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Living Essentials
Value Chain Partnership
Living Essentials Value Chain Partnership 2019 l 00
Table of Contents
Summary
• Objectives
• Agreement
Scope
• Technology
Enabled
Distribution
Mitsubishi
• Mitsubishi
Corporation
• Living Essential
Group
• Mitsubishi
Shokuhin
Perspectives
• Pakistan
Value Chain
• Opportunities
• TCS
• Modern
Distribution
• Models
Pakistan
• GDP Projections
• Fast Facts
• Distribution
Elements
Consumer
• Demography
• Top 20 Cities
• Human
Development
• Urbanization
Retail
• Catagories
• Food
Expenditure
• Channel
Segmentation
• Retail Landscape
• E Retailing
Opportunity
• Processed Food
• Reason
• Market Analysis
• Target Princeples
• Target market
• SWOT
• Financials
Page 3-5
01
Page 6-11
02
Page 12-20
03
Page 21-26
Page 60-88
04
Page 27-34
05
Page 35-48
06
Page 49-59
07
Market
• Producers
• Distributes
Living Essentials Value Chain Partnership 2019 l 00
MC Objective
Progressive Distribution Network
Daily necessities from food to consumer goods
• Should have
Retailer centric product line
Channel based
• Provides
Analytic for the product owners
Retailer-friendly order system
Appropriate Inventory management
Modernize & agile delivery system
Living Essentials Value Chain Partnership 2019 l 00
Agreement Scope MC & TCS
• Product Development
• Logistics Operation
• Financial
• IT system
• Marketing Plan
• Retail Execution
30 Millions
Warehouse
Living Essentials Value Chain Partnership 2019 l 00
Technology Enabled Distribution
Source
Dairy Form
Staples Form
Goat Form
Poultry Farm
Fish Form
Target Principles
$ 1.1 B
$ 0.56 B
$ 0.27 B
$ 0.17 B
$ 0.28 B
$ 0.14 B
Categories
$ 82 B
Milk and Dairy
$ 37 B
Fish Meat & Chicken
$ 0.4 B
Delicacy & Seasoning
$ 0.5 B
Topping & Spices
Reach of
850,000 Sq. Ft
Warehouse
950+
Express Centres
2100+
Service Centres
8000
Business Customers
Target Market
Population 30 Millions
Outlets 125 K - Target 12 K
Medium to top end retail & Food Services
Living Essentials Value Chain Partnership 2019 l 00
Global Environmental & Infrastructure Industrial Finance, Logistics & Development Energy Business Group
Chemicals GroupMachinery GroupMetals Group
Living Essentials Group
Living Essentials Value Chain Partnership 2019 l 00
LEG Strategy & Offers
Aims to achieve sustainable growth by fulfilling consumers' daily lives around the world.
As part of LEG mission LEG committed to undertake a diverse range of businesses by expanding
global supply network and developing vertically integrated business model outside Japan.
Offers diverse range of products and services to consumers in a sustainable manner in various
fields of business from raw materials procurement to distribution and retail.
Emphasis on generating not just economic value, but also environmental and social value in
line with its strategy to achieve sustainable corporate value.
Living Essentials Value Chain Partnership 2019 l 00
LEG - Brief of its 5 Divisions
Retail Division
Sale of food, clothing, furniture and interior furnishings, Daily goods
Development and distribution of various consumer sales materials and
services
Marketing business, coalition loyalty program and payment
settlement-related service businesses
Distribution Division
Distribution and logistics of various products and services including
processed foods, frozen and chilled foods, confectionery, liquor, paper
products, packaging materials
Various healthcare related businesses such as outsourcing services for
hospitals, import and sale of medical equipment, and nursing care
equipment rental
Distribution business, which has the role of connecting manufacturers
to retailers, the Distribution Division evolved to supply products and
services by responding to changes in market and industry
environments and meeting the needs of diverse consumers
Living Essentials Value Chain Partnership 2019 l 00
LEG - Brief of its 5 Divisions
Consumer Products
Consumer necessities such as processed foods,
confectionery, beverages, canned goods,
instant noodles, seasoning’s, milled flour,
sugar, starches, starched products, tires, and
other daily necessities
Manufacturing of baby diapers in Indonesia
through a joint venture with Daio Paper
Indonesia).
Fresh Food Products
Production, procurement, processing and sale
of marine products
Procurement and sale of rice, fresh produce
and dairy products
Production, procurement , manufacturing,
processing and sale of meats
Resources Division
Production, collection, manufacturing,
processing and sale of grains, feed, and food
and beverage raw materials as well as housing
and constr.
Living Essentials Value Chain Partnership 2019 l 00
Mitsubishi Shokuhin – The Distribution
Aim to go beyond traditional food wholesaling to become a general food products trading
company spanning diverse areas ,business formats and functions
Marketing
• Macro marketing
analysis
• Market Outlook,
Category, Product
Trends
• Consumption trends,
consumption trend
analysis
• Lifestyle marketing
POS, ID-POS data
analysis
• Promotion support
for O2O
Distribution
• Automatic warehouse
and digital picking
system
• Deliveries by category
and store passage
• Product logistics to
in-store logistics,
"Solutions with
integrated logistics and
information"
Segments
• Frozen and Chilled
Foods
• Processed Foods
• Alcoholic Beverages
• Confectioneries
Services
• 30,000 Customers
• Restaurants and
food services
• Same day delivery
• Order centre open
365 days
• Club fresh frozen,
room temperature
food and disposable
supplies in a single
delivery
https://www.mitsubishi-shokuhin.com/solution/development.html
Living Essentials Value Chain Partnership 2019 l 00
Solution Partner Mitsubishi-Shokuhin
Mitsubishi-Shokuhin Distribution Business
Handles over Ten Thousand products in the four categories.
Processed foods
Seasoning’s and sauces
Chilled and frozen foods
Confectionery and canned goods
Alcoholic and non-alcoholic beverages
30.6
Processed foods
39.9
Chilled and frozen foods
11.8
Confectionery & canned goods
0.81
Seasoning’s and sauces
17.6
Alcoholic and non-alcoholic beverages
https://www.mitsubishi-shokuhin.com/solution/development.html
Living Essentials Value Chain Partnership 2019 l 00
Perspective
Living Essentials Value Chain Partnership 2019 l 00
LEG Perspective Pakistan Value Chain
Basic Food & Necessities
Undeveloped/In efficient supply chain
Minimum availability leads to limited consumption
Resource
Processing
• Disorganize
infrastructure
• Protected local
produces
• Lack of
transparency
• High rate of
wastage
Manufacturing
• FMCG market
dominated by
few foreign
manufacturer
• Unbalanced
competition
• High import
duty-High Entry
Barriers
Retail
• 549K store -
90% + GT store
• PKR.3.6 T
market
• Small &
Scattered MT
• Cash payment to
distributors
Consumer
• Rising middle class
• 77 Mn /208 Mn
• $5680 / GDP at
PPP
• Limited Availability
of Goods to
Consumer
Distribution
• Scattered
small size
distributor
across Pakistan
• Network Gaps
Category
centric – Not
retail/custome
r centric
Ref: LEG Presentation
Living Essentials Value Chain Partnership 2019 l 00
LEG Opportunity Perspective - Market Needs
Agricultural Logistics
• Traditional traders
• Time sensitivity / precision
• Information flow
• Temp controlled
Consumer
• Emergence of E commerce
• Growing needs for the last miles delivery
Whole Sale
And Retail
• Disorganize
distribution
network of
General Trade
Temperature Controlled Vehicles
• Need of temperature controlled Vehicles
• Cross border Opportunity - CPEC
Ref: LEG Presentation
Living Essentials Value Chain Partnership 2019 l 00
Living Essentials Group Perspective - TCS Value Chain
Solution Partner
Manufacturing
• Access to direct sales
delivery
• Logistic Management
expertise
Distribution
• Expertise &
Capacity in
direct sales delivery
Consumer
• Insight data and
experience
TCS business of delivering:
• Documents & package
• Public service,
Insurance, visa, tickets
Living Essentials Value Chain Partnership 2019 l 00
LEG Opportunity Perspective
Warehouse
Capacity
850,000 Sq. Ft
Locations
950+
Express centres
Logistics
2100+
Service centres
Customers
8000
Business
Customers
Key Assets
Ref: LEG Presentation
Living Essentials Value Chain Partnership 2019 l 00
Modernized Distribution - Food and Daily Necessities
PKR 3.6 Trillion of Food Retail
• Ware House 850,000 Sq. Ft
• Country wide foot print
• Express Centres 950
• Access Points 2000 +
• Business Customer 18000
Market Needs
• Agriculture Transportations
• GT Serving Distributions
• E commerce
• Last Mile Delivery*
* Transportation Hub
To end Consumer
Modern Distribution
• Channel based offerings
• Category line
• Analytic / info flow
• Ordering & replenishment
through system
• Inventory Management /
JIT
• MC network around the
globe
• Oracle
Systems/Demand
Apps Expertise
• Hub and retail
Distributions
Expertise
Living Essentials Value Chain Partnership 2019 l 00
Jumbo-tail Model - India
Buyers
• Retailers
• Food Services
• Manufacturers
• Farmers
• Middleman
• Platforms
Sellers
Delivery and payments Collection for seller Proprietary algorithms
Working Capital providing from third party/ Bank
Selection of products Website - Sellers linked
Products with detail
Customers buy these
Products from the
Website/Phone App.
Staples, spices,dry fruits,
Packaged foods, and
FMCG products
Ref: Jumbo Tail presentations
Website
Living Essentials Value Chain Partnership 2019 l 00
Amazon Based Model
Customer
TCS
Distributor
Manufacturer / Imports
Customer
Retailer
Warehouse
Manufacturer / Imports
Pull Pull
Living Essentials Value Chain Partnership 2019 l 00
Amazon Based Model
Information Flow
Physical Flow
Whole Seller
Partner
Level 2
Level 3
Vendor/ Supplier
Manufacturing
Independent
Supplier/ Third Party
Level 1
Customer
Website & system
Living Essentials Value Chain Partnership 2019 l 00
Pakistan
Consumer Insight
Overview
Living Essentials Value Chain Partnership 2019 l 00
Global Economic Projection
Pakistan GDP in View of
World Financial Institutions
5% - 2050
5.5% - 2020
5.7% - 2018
4.9% - 2018
Share in the
World GDP
Year
1980
1990
2000
2010
2017
0.54%
0.72%
0.74%
0.79%
0.83%
Share
Living Essentials Value Chain Partnership 2019 l 00
Market Land Scape
• 208 Million Population - the world’s sixth most populous country
• 100 Million under the age of 30 years -23.8 is the Median Age
• 18th Largest Middle Class in the World- USD 2 to USD 20 Per/Day
• Family size of 6.5 person with almost equal gender ratio
• Punjab with 53% population & the most dense province
• 36% Urban population which is growing over 3% annually
• Top 10 cities Contain 20% Population – Karachi is the biggest over 15 Mn
GDP - TOTAL
Agricultural
Sector
19%
Services
Sector
60%
Industrial
Sector
21%
Living Essentials Value Chain Partnership 2019 l 00
Market Facts - Pakistan
• 36th-largest country in the world, 796,095 sq km
• GDP (purchasing power parity): $1.1 trillion (2017 est.)
• GDP per capita: $5,400 (2017 est.)
• Rs.3.6 trillion – Whole sale and Retail Trade
• Fastest Growing Retail Market – 8.2% (2016-2021)
• 73% Tele Density – 153 million mobile phone users
• 22% Internet user – over 20 million people
Services Sector
17%
31%
22%
13%
11%
6%
Other
Private Services
General
Government
Services
Housing
Services (OD)
Finance &
Insurance
Transport,
Storage &
Communication
Wholesale &
Retail Trade
Living Essentials Value Chain Partnership 2019 l 00
Elements for the Progressive Distribution Network
Know the
Consumer
Know the
Retailer
Design product
& Services
Distribution
Retailer
oriented
products &
network
Living Essentials Value Chain Partnership 2019 l 00
FMCG Distribution Services
FMCG Distribution Demand
Business Excellence
• Operating Model Governance
• FMCG Analytic & Insights
• New Business Services Delivery
• Centres of Expertise (Co-Es)Population GDP Urbanization
Fix Foundation for Real Value Creation Build New Operating Model
Living Essentials Value Chain Partnership 2019 l 00
Consumer
Insight
Living Essentials Value Chain Partnership 2019 l 00
Know the Consumer
Living Essentials Value Chain Partnership 2019 l 00
Demographic Split
ISLAMABAD
1%
KHYBER
PAKHTUNKHWA
15%
PUNJAB
53%
SINDH
23%
BALOCHISTAN
6%
FATA
2%
Census 2017
RURAL
64%
URBAN
36%
Living Essentials Value Chain Partnership 2019 l 00
Demography – Top 20 Cities
Census 2017
46,125,439
20.97%
RANK NAME PROVINCE Population
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Karachi
Lahore
Faisalabad
Rawalpindi
gujranwala
Peshawar
Multan
Hyderabad
Islamabad
Quetta
Bahawalpur
Sargodha
Sialkot
Sukkur
Larkana
Sheikhupura
Rahim Yar Khan
Jhang
Dera Ghaxi Khan
Gujrat
Sindh
Punjab
Punjab
Punjab
Punjab
Khyber Pakhtunkhawa
Punjab
Sindh
Capital Territory
Balochistan
Punjab
Punjab
Punjab
Sindh
Sindh
Punjab
Punjab
Punjab
Punjab
Punjab
14,916
11,126,285
3,204,276
2,098,231
2,027,001
1,970,042
1,871,843
1,734,309
1,009,832
1,001,205
762,111
659,862
655,852
499,900
490,508
473,129
420,419
414,131
399,064
390,533
Living Essentials Value Chain Partnership 2019 l 00
Human Development Condition
Census 2017
Pakistan HDI - 0.562 - Medium - World Rank 150
Islamabad
Punjab
Sindh
Khyber Pakhtunkhawa
Balochistan
Fata
0.875
0.732
0.64
0.628
0.421
0.216
Very High
High
Medium
Medium
Low
Low
5.97
6.43
5.58
7.94
6.95
8.96
Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55
Area HDI Status Family Size
Living Essentials Value Chain Partnership 2019 l 00
Human Development Condition
Human Development Index UN 2017
Districts wise HDI
Top Ten Districts
Very High
High
Medium
Low
0.853
0.739
0.6372
0.371
35.69 Millions
62.23 Millions
61.83 Millions
40.28 Millions
6.09
6.48
6.61
6.29
Status HDI
17.8%
31.1%
30.9%
20.1%
%
9
23
33
56
Districts POP Family Size
Districts HDI Family Size
Lahore
Islamabad/Rawalpindi
Karachi
Sialkot
Jhelum
Gujrat
Chakwal
Attock
Faisalabad
Gujranwala
0.877
0.875
0.854
0.834
0.829
0.795
0.792
0.786
0.782
0.769
HDI Rank
1
2
3
4
5
6
7
8
9
10
6.33
5.97/6.08
5.74
6.78
5.97
6.23
5.62
6.14
6.43
6.71
Status
Very High
Very High
Very High
Very High
Very High
High
High
High
High
High
Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55
Note: Fata & AJK Data is not included
Living Essentials Value Chain Partnership 2019 l 00
Top 10 Most Populous Cities
Human Development Index UNO 2017
Pakistan HDI - 0.562 - Medium - World Rank 150
City
Karachi
Lahore
Faisalabad
Rawalpindi
Gujranwala
Peshawar
Multan
Hyderabad
Islamabad
Quetta
0.854
0.877
0.782
0.871
0.769
0.756
0.718
0.716
0.875
0.664
HDI
Very High
Very High
High
Very High
High
High
High
High
Very High
Medium
Status
4
1
10
3
10
14
21
22
2
38
HDI Rank
5.74
6.33
6.43
6.08
6.71
8.72
6.2 4
5.06
5.97
8.22
Family Size
Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55
Living Essentials Value Chain Partnership 2019 l 00
Urbanization Speed
Census 2017
Province wise Population and Growth Rates
Area
Pakistan
KPK
Punjab
Sindh
Balochistan
FATA
Islamabad
132.35
17.74
73.62
30.44
6.57
3.18
0.81
Population in Million Average annual Growth Rate
207.77
30.52
110.01
47.88
12.34
5
2
1998 2017
2.6
2.8
2.6
2.7
2.4
2.1
5.2
2.4
2.89
2.13
2.41
3.37
2.41
4.91
1981-98 1998-2017
Area
Pakistan
KPK
FATA
Punjab
Sindh
Balochistan
Islamabad
Population in Million Urban share (0/0)
132.35
17.74
3.18
73.62
30.44
6.57
0.81
84.25
11.06
2.20
47.29
19.03
4.33
0.34
1981 1998
207.77
30.52
5.00
110.01
47.89
12.34
2.00
2017
32.52
16.87
2.69
31.27
48.75
23.89
65.72
28.3
15.06
-
27.6
43.32
15.62
60.06
1981 1998
36.38
18.77
2.84
36.71
52.02
27.55
50.58
2017
Living Essentials Value Chain Partnership 2019 l 00
Retail
Insight
Living Essentials Value Chain Partnership 2019 l 00
Monthly Family Expense Distribution
Census 2017
Housing, water,
electricity, gas & fuels
30%
Food & Non
Alcoholic Bev
35%
Miscellaneous
3%
Recreation & Culture
2%
Alcoholic Bev.
& Tobacco
1%
Restaurants & Hotels
1%
Health
2%Communication
3%
Education
4%
Furnishing & household
equipment maintenance
4%
Transport
7%
Clothing & Footwear
8%
Living Essentials Value Chain Partnership 2019 l 00
Food Expenditure Break down - 35% of Expense
Census 2017
Food Consumption
Milk
Cereals
Vegetables
Meat
Ghee
Other food items
Sugar
Fruits
Pulses
Squashes
Tea
Biscuits
Jams
21%
20%
13%
10%
9%
8%
5%
4%
3%
3%
2%
2%
2%
Punjab
17%
20%
13%
14%
8%
7%
5%
4%
2%
3%
4%
2%
2%
Sindh
16%
23%
10%
10%
10%
9%
8%
4%
3%
2%
3%
3%
1%
KPK
13%
22%
13%
15%
8%
5%
6%
4%
3%
3%
4%
2%
2%
Boluchistan
Living Essentials Value Chain Partnership 2019 l 00
Food Category Size - Opportunity Mapping
Average Food Expenditure
Milk & Products
Cereals
Edible Oils & Fats
Vegetables
Gur, Sugar Preparations
Meat and Fish
Poultry
Miscellaneous Food Products
Tea, Coffee, Soft Drink
Condiments and Spices
Fruits & Dry Fruits
Tobacco & Chewing Products
Pulses, Split & Whole
Baked & Fried Products
Total
25.2
18.21
10.79
8.59
6.4
6.37
4.91
3.68
3.45
3.3
3.1
2.43
2.33
1.24
100
Category
Weight
398.49
287.96
170.62
135.82
101.20
100.73
77.64
58.19
54.56
52.18
49.02
38.43
36.84
99.61
1542
33.21
24.00
14.22
11.32
8.43
8.39
6.47
4.85
4.55
4.35
4.09
3.20
3.07
1.24
128.50
Per Cap Consumption - PPP
Annual $ 1542 Monthly $ 128.50
82.8
59.83
35.45
28.22
21.02
20.93
16.13
12.09
11.34
10.84
10.18
7.98
7.65
4.07
328.56
Total Size - Billion
Economic Survey of Pakistan 2017
Per Capital GDP $5400
Domestic Consumption $4428
80% Per capital DGP
Food share $1542
35% Of Domestic Consumption
Living Essentials Value Chain Partnership 2019 l 00
Know the Retailer
Living Essentials Value Chain Partnership 2019 l 00
Channel Segmentation
Census 2017
Wholesale
1%
Food Services
12%
Street Vendor
6%
Medical
Store
3%
Grocery
Store
76%
Bakery
2%
Modern Trade
0.5%
2 Millions Total Outlets
Local Source
FMCG Universe
Channel
No.
Outlets
% Age
Bakery
Street Vendor
Grocery Store
Medical (Drug) Store
Food Services
Wholesale
Modern Trade
17000
52000
656000
23000
101000
9000
4000
862,000.00
2%
6%
76%
3%
12%
1%
0.46
Living Essentials Value Chain Partnership 2019 l 00
Retail Landscape
Retail Outlet Projections
Year No. Outlets
2016
2017
2018
2019
2020
2021
500,000,00
562,5 00,00
632,812,50
711,914,06
800,903,32
1,000,000,00
Euro-monitor
FMCG Universe
Net Retail Sales
PKR $
2013
2014
2015
2016
2017
2018
1 6, 220,00
18,1 00,00
20, 320,00
22 930,00
25,980,00
29, 440,00
115.85
129.26
145.14
163.77
185.57
210.28
Statisca
Billion
35,000,00
30,000,00
20,000,00
15,000,00
10,000,00
5,000,00
0
2012 2013 2014 2015 20182016 2019
1,200000
1,000000
800,000
600,000
400,000
200,000
0
2013 2014 2015 20182016 2019
Living Essentials Value Chain Partnership 2019 l 00
Basis for Mapping the Retail Store
Location
Category
Handling
Sales
Volumes
Foot Fall of
Customer
Customer
Type
Store
Layouts
Area of
The Store
No of Cash
Counter
Living Essentials Value Chain Partnership 2019 l 00
Modern Trade - International
• Outlets - 9
• In Cities - 5
• Outlets - 6
• In Cities - 3
• Outlets - 2
• In Cities - 1
Living Essentials Value Chain Partnership 2019 l 00
Modern Trade - Pakistani
• Outlets - 10
• In Cities - 4
• Outlets - 6
• In Cities - 3
• Outlets - 5
• In Cities - 3
Modern Trade - Pakistani
Living Essentials Value Chain Partnership 2019 l 00
Living Essentials Value Chain Partnership 2019 l 00
Top Ten Retailers – Growing segments
Store
Imtiaz
Metro
Al-Fateh
Chase Group
Madina Cash & Carry
Euro Store
Punjab Cash & Carry
Hyper star
USC
CSD
Total
60
67
50
30
65
85
90
55
95
65
62
Food
40
33
50
70
35
15
10
45
5
35
38
Non food
65
39
35
36
12
6
6
28
40
21
288
Total to - Billion
8
9
10
14
11
9
6
6
5300
135
5508
No. Store
Share %
Living Essentials Value Chain Partnership 2019 l 00
E Retailing
Living Essentials Value Chain Partnership 2019 l 00
E Retailing Landscape in Pakistan
• Vendors
• Logistics
• Website
• Couriers
• Payment Methods
Component
• Clothing
• Consumer Electronics
• Food
• On line Bookings – tickets
• FMCG
Categories
• Vendor Capacity
• Payment Methods
• Regulation – NO
• Courier ability
• Technology
Challenges
Living Essentials Value Chain Partnership 2019 l 00
Opportunity
Processed Food
Living Essentials Value Chain Partnership 2019 l 00
Proposed Categories for the Distribution
Canned
Foods
Processed Food
& Frozen
Milk & Dairy
Products
Meat, Poultry &
Related products
Food is no longer the labour intensive affair in urban households
Ready-to-cook, store-bought items are steadily making their way onto our plates
The rising Pakistani urban middle-class
Growing disposable incomes are accountable for This shift in dietary patterns
Ready-made food contributes nearly five per cent
Why
Living Essentials Value Chain Partnership 2019 l 00
Market Analysis
Category
Milk & Products
Cereals
Edible Oils & Fats
Vegetables
Gut, Sugar Preparations
Meat and Fish
Poultry
Miscellaneous Food Products
Tea, Coffee, Soft Drink
Condiments and Spices
Fruits & Dry Fruits
Tobacco & Chewing Products
Pulses, Split & Whole
Baked & Fried Products
25.2
18.21
10.79
8.59
6.4
6.37
4.91
3.68
3.45
3.3
3.1
2.43
2.33
1.24
Category
Weight
YES
YES
YES
NO
YES
NO
YES
YES
YES
YES
NO
YES
YES
YES
Packaging
Mostly disorganize
Mostly disorganize
organized
Mostly disorganize
Mostly disorganize
Mostly disorganize
Mostly disorganize
organized
organized
Mostly disorganize
Mostly disorganize
organized
Mostly disorganize
Mostly disorganize
Dominant Portion
Nestle, Engro, Fauji
Nestle, Fauji
Dalda, Mezan, Kashmir
No National Brand
No National Brand
No National Brand
K&N, Season, Sufi
Uniliver, P&G, Reckit
Tapal, Lipton, Vital
National, Shan
No National Brand
PTC, PHM, KTC
No National Brand
Gourmet, Shezan
Market Players
Traditional
Traditional
Dalda
Traditional
Traditional
Traditional
Traditional
Uniliver
Pepsi
Traditional
Traditional
Pakistan Tobacco
Traditional
Traditional
Market Leader
Low
Low
Moderate
Low
Moderate
Low
Moderate
Moderate
High
Low
Low
High
Low
Moderate
Competition
Living Essentials Value Chain Partnership 2019 l 00
Market Insight – Category Analysis
Packaging
Dominant Portion
Market Players
Market Leader
Competition
Most of the Categories have Packaging
Supply Chain is disorganize
Brands are available
Traditional channel is the market leader
Moderate to Low - Niche marketing
Living Essentials Value Chain Partnership 2019 l 00
Key Producers and Targeted Category Share
Topping, Desserts
Dairy Products
Meat, Poultry
Canned Foods
Nestle, Uniliver
Nestle, Engro, Fauji
K&N, Sufi, Meat One ,FML
Imports
Share in FOOD
Dairy Products
Meat, Poultry
Canned Foods
Topping, Desserts
CATEGORY Share
25.2%
11.28%
0.79%
Living Essentials Value Chain Partnership 2019 l 00
Target Market
Pakistan HDI - 0.562 - Medium - World Rank 150
Lahore
Islamabad/Rawalpindi
Karachi
Sialkot
Jhelum
0.877
0.875
0.854
0.834
0.829
Very High
Very High
Very High
Very High
Very High
1
2
3
4
5
Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55
Districts HDI Status HDI Rank
6.33
5.97/6.08
5.74
6.78
5.97
Family Size
Living Essentials Value Chain Partnership 2019 l 00
Opportunity Mapping
Particulars
Size (Trillion PKR)
Demand
Supply
Competition
Entry
Integration
Expertise
Customer
Infra-structure
Market size
0.9
 Medium
High
High
Difficult
High
High
High
 Strong
Big
Dairy&
Confectionery
0.7
 Medium
High
High
Average
Medium
Medium
Medium
Medium
Medium
Cereals
0.4
Medium
Medium
High
Difficult
High
High
High
Strong
 Medium
EdibleOil&
Fats
0.4
High
Medium
Medium
Average
Medium
High
High
 Weak
 Medium
Vegetables,
Fruits&DryFruits
0.2
High
High
Medium
Average
High
High
High
Strong
Medium
Gur&
Sugar
0.2
Medium
Medium
Medium
Difficult
 High
Medium
High
Medium
Medium
Meat&
Fish
0.2
High
High
Medium
Easy
High
Medium
High
 Strong
Medium
Poultry
0.1
High
High
High
Difficult
Medium
High
High
Strong
Medium
PersonalCare
&HomeCare
0.1
High
High
HIGH
Difficult
Medium
High
High
Strong
 Medium
Tea,Coffee&
SoftDrink
0.2
High
High
High
Difficult
High
Medium
High
Strong
Medium
Spices&
Pulses
0.1
High
High
High
Easy
High
Medium
Medium
Medium
Medium
Tobacco
00.1
Low
Medium
Low
Easy
Average
Average
 Low
Medium
Low
Baked&
Fried
Hybrid Distribution Analysis
Hybrid
Distribution
Strengths
• High and growing demand
• Selected distribution/
Category centric
• Smooth supplies
• Urban retail/Modern retail
Challenges
• New entry
• Modern Trade
• Local Competition
• Developing category
Threats
• Quality Maintenance
• Vendors
• Platforms
• Competition
Opportunities
• Quality
• Know how development
• Branding
• Integration – Forward/
Backward
Living Essentials Value Chain Partnership 2019 l 00
Living Essentials Value Chain Partnership 2019 l 00
Distribution - Three Years Road Map
Start Up
Year 1
• Karachi
• Lahore
• Isamabad
Capitalising the Equity
Year 3
• Build Capacity and
service for future
Partnering The Brands
Year 0
• Enter with capability
strength
• Entry with the big Brands
to Syncronised with the
market
Adding Cities
Year 2
• According to
level of
experties
Living Essentials Value Chain Partnership 2019 l 00
Financial Highlights
1st Year
63M
2nd Year
94M
3rd Year
120M
Net
Revenue
1st Year
21%
2nd Year
23%
3rd Year
25%ROI
1.26B
Gross
Revenue
2nd Year
1.87B
3rd Year
2.4B
1st Year
Living Essentials Value Chain Partnership 2019 l 00
Financial Highlights
0
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
1st Year 2nd Year 3rd Year
EBITA
0
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
1st Year 2nd Year 3rd Year
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
1st Year 2nd Year 3rd Year
Gross Revenue Net Revenue

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Value Chain Partnership in Pakistan

  • 2. Living Essentials Value Chain Partnership 2019 l 00 Table of Contents Summary • Objectives • Agreement Scope • Technology Enabled Distribution Mitsubishi • Mitsubishi Corporation • Living Essential Group • Mitsubishi Shokuhin Perspectives • Pakistan Value Chain • Opportunities • TCS • Modern Distribution • Models Pakistan • GDP Projections • Fast Facts • Distribution Elements Consumer • Demography • Top 20 Cities • Human Development • Urbanization Retail • Catagories • Food Expenditure • Channel Segmentation • Retail Landscape • E Retailing Opportunity • Processed Food • Reason • Market Analysis • Target Princeples • Target market • SWOT • Financials Page 3-5 01 Page 6-11 02 Page 12-20 03 Page 21-26 Page 60-88 04 Page 27-34 05 Page 35-48 06 Page 49-59 07 Market • Producers • Distributes
  • 3. Living Essentials Value Chain Partnership 2019 l 00 MC Objective Progressive Distribution Network Daily necessities from food to consumer goods • Should have Retailer centric product line Channel based • Provides Analytic for the product owners Retailer-friendly order system Appropriate Inventory management Modernize & agile delivery system
  • 4. Living Essentials Value Chain Partnership 2019 l 00 Agreement Scope MC & TCS • Product Development • Logistics Operation • Financial • IT system • Marketing Plan • Retail Execution 30 Millions Warehouse
  • 5. Living Essentials Value Chain Partnership 2019 l 00 Technology Enabled Distribution Source Dairy Form Staples Form Goat Form Poultry Farm Fish Form Target Principles $ 1.1 B $ 0.56 B $ 0.27 B $ 0.17 B $ 0.28 B $ 0.14 B Categories $ 82 B Milk and Dairy $ 37 B Fish Meat & Chicken $ 0.4 B Delicacy & Seasoning $ 0.5 B Topping & Spices Reach of 850,000 Sq. Ft Warehouse 950+ Express Centres 2100+ Service Centres 8000 Business Customers Target Market Population 30 Millions Outlets 125 K - Target 12 K Medium to top end retail & Food Services
  • 6. Living Essentials Value Chain Partnership 2019 l 00 Global Environmental & Infrastructure Industrial Finance, Logistics & Development Energy Business Group Chemicals GroupMachinery GroupMetals Group Living Essentials Group
  • 7. Living Essentials Value Chain Partnership 2019 l 00 LEG Strategy & Offers Aims to achieve sustainable growth by fulfilling consumers' daily lives around the world. As part of LEG mission LEG committed to undertake a diverse range of businesses by expanding global supply network and developing vertically integrated business model outside Japan. Offers diverse range of products and services to consumers in a sustainable manner in various fields of business from raw materials procurement to distribution and retail. Emphasis on generating not just economic value, but also environmental and social value in line with its strategy to achieve sustainable corporate value.
  • 8. Living Essentials Value Chain Partnership 2019 l 00 LEG - Brief of its 5 Divisions Retail Division Sale of food, clothing, furniture and interior furnishings, Daily goods Development and distribution of various consumer sales materials and services Marketing business, coalition loyalty program and payment settlement-related service businesses Distribution Division Distribution and logistics of various products and services including processed foods, frozen and chilled foods, confectionery, liquor, paper products, packaging materials Various healthcare related businesses such as outsourcing services for hospitals, import and sale of medical equipment, and nursing care equipment rental Distribution business, which has the role of connecting manufacturers to retailers, the Distribution Division evolved to supply products and services by responding to changes in market and industry environments and meeting the needs of diverse consumers
  • 9. Living Essentials Value Chain Partnership 2019 l 00 LEG - Brief of its 5 Divisions Consumer Products Consumer necessities such as processed foods, confectionery, beverages, canned goods, instant noodles, seasoning’s, milled flour, sugar, starches, starched products, tires, and other daily necessities Manufacturing of baby diapers in Indonesia through a joint venture with Daio Paper Indonesia). Fresh Food Products Production, procurement, processing and sale of marine products Procurement and sale of rice, fresh produce and dairy products Production, procurement , manufacturing, processing and sale of meats Resources Division Production, collection, manufacturing, processing and sale of grains, feed, and food and beverage raw materials as well as housing and constr.
  • 10. Living Essentials Value Chain Partnership 2019 l 00 Mitsubishi Shokuhin – The Distribution Aim to go beyond traditional food wholesaling to become a general food products trading company spanning diverse areas ,business formats and functions Marketing • Macro marketing analysis • Market Outlook, Category, Product Trends • Consumption trends, consumption trend analysis • Lifestyle marketing POS, ID-POS data analysis • Promotion support for O2O Distribution • Automatic warehouse and digital picking system • Deliveries by category and store passage • Product logistics to in-store logistics, "Solutions with integrated logistics and information" Segments • Frozen and Chilled Foods • Processed Foods • Alcoholic Beverages • Confectioneries Services • 30,000 Customers • Restaurants and food services • Same day delivery • Order centre open 365 days • Club fresh frozen, room temperature food and disposable supplies in a single delivery https://www.mitsubishi-shokuhin.com/solution/development.html
  • 11. Living Essentials Value Chain Partnership 2019 l 00 Solution Partner Mitsubishi-Shokuhin Mitsubishi-Shokuhin Distribution Business Handles over Ten Thousand products in the four categories. Processed foods Seasoning’s and sauces Chilled and frozen foods Confectionery and canned goods Alcoholic and non-alcoholic beverages 30.6 Processed foods 39.9 Chilled and frozen foods 11.8 Confectionery & canned goods 0.81 Seasoning’s and sauces 17.6 Alcoholic and non-alcoholic beverages https://www.mitsubishi-shokuhin.com/solution/development.html
  • 12. Living Essentials Value Chain Partnership 2019 l 00 Perspective
  • 13. Living Essentials Value Chain Partnership 2019 l 00 LEG Perspective Pakistan Value Chain Basic Food & Necessities Undeveloped/In efficient supply chain Minimum availability leads to limited consumption Resource Processing • Disorganize infrastructure • Protected local produces • Lack of transparency • High rate of wastage Manufacturing • FMCG market dominated by few foreign manufacturer • Unbalanced competition • High import duty-High Entry Barriers Retail • 549K store - 90% + GT store • PKR.3.6 T market • Small & Scattered MT • Cash payment to distributors Consumer • Rising middle class • 77 Mn /208 Mn • $5680 / GDP at PPP • Limited Availability of Goods to Consumer Distribution • Scattered small size distributor across Pakistan • Network Gaps Category centric – Not retail/custome r centric Ref: LEG Presentation
  • 14. Living Essentials Value Chain Partnership 2019 l 00 LEG Opportunity Perspective - Market Needs Agricultural Logistics • Traditional traders • Time sensitivity / precision • Information flow • Temp controlled Consumer • Emergence of E commerce • Growing needs for the last miles delivery Whole Sale And Retail • Disorganize distribution network of General Trade Temperature Controlled Vehicles • Need of temperature controlled Vehicles • Cross border Opportunity - CPEC Ref: LEG Presentation
  • 15. Living Essentials Value Chain Partnership 2019 l 00 Living Essentials Group Perspective - TCS Value Chain Solution Partner Manufacturing • Access to direct sales delivery • Logistic Management expertise Distribution • Expertise & Capacity in direct sales delivery Consumer • Insight data and experience TCS business of delivering: • Documents & package • Public service, Insurance, visa, tickets
  • 16. Living Essentials Value Chain Partnership 2019 l 00 LEG Opportunity Perspective Warehouse Capacity 850,000 Sq. Ft Locations 950+ Express centres Logistics 2100+ Service centres Customers 8000 Business Customers Key Assets Ref: LEG Presentation
  • 17. Living Essentials Value Chain Partnership 2019 l 00 Modernized Distribution - Food and Daily Necessities PKR 3.6 Trillion of Food Retail • Ware House 850,000 Sq. Ft • Country wide foot print • Express Centres 950 • Access Points 2000 + • Business Customer 18000 Market Needs • Agriculture Transportations • GT Serving Distributions • E commerce • Last Mile Delivery* * Transportation Hub To end Consumer Modern Distribution • Channel based offerings • Category line • Analytic / info flow • Ordering & replenishment through system • Inventory Management / JIT • MC network around the globe • Oracle Systems/Demand Apps Expertise • Hub and retail Distributions Expertise
  • 18. Living Essentials Value Chain Partnership 2019 l 00 Jumbo-tail Model - India Buyers • Retailers • Food Services • Manufacturers • Farmers • Middleman • Platforms Sellers Delivery and payments Collection for seller Proprietary algorithms Working Capital providing from third party/ Bank Selection of products Website - Sellers linked Products with detail Customers buy these Products from the Website/Phone App. Staples, spices,dry fruits, Packaged foods, and FMCG products Ref: Jumbo Tail presentations Website
  • 19. Living Essentials Value Chain Partnership 2019 l 00 Amazon Based Model Customer TCS Distributor Manufacturer / Imports Customer Retailer Warehouse Manufacturer / Imports Pull Pull
  • 20. Living Essentials Value Chain Partnership 2019 l 00 Amazon Based Model Information Flow Physical Flow Whole Seller Partner Level 2 Level 3 Vendor/ Supplier Manufacturing Independent Supplier/ Third Party Level 1 Customer Website & system
  • 21. Living Essentials Value Chain Partnership 2019 l 00 Pakistan Consumer Insight Overview
  • 22. Living Essentials Value Chain Partnership 2019 l 00 Global Economic Projection Pakistan GDP in View of World Financial Institutions 5% - 2050 5.5% - 2020 5.7% - 2018 4.9% - 2018 Share in the World GDP Year 1980 1990 2000 2010 2017 0.54% 0.72% 0.74% 0.79% 0.83% Share
  • 23. Living Essentials Value Chain Partnership 2019 l 00 Market Land Scape • 208 Million Population - the world’s sixth most populous country • 100 Million under the age of 30 years -23.8 is the Median Age • 18th Largest Middle Class in the World- USD 2 to USD 20 Per/Day • Family size of 6.5 person with almost equal gender ratio • Punjab with 53% population & the most dense province • 36% Urban population which is growing over 3% annually • Top 10 cities Contain 20% Population – Karachi is the biggest over 15 Mn GDP - TOTAL Agricultural Sector 19% Services Sector 60% Industrial Sector 21%
  • 24. Living Essentials Value Chain Partnership 2019 l 00 Market Facts - Pakistan • 36th-largest country in the world, 796,095 sq km • GDP (purchasing power parity): $1.1 trillion (2017 est.) • GDP per capita: $5,400 (2017 est.) • Rs.3.6 trillion – Whole sale and Retail Trade • Fastest Growing Retail Market – 8.2% (2016-2021) • 73% Tele Density – 153 million mobile phone users • 22% Internet user – over 20 million people Services Sector 17% 31% 22% 13% 11% 6% Other Private Services General Government Services Housing Services (OD) Finance & Insurance Transport, Storage & Communication Wholesale & Retail Trade
  • 25. Living Essentials Value Chain Partnership 2019 l 00 Elements for the Progressive Distribution Network Know the Consumer Know the Retailer Design product & Services Distribution Retailer oriented products & network
  • 26. Living Essentials Value Chain Partnership 2019 l 00 FMCG Distribution Services FMCG Distribution Demand Business Excellence • Operating Model Governance • FMCG Analytic & Insights • New Business Services Delivery • Centres of Expertise (Co-Es)Population GDP Urbanization Fix Foundation for Real Value Creation Build New Operating Model
  • 27. Living Essentials Value Chain Partnership 2019 l 00 Consumer Insight
  • 28. Living Essentials Value Chain Partnership 2019 l 00 Know the Consumer
  • 29. Living Essentials Value Chain Partnership 2019 l 00 Demographic Split ISLAMABAD 1% KHYBER PAKHTUNKHWA 15% PUNJAB 53% SINDH 23% BALOCHISTAN 6% FATA 2% Census 2017 RURAL 64% URBAN 36%
  • 30. Living Essentials Value Chain Partnership 2019 l 00 Demography – Top 20 Cities Census 2017 46,125,439 20.97% RANK NAME PROVINCE Population 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Karachi Lahore Faisalabad Rawalpindi gujranwala Peshawar Multan Hyderabad Islamabad Quetta Bahawalpur Sargodha Sialkot Sukkur Larkana Sheikhupura Rahim Yar Khan Jhang Dera Ghaxi Khan Gujrat Sindh Punjab Punjab Punjab Punjab Khyber Pakhtunkhawa Punjab Sindh Capital Territory Balochistan Punjab Punjab Punjab Sindh Sindh Punjab Punjab Punjab Punjab Punjab 14,916 11,126,285 3,204,276 2,098,231 2,027,001 1,970,042 1,871,843 1,734,309 1,009,832 1,001,205 762,111 659,862 655,852 499,900 490,508 473,129 420,419 414,131 399,064 390,533
  • 31. Living Essentials Value Chain Partnership 2019 l 00 Human Development Condition Census 2017 Pakistan HDI - 0.562 - Medium - World Rank 150 Islamabad Punjab Sindh Khyber Pakhtunkhawa Balochistan Fata 0.875 0.732 0.64 0.628 0.421 0.216 Very High High Medium Medium Low Low 5.97 6.43 5.58 7.94 6.95 8.96 Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55 Area HDI Status Family Size
  • 32. Living Essentials Value Chain Partnership 2019 l 00 Human Development Condition Human Development Index UN 2017 Districts wise HDI Top Ten Districts Very High High Medium Low 0.853 0.739 0.6372 0.371 35.69 Millions 62.23 Millions 61.83 Millions 40.28 Millions 6.09 6.48 6.61 6.29 Status HDI 17.8% 31.1% 30.9% 20.1% % 9 23 33 56 Districts POP Family Size Districts HDI Family Size Lahore Islamabad/Rawalpindi Karachi Sialkot Jhelum Gujrat Chakwal Attock Faisalabad Gujranwala 0.877 0.875 0.854 0.834 0.829 0.795 0.792 0.786 0.782 0.769 HDI Rank 1 2 3 4 5 6 7 8 9 10 6.33 5.97/6.08 5.74 6.78 5.97 6.23 5.62 6.14 6.43 6.71 Status Very High Very High Very High Very High Very High High High High High High Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55 Note: Fata & AJK Data is not included
  • 33. Living Essentials Value Chain Partnership 2019 l 00 Top 10 Most Populous Cities Human Development Index UNO 2017 Pakistan HDI - 0.562 - Medium - World Rank 150 City Karachi Lahore Faisalabad Rawalpindi Gujranwala Peshawar Multan Hyderabad Islamabad Quetta 0.854 0.877 0.782 0.871 0.769 0.756 0.718 0.716 0.875 0.664 HDI Very High Very High High Very High High High High High Very High Medium Status 4 1 10 3 10 14 21 22 2 38 HDI Rank 5.74 6.33 6.43 6.08 6.71 8.72 6.2 4 5.06 5.97 8.22 Family Size Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55
  • 34. Living Essentials Value Chain Partnership 2019 l 00 Urbanization Speed Census 2017 Province wise Population and Growth Rates Area Pakistan KPK Punjab Sindh Balochistan FATA Islamabad 132.35 17.74 73.62 30.44 6.57 3.18 0.81 Population in Million Average annual Growth Rate 207.77 30.52 110.01 47.88 12.34 5 2 1998 2017 2.6 2.8 2.6 2.7 2.4 2.1 5.2 2.4 2.89 2.13 2.41 3.37 2.41 4.91 1981-98 1998-2017 Area Pakistan KPK FATA Punjab Sindh Balochistan Islamabad Population in Million Urban share (0/0) 132.35 17.74 3.18 73.62 30.44 6.57 0.81 84.25 11.06 2.20 47.29 19.03 4.33 0.34 1981 1998 207.77 30.52 5.00 110.01 47.89 12.34 2.00 2017 32.52 16.87 2.69 31.27 48.75 23.89 65.72 28.3 15.06 - 27.6 43.32 15.62 60.06 1981 1998 36.38 18.77 2.84 36.71 52.02 27.55 50.58 2017
  • 35. Living Essentials Value Chain Partnership 2019 l 00 Retail Insight
  • 36. Living Essentials Value Chain Partnership 2019 l 00 Monthly Family Expense Distribution Census 2017 Housing, water, electricity, gas & fuels 30% Food & Non Alcoholic Bev 35% Miscellaneous 3% Recreation & Culture 2% Alcoholic Bev. & Tobacco 1% Restaurants & Hotels 1% Health 2%Communication 3% Education 4% Furnishing & household equipment maintenance 4% Transport 7% Clothing & Footwear 8%
  • 37. Living Essentials Value Chain Partnership 2019 l 00 Food Expenditure Break down - 35% of Expense Census 2017 Food Consumption Milk Cereals Vegetables Meat Ghee Other food items Sugar Fruits Pulses Squashes Tea Biscuits Jams 21% 20% 13% 10% 9% 8% 5% 4% 3% 3% 2% 2% 2% Punjab 17% 20% 13% 14% 8% 7% 5% 4% 2% 3% 4% 2% 2% Sindh 16% 23% 10% 10% 10% 9% 8% 4% 3% 2% 3% 3% 1% KPK 13% 22% 13% 15% 8% 5% 6% 4% 3% 3% 4% 2% 2% Boluchistan
  • 38. Living Essentials Value Chain Partnership 2019 l 00 Food Category Size - Opportunity Mapping Average Food Expenditure Milk & Products Cereals Edible Oils & Fats Vegetables Gur, Sugar Preparations Meat and Fish Poultry Miscellaneous Food Products Tea, Coffee, Soft Drink Condiments and Spices Fruits & Dry Fruits Tobacco & Chewing Products Pulses, Split & Whole Baked & Fried Products Total 25.2 18.21 10.79 8.59 6.4 6.37 4.91 3.68 3.45 3.3 3.1 2.43 2.33 1.24 100 Category Weight 398.49 287.96 170.62 135.82 101.20 100.73 77.64 58.19 54.56 52.18 49.02 38.43 36.84 99.61 1542 33.21 24.00 14.22 11.32 8.43 8.39 6.47 4.85 4.55 4.35 4.09 3.20 3.07 1.24 128.50 Per Cap Consumption - PPP Annual $ 1542 Monthly $ 128.50 82.8 59.83 35.45 28.22 21.02 20.93 16.13 12.09 11.34 10.84 10.18 7.98 7.65 4.07 328.56 Total Size - Billion Economic Survey of Pakistan 2017 Per Capital GDP $5400 Domestic Consumption $4428 80% Per capital DGP Food share $1542 35% Of Domestic Consumption
  • 39. Living Essentials Value Chain Partnership 2019 l 00 Know the Retailer
  • 40. Living Essentials Value Chain Partnership 2019 l 00 Channel Segmentation Census 2017 Wholesale 1% Food Services 12% Street Vendor 6% Medical Store 3% Grocery Store 76% Bakery 2% Modern Trade 0.5% 2 Millions Total Outlets Local Source FMCG Universe Channel No. Outlets % Age Bakery Street Vendor Grocery Store Medical (Drug) Store Food Services Wholesale Modern Trade 17000 52000 656000 23000 101000 9000 4000 862,000.00 2% 6% 76% 3% 12% 1% 0.46
  • 41. Living Essentials Value Chain Partnership 2019 l 00 Retail Landscape Retail Outlet Projections Year No. Outlets 2016 2017 2018 2019 2020 2021 500,000,00 562,5 00,00 632,812,50 711,914,06 800,903,32 1,000,000,00 Euro-monitor FMCG Universe Net Retail Sales PKR $ 2013 2014 2015 2016 2017 2018 1 6, 220,00 18,1 00,00 20, 320,00 22 930,00 25,980,00 29, 440,00 115.85 129.26 145.14 163.77 185.57 210.28 Statisca Billion 35,000,00 30,000,00 20,000,00 15,000,00 10,000,00 5,000,00 0 2012 2013 2014 2015 20182016 2019 1,200000 1,000000 800,000 600,000 400,000 200,000 0 2013 2014 2015 20182016 2019
  • 42. Living Essentials Value Chain Partnership 2019 l 00 Basis for Mapping the Retail Store Location Category Handling Sales Volumes Foot Fall of Customer Customer Type Store Layouts Area of The Store No of Cash Counter
  • 43. Living Essentials Value Chain Partnership 2019 l 00 Modern Trade - International • Outlets - 9 • In Cities - 5 • Outlets - 6 • In Cities - 3 • Outlets - 2 • In Cities - 1
  • 44. Living Essentials Value Chain Partnership 2019 l 00 Modern Trade - Pakistani • Outlets - 10 • In Cities - 4 • Outlets - 6 • In Cities - 3 • Outlets - 5 • In Cities - 3
  • 45. Modern Trade - Pakistani Living Essentials Value Chain Partnership 2019 l 00
  • 46. Living Essentials Value Chain Partnership 2019 l 00 Top Ten Retailers – Growing segments Store Imtiaz Metro Al-Fateh Chase Group Madina Cash & Carry Euro Store Punjab Cash & Carry Hyper star USC CSD Total 60 67 50 30 65 85 90 55 95 65 62 Food 40 33 50 70 35 15 10 45 5 35 38 Non food 65 39 35 36 12 6 6 28 40 21 288 Total to - Billion 8 9 10 14 11 9 6 6 5300 135 5508 No. Store Share %
  • 47. Living Essentials Value Chain Partnership 2019 l 00 E Retailing
  • 48. Living Essentials Value Chain Partnership 2019 l 00 E Retailing Landscape in Pakistan • Vendors • Logistics • Website • Couriers • Payment Methods Component • Clothing • Consumer Electronics • Food • On line Bookings – tickets • FMCG Categories • Vendor Capacity • Payment Methods • Regulation – NO • Courier ability • Technology Challenges
  • 49. Living Essentials Value Chain Partnership 2019 l 00 Opportunity Processed Food
  • 50. Living Essentials Value Chain Partnership 2019 l 00 Proposed Categories for the Distribution Canned Foods Processed Food & Frozen Milk & Dairy Products Meat, Poultry & Related products Food is no longer the labour intensive affair in urban households Ready-to-cook, store-bought items are steadily making their way onto our plates The rising Pakistani urban middle-class Growing disposable incomes are accountable for This shift in dietary patterns Ready-made food contributes nearly five per cent Why
  • 51. Living Essentials Value Chain Partnership 2019 l 00 Market Analysis Category Milk & Products Cereals Edible Oils & Fats Vegetables Gut, Sugar Preparations Meat and Fish Poultry Miscellaneous Food Products Tea, Coffee, Soft Drink Condiments and Spices Fruits & Dry Fruits Tobacco & Chewing Products Pulses, Split & Whole Baked & Fried Products 25.2 18.21 10.79 8.59 6.4 6.37 4.91 3.68 3.45 3.3 3.1 2.43 2.33 1.24 Category Weight YES YES YES NO YES NO YES YES YES YES NO YES YES YES Packaging Mostly disorganize Mostly disorganize organized Mostly disorganize Mostly disorganize Mostly disorganize Mostly disorganize organized organized Mostly disorganize Mostly disorganize organized Mostly disorganize Mostly disorganize Dominant Portion Nestle, Engro, Fauji Nestle, Fauji Dalda, Mezan, Kashmir No National Brand No National Brand No National Brand K&N, Season, Sufi Uniliver, P&G, Reckit Tapal, Lipton, Vital National, Shan No National Brand PTC, PHM, KTC No National Brand Gourmet, Shezan Market Players Traditional Traditional Dalda Traditional Traditional Traditional Traditional Uniliver Pepsi Traditional Traditional Pakistan Tobacco Traditional Traditional Market Leader Low Low Moderate Low Moderate Low Moderate Moderate High Low Low High Low Moderate Competition
  • 52. Living Essentials Value Chain Partnership 2019 l 00 Market Insight – Category Analysis Packaging Dominant Portion Market Players Market Leader Competition Most of the Categories have Packaging Supply Chain is disorganize Brands are available Traditional channel is the market leader Moderate to Low - Niche marketing
  • 53. Living Essentials Value Chain Partnership 2019 l 00 Key Producers and Targeted Category Share Topping, Desserts Dairy Products Meat, Poultry Canned Foods Nestle, Uniliver Nestle, Engro, Fauji K&N, Sufi, Meat One ,FML Imports Share in FOOD Dairy Products Meat, Poultry Canned Foods Topping, Desserts CATEGORY Share 25.2% 11.28% 0.79%
  • 54. Living Essentials Value Chain Partnership 2019 l 00 Target Market Pakistan HDI - 0.562 - Medium - World Rank 150 Lahore Islamabad/Rawalpindi Karachi Sialkot Jhelum 0.877 0.875 0.854 0.834 0.829 Very High Very High Very High Very High Very High 1 2 3 4 5 Very High => 0.8 | High 0.7 to 0.799 | Medium 0.55 - 0.699 | Low Less Than 0.55 Districts HDI Status HDI Rank 6.33 5.97/6.08 5.74 6.78 5.97 Family Size
  • 55. Living Essentials Value Chain Partnership 2019 l 00 Opportunity Mapping Particulars Size (Trillion PKR) Demand Supply Competition Entry Integration Expertise Customer Infra-structure Market size 0.9  Medium High High Difficult High High High  Strong Big Dairy& Confectionery 0.7  Medium High High Average Medium Medium Medium Medium Medium Cereals 0.4 Medium Medium High Difficult High High High Strong  Medium EdibleOil& Fats 0.4 High Medium Medium Average Medium High High  Weak  Medium Vegetables, Fruits&DryFruits 0.2 High High Medium Average High High High Strong Medium Gur& Sugar 0.2 Medium Medium Medium Difficult  High Medium High Medium Medium Meat& Fish 0.2 High High Medium Easy High Medium High  Strong Medium Poultry 0.1 High High High Difficult Medium High High Strong Medium PersonalCare &HomeCare 0.1 High High HIGH Difficult Medium High High Strong  Medium Tea,Coffee& SoftDrink 0.2 High High High Difficult High Medium High Strong Medium Spices& Pulses 0.1 High High High Easy High Medium Medium Medium Medium Tobacco 00.1 Low Medium Low Easy Average Average  Low Medium Low Baked& Fried
  • 56. Hybrid Distribution Analysis Hybrid Distribution Strengths • High and growing demand • Selected distribution/ Category centric • Smooth supplies • Urban retail/Modern retail Challenges • New entry • Modern Trade • Local Competition • Developing category Threats • Quality Maintenance • Vendors • Platforms • Competition Opportunities • Quality • Know how development • Branding • Integration – Forward/ Backward Living Essentials Value Chain Partnership 2019 l 00
  • 57. Living Essentials Value Chain Partnership 2019 l 00 Distribution - Three Years Road Map Start Up Year 1 • Karachi • Lahore • Isamabad Capitalising the Equity Year 3 • Build Capacity and service for future Partnering The Brands Year 0 • Enter with capability strength • Entry with the big Brands to Syncronised with the market Adding Cities Year 2 • According to level of experties
  • 58. Living Essentials Value Chain Partnership 2019 l 00 Financial Highlights 1st Year 63M 2nd Year 94M 3rd Year 120M Net Revenue 1st Year 21% 2nd Year 23% 3rd Year 25%ROI 1.26B Gross Revenue 2nd Year 1.87B 3rd Year 2.4B 1st Year
  • 59. Living Essentials Value Chain Partnership 2019 l 00 Financial Highlights 0 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 1st Year 2nd Year 3rd Year EBITA 0 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 1st Year 2nd Year 3rd Year 0 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 1st Year 2nd Year 3rd Year Gross Revenue Net Revenue