakistan Economy:6

LIST OF ALL PLAYERS:8

INDUSTRY PALYERS8
Market Share:9

Profile of Three main players:11

Wazir Ali (TULLO)11
SUFI12
Habib Oil Mills13

PRODUCTS13

1.Super Habib13

Opportunity:14

Untapped rural Market14
Possibilities in the export market.14
People are becoming more health consciousness.14
Upcoming project of Palm Oil refinery.15

Threats15

Increased cost of production especially because of inputs like energy.15 ⎫Heavy reliance on imports may give rise to exchange rate risk.15 ⎫Black Market is increasing with phenomenal rate.16

Reduction in the purchasing power of people due to inflation.16

ISSUES17

Imports of raw material increasing by 9% per annum.17 ⎫Price difference between branded and non-branded segments.18 ⎫Huge gap between consumption and production.19

Possibility for New comers:20

Michael Porter’s Model – The five competitive forces of industry20 Strengths21
Weakness21

STRATEGY FOR NEW PLAYER:22

Steps of Segmentation for US (NEW PLAYER) in the Industry:22

Impact of WTO and opening of boarder with India23

Salient Features of WTO Agreement23
Consequences:24

Future of the Industry:26

SUPPLY CHAIN OF THE INDUSTRY:29

1.Procurement29
Issues:29
2.Manufacturing29
Issues:29
3.Distribution:30
MARKET STRUCTURE OF EDIBLE OIL INDUSTRY30
Issues:31
4.Marketing31
Issues:31

HR availability and other issues:32

Key factors from HR perspective in the industry:32
Issues:32
Un-trained staff:32
Strikes and improper shutdowns:33
High turnover33
No proper use of Information technology:33
Government challenges:33
Suggested Measures for the HR availability of Edible Oil Industry:34

Edible Oil Industry:

History:

By 1973 there were 26 Ghee units operating in Pakistan producing about 150,000 tons. On 3rd September 1973 Ghee units were nationalized and their control was given to Board of Management Sind and Punjab. This was the time when price control was also introduced.

In May, 1976 Ghee Corporation of Pakistan (GCP) was created due to shortage caused by mis-management. Out of 26, two factories owned by Lever Brothers were not nationalized. Ghee Corporation of Pakistan expanded production of ghee in the country and improved quality and control.

Around 1978, Government of Pakistan started to promote the use of cooking oil. From 1978-86 consumption of Vegetable Ghee jumped due to price control and good availability. In 1986 volume of cooking oil produced in the country was 7.5 Lac tons. In 1986 the industry was deregulated which led to a major influx of manufacturers. Till this time Ghee Corporation of Pakistan was the largest producer and therefore an informal price control was imposed by its bulk sales. In 1991-92 GCP partially denationalised. Since 1992-93 there has been an over capacity in the industry.

In 1990 pouch packing was introduced for Ghee. It was the same time when branding and aggressive promotion of Oil and Ghee started. In 1992 Pet Bottles were used for consumer packing. And Nestle Milkpak introduced pure Ghee in Tetrapacks.

INDUSTRY SEGMENTS

The oil and ghee industry has 3 clear segments.

✓ Ghee (75.33%) with a total consumption of 1.75 Mil tons. ✓ Cooking Oil (23.33%) with a total consumption of 1.0 Mil tons ✓ Industrial Fat (1.34%) with a total consumption of 50,000 tons.

Edible Oil industry and Pakistan Economy:

Pakistani society has traditionally been consuming butterfat “Desi Ghee” prepared from butter by heating, as a cooking medium of choice. However, this product has been in short supply for a long time due to numerous reasons....
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