SALES of branded spices continue to swell on the growing domestic demand, but their market share is still small. The spice processing industry has yet to exploit the untapped market potential.

Exports of packaged spices and pickles have also been on the rise as manufacturers have set up more distribution networks abroad and are reaching out to new markets. Besides, offshore spice production facilities of these companies are also doing well and earning foreign exchange for the country, executives of these firms claim.

Over the years, the growing urbanisation and changes in life styles have boosted domestic demand for branded spices. And food firms have responded actively to cater to this rising demand.


Leading companies enter into sales agreements with superstores that are typically undertaken between producers and distributors


National Foods has introduced Computerised Reporting Yield for Sales and Trade Automation Landscape to enable its distributors to book orders via mobile phones. Company officials say this, along with some other measures, reduced the cost of sales from 15.5pc of the sales revenue in FY13 to 13.1pc in FY14 and enabled the company to push sales volumes by 13.8pc.

National Foods has recorded an average 21pc growth in sales between 2011- 2014. Its after-tax profit also soared by more than 150pc in 2011 and 2012 though it slumped dramatically, due largely to base effect, to 15.4pc and 5.1pc in 2013 and 2014 respectively. The company has expanded its presence from 45 foreign markets to some new export markets including Iraq, Japan, Nigeria and the Netherlands.

Market sources say the share of packaged mixed spices for specific food recipes in overall exports of spices is on the rise. Total exports of spices that stood at $50m in FY12 went up to $68m in FY13 but fell in FY14 to $56.4m because domestic sales through superstores surged. (In eight months of FY15, however, exports have again rebounded with 24pc yoy growth).

The spice industry is largely undocumented and 65-70pc of the market share remains in the informal sector. In 2006, a study conducted by the federal government with the industry’s help had estimated that spice manufacturers in organised sector enjoyed 25pc of the market share.

Taking that ratio as the basis and factoring in such important things like the estimated increase in total demand and supply and growth in sales of spice making companies, “we can assume that this percentage has risen to 30-35pc,” says an official of Shan Foods.

National Foods and Shan Foods each claim to enjoy a 40pc share in branded spice market. Shan Foods sells more than 60pc of its spices in the domestic market and exports the remaining 40pc to foreign markets in the Middle East, North America, UK and Europe, company officials say.

Chef Pride and Mehran, two other smaller spice proceesing companies have also started to be doing well, both locally and on the export front.

In addition, some food companies whose core business was not related to spices now process them to benefit from a growing market for branded products.

Habib Oil Mills, mainly an edible oil producer, is prominent among them. Some plain Habib spices and one or two recipe-mix spices are doing a good business in big cities.

Apart from the above-named major spice makers, lots of small spice units have also been set up in recent years. They, too, produce branded spices for the low-income group.

Market leaders enter into sale agreements with superstores like Metro, Imtiaz, etc. that are typically undertaken between producers and distributors. Spice makers, like all other manufacturers of FMCG, sell their products in bulk to superstores which also cater to the demand of retailers in their areas which the company distributors don’t reach, market sources say.

Pakistan produces onion, garlic, chillies, coriander, turmeric and, to some extent ginger. Other than these, all raw spices are either imported from various countries or some of them are routinely smuggled into the country from neighbouring countries like Iran and India.

Annual imports of black peeper, cardamom, cassia, cinnamon, clove, cumin seeds, ginger, nutmeg, bay leaf etc. runs into billions of rupees.

“Ensuring regular and cost-effective availability of such a large number of spices and condiments in a highly competitive market is not an easy task,” says a senior official of Shan Foods. “Besides, large-scale spice manufacturing requires lots of investment in production and packaging machinery, product development research and innovative mass-marketing campaigns. That tends to keep new comers away from venturing into this industry.”

Published in Dawn, Economic & Business, April 6th, 2015

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