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 Unilever
Unilever'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
 Although Unilever wasn't formed until 1930, the companies that joined forces to
19th create the business we know today were already well established before the start of
ce the 20th century.
ntu
ry
Unilever's founding companies produced products made of oils and fats, principally
1900s soap and margarine. At the beginning of the 20th century their expansion nearly
outstrips the supply of raw materials.
Tough economic conditions and the First World War make trading difficult for
1910s everyone, so many businesses form trade associations to protect their shared
interests.
With businesses expanding fast, companies set up negotiations intending to stop
1920s others producing the same types of products. But instead they agree to merge - and
so Unilever is created.
Unilever's first decade is no easy ride: it starts with the Great Depression and ends
1930s with the Second World War. But while the business rationalises operations, it also
continues to diversify.
Unilever's operations around the world begin to fragment, but the business
1940s continues to expand further into the foods market and increase investment in
research and development.
Business booms as new technology and the European Economic Community lead to
1950s rising standards of living in the West, while new markets open up in emerging
economies around the globe.
As the world economy expands, so does Unilever and it sets about developing new
1960s products, entering new markets and running a highly ambitious acquisition
programme.
Hard economic conditions and high inflation make the 1970s a tough time for
1970s everyone, but things are particularly difficult in the fast-moving consumer goods
(FMCG) sector as the big retailers start to flex their muscles.
Unilever is now one of the world's biggest companies, but takes the decision to
1980s focus its portfolio, and rationalise its businesses to focus on core products and
brands.
The business expands into Central and Eastern Europe and further sharpens its focus
1990s on fewer product categories, leading to the sale or withdrawal of two-thirds of its
brands.
The decade starts with the launch of Path to Growth, a five-year strategic plan, and
The 21st in 2004 further sharpens its focus on the needs of 21st century consumers with its
ce Vitality mission.
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ry
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 Home Care Brands
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

Supply of fresh milk Supply of UHT milk

Year
(Million liters) (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

Annual
Annual Production
Consumption
Years
(million liters)
(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

Annual Production Annual Consumption

Year
(million liters) (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

Annual Production Annual Consumption

Year
(million liters) (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