According to Dairy Index 2012, Pakistan is the third largest dairy producing and consuming country in the world with 64 percent of the countrys populace labeled as "Deeper in the Pyramid' (DIP), which symbolizes 60 percent of LDP intake. The livestock sector only contributes 11% of the country's GDP, with around 42 billion litres of dairy produced per annum. The full total income from these dairy products is projected as US$ 26 billion per annum.
As per the Economic Study of Pakistan 2009, Pakistan has a herd size of around 63 million family pets, which is another largest on earth. About 35 million people are involved in dairy farming, deriving more than 40% of their total income from livestock. For these farmers, dairy animals provide milk for domestic ingestion as well as meagre income through the sale of dairy. In rural Pakistani culture livestock is a storer of prosperity. It is viewed as important interpersonal capital and will be offering insurance to the owner in times of financial stress.
Pakistan lacks the fundamental infrastructure that is needed for safe safe-keeping and transport of farm produce. Based on the Livestock and Dairy Development Plank, 20 percent of the current milk development is lost due to poor infrastructure. Poor research facilities, technological backwardness and insufficient control facilities have resulted in generating fewer careers and adding virtually no value to its agriculture produce. Of all the milk produced in the united states, only 3 percent is refined. Leftovers of it is consumed as fresh milk which is not cured and is mostly given by gawala's. These Gawala's account for around 80-85% of total milk supply in the united states. Because of this informal sector most of the dairy in Pakistan is of low quality and it is untreated. The handling of dairy is miserable no precautions are considered. People involved with this technique are mostly uneducated and have low desire to health issues. They do not understand the importance of treatment strategies. Due to this insufficient education, the production of dairy is also low. The methods used for milking are old and no machinery is used. Everything is performed purely by hand. Furthermore the live stock aren't properly fed and taken care and attention off. People do not understand the ways through which efficiency can be enhanced. Having less equipment also causes 20% of the dairy to be lost during carriage which also decreases the produce and revenue made by selling the dairy.
The packaged dairy industry comes into picture here. This industry is the opposite of the unprocessed dairy dairy industry which is the major chunk. The packaged dairy companies have tried out to present new techniques, use of equipment for milking and environment of health requirements. These companies have cutting edge plants installed and try to provide the best quality milk. The companies mostly buy milk from these local dairy men but a few also have their own farms. The neighborhood unprocessed milk is bought by these companies and processed and cured at the criteria which meet international quality.
So with the increase of such companies and awareness among consumers, the packed milk industry has began to take effect and gain share of the full total dairy products industry.
The packaged milk category was started in 1981 by company called Milk Pak, which pioneered tetra pack milk in Pakistan. The supply chain engaged collecting milk from rural areas across Punjab, finalizing the dairy through UHT (Ultra-High Temps Control) treatment, and advertising it to consumers in exclusively colored triangular and rectangular packages designed to prolong the milk's quality. Dairy Pak's "Dairy Packs" were very well-received and the brand soon became synonymous with quality milk. Its first proper competition came in the form of Haleeb, which introduced distinctively blue tetra packs to the marketplace in 1986. Milk Pak later merged with Nestle and continuing its development and leading the new high potential industry.
By 2006, the dairy products dairy category was growing at 20 percent yearly, and Dairy Pak and Haleeb were well-entrenched brands with distinctive colors and brand guarantees of providing high quality, natural and healthy dairy. Dairy Pak was identified by its renewable and white packaging-the colours of the country-and offered a brandname backed with the strong equity of Nestle, in conjunction with its own traditional traditions. Haleeb was recognized as the blue brand, and professed to have the "naturally thickest" milk which was also claimed to give tea the best taste.
At that point, market was dominated by these two strong and extensively well known brands. The industry viewed completely impenetrable for the new comers. But still dairy industry in Pakistan experienced great leads for expansion. However Olpers, new milk brand supported by a powerful company engro, surfaced to the field and using its heavy promotional activities it soon started out making its presence felt. The business gained share on the market quite rapidly and in couple of years time accounted for 13% of the market share. Other big companies saw this as the hallmark of potential profitable market and starting stepping into the packaged dairy business. Good Dairy was another brand supported by Shakargunj also launched onto the field and started making impact. Local companies like Nirala sweets also required the opportunity and launched their dairy food. Within this growing market some old products such as Nurpur started out reviving their brand and began making tetra pack milk. Numerous small brands like Halla, Premium and Primary launched their plastic packaged dairy too which was cheaper than tetra pack.
The industry had taken real boost in years 2008 and onwards. Countless brands started out emerging, many on small size. People started importing cows from Australia and other countries and marketed their milk. Knowledgeable people also stepped into this business. They brought in new techniques, live stocks and options and feeds to improve the output and sell quality healthy milk. Various brands like Fresh milk, Farm fresh, Anhaar, White yellow metal followed this style. The industry especially appears profitable as Pakistan is one of the greatest dairy producing and consuming country on the globe. Milk is one of the key components of Pakistani people diets. Increase in urbanization during these years also helped the industry to increase. People originated from rural areas started adopting to new developments. Mass media created an impact as companies used strenuous advertising to impact consumer selections and make them think that the packaged dairy is better, safe and healthy. The new milk suppliers also helped the industry as the new milk they provided was constantly missing quality, rumours of mixing up of normal water into dairy, unhygienic treatment of dairy and medications directed at animals to improve milk produce led visitors to give-up fresh dairy intake and avert to packaged milk.
Identify just how many new packaged milk companies have become functional in previous five years.
What is the growth of milk development in last five years
What will be the reasons behind the growth
What is the projected development for approaching years
Why is demand for packed milk increasing
What are potential new market segments for packaged milk
How many individuals are willing to swap fresh milk with packed milk
Is the non packed milk industry slowly and gradually transforming into packed dairy industry?
What impact does indeed increasing population has on milk demand
Is large youth population a driver for development in packaged dairy?
'Analysing the development of packaged milk sector in Pakistan over the last five years. '
This section will make clear what type of research would be conducted and by which means. It protects the facts of the study design, strategy for collecting the info, human population, questionnaire development and data examination.
The type of data can be either primary or supplementary. In this specific paper both primary and supplementary data would be utilized. The principal data placed will be accumulated via questionnaire whereas the source of extra data are released articles from Jstor journal and other credible options. Further the data can be qualitative and quantitative in characteristics. Qualitative data identifies data that could categorize items in terms of certain characteristics and / or quality. This type of data can be viewed and recorded however, it cannot be measured. Quantitative data refers to data that is numerical and can be assessed using various statistical techniques. The majority of the data regarding this newspaper is quantitative in nature. This is because of the fact that quantitative data is better to measure and review and reduces biasness that may appear in qualitative data. Information with regards to the demographics of the research themes would be referred to as qualitative data; this consists of information about the respondent's gender, era, etc.
Convenience, non-probability sampling will be utilized, based on the ease of gain access to for the researcher.
For the goal of this research, the list of elements upon that your sample is picked from the populace include the fact that they must be easy to get at to the researcher (as convenience sampling can be used). The other element of is the fact atleast 50% of the sample should fall in to the SEC B income bracket. It is because research shows this course to be the most frequent users of these products.
The time frame for this research project is 5 weeks, starting from August and finishing in Dec.
Research Proposal Distribution (August 2012)
Revisions to Proposal (1st Sept 2012)
Literature Review (8th September 2012)
Hypothesis Generation (8th September 2012)
Theoretical Construction (8th Sept 2012)
Methodology (8th September 2012)
Data Collection (22nd September 2012)
Data Compilation (6th October 2012)
Data Examination (13th October 2012)
Results and Studies (20th Oct 2012)
Final Distribution (3rd November 30th 2012)
The prospering dairy industry of Pakistan
The author of the article talks about the increasing tendency of consumption of top quality or packaged milk products in cities. Based on the author the change of dairy industry from unprocessed loose products to formally treated hygienic packed products has took quite a while. The packaged milk industry initiated in 1981 but till the early 2000's the progress was very slow-moving. People did not adapt to the theory and kept on consuming fresh products. Milk from Gawala's and yogurt from local dairy shops were widely preferred. Within the last 10 years the consumers became more aware of the advantages of the packaged dairy. People also started knowing about the incorrect treatment of dairy products by the neighborhood milkmen. Germs, mixing of drinking water, poor handling techniques and medications to improve milk produce from cows added to consumer's dismay. People all of the sudden started looking at packaged milk as more healthy, healthy and safe. According to the body given in the paper, the packaged dairy industry is growing at 20% annually.
Marketing of dairy products (fresh) milk vs. packed milk
The article studies the reason why behind success of packaged milk recently. The industry has boomed in last five years. Many new companies have come and impacted the industry. The new milk has been substituted for the packaged milk.
According to the writer the impact is seen by studying the marketing strategies of fresh dairy producers vs. Packed milk producers. The author views advertising as a key factor that has contributed to this increase in packaged milk industry. The marketing strategies and advertising has improved consumer's perception. Consumers are made alert to the features of packaged milk. The hygienic principles, purity and freshness have been advertised massively. The marketing has also shown the dark aspect of fresh dairy. The improper handling, unhygienic and old methods and contamination in the dairy have led to change in people choice. Moreover the firms have targeted changing people life styles. The capability of packaged milk, straight forward handling and easy storage has also brought on good attitude towards packaged milk. The packaged milk makers have also successfully promoted dairy as essential product for as well as main component for various items. Like the best tea, best desserts and best drinks are produced from packaged milk.
On the other side the fresh dairy industry being mainly unaccounted and casual has failed in this aspect. They are lacking technology as well as modern techniques. The uneducated milkmen have failed o understand the significance of marketing. They remain surviving on large demand, price and staunch users who do not want packaged dairy.
Changing lifestyles and consumer attitudes
The increasing concerns of contaminants, germs, bacterias and improper handling of milk products specially dairy has led many consumers to choose for packaged milk consumption. The understanding and knowledge of packaged milk being more secure and healthy is fast finding and catching the imagination of consumers. People are more informed about the hazards of eating unhygienic loose milk. This change is the an integral sign of huge potential and substantial untapped market that has great prospect of growth in packaged milk industry.
Keeping in mind this huge potential and changing standards of living of consumers, the packaged milk companies have come up with different types of milk. Consumers now have more options than they could have imagined previously. Companies like Milkpak and Olpers offer normal pasteurized milk with full excessive fat content as well as low fat, high calcium dairy better known as skimmed milk. Consumers specially the females are targeted with the skimmed dairy categories whereas men and children are advertised the normal brand of milk. Discussing choices and technology, companies have even made milk a special item. For instance olpers marketplaces it milk Tarang specially to make tea. It says that Tarang is best dairy for tea. Similarly nestle has done this for quite some time with its dry out milk brand called every day. So with changing consumers need and evolving standards of living, companies have come up with new and progressive products and also have successfully customized their options.
Drinking milk products in Pakistan
In the dairy products sector, milk continues to be the largest consumed commodity. In this category of drinking dairy, 'Khula doodh' is still the preferred choice of consumers as high percentage of population consumes it. Show of packaged milk is still suprisingly low in the dairy products industry. The primary reason behind this is that still majority of people consider the loose milk to be more fresh, wholesome and affordable.
"Drinking dairy food is expected to see a continuous value CAGR of 8% over the forecast period, departing from the high gross annual growth of 21% seen in 2011 as well as similar high double-digit growth seen in recent years which had been mainly led by hikes in unit prices. Through the forecast period, prices are expected to see only humble expansion since companies are concerned about the shortcoming of consumers to cope with soaring food inflation. "
In this high growth industry, packaged dairy has also seen tremendous expansion. Your competition has increased and new companies have started out making impact on the market. This year 2010, Engro foods a young company was attached with Nestle Milkpak a pioneering company in packaged dairy for the talk about value of sales which stood at 33%. Haleeb closely followed these companies with 20% value talk about.
The white revolution (Dhoodh darya)
Through these statistics we can clearly note that the dairy industry has great prospect of growth. The packaged dairy industry is also contributing more and more each year. The growth style is strong and may lead the industry in forseeable future. All of this would be produced possible by achieving the objectives as mentioned in the newspaper.
Pakistan's transforming dairy products industry
The Gawala system is one of the long ranking practices of Pakistan dairy industry. The result of this tradition is seen by dominance of unprocessed dairy which makes up about 93% of most liquid dairy products. From 2006-2009 utilization of LDP has increased with increase in the populace, 'With a CAGR of 2. 4% (regarding to Tetra Pak data). In 2009 2009, LDP consumption reached 18. 9bn litres, preserving its position as the fourth most significant LDP consumer after India, China and the US'.
In the same period, the speed of growth of packaged LDP was at CAGR of 8. 4% compared with unpackaged products, which grew at a CAGR of 2. 1%. corresponding to tetra load up this trend will continue in forseeable future. Tetra Pak expects packaged LDP to continue growing, with a CAGR of 10. 4% from 2009-12. The changing demographics of the country are adding to this change. Growing middle class, increasing young human population and education has triggered visitors to demand safer and more healthy products. In the alst ten years the urban inhabitants of apkistan has increased by 3 ratio points. In '09 2009, 35. 5% (59. 9m) more people were moving into cities. This change or urbanization has limited the supply of good healthy fresh dairy as folks have moved away from rural areas. Their usage of good quality loose dairy has been limited because of the lack of a cold resource chain. It has provided packaged milk companies with the possibility to provide good quality, safe milk in an choice form.
Increasing educational course and superior consumers have demanded increasingly more packaged products as they perceive it to be more healthy and far more convenient. From 1999-2009, packed LDP grew by 19%.
VAT to hamper expansion of dairy products industry
In 2010 this article posted in tribune elevated concerns of dairy products industry as government considered applying VAT on packaged milk. Corresponding to Pakistan dairy association (PDA) the VAT would seriously hamper the growth of the industry. Corresponding to Muzammil Aslam, economist at JS global capital ltd. Federal will face difficulty in making use of VAT on food industry. "The government will face problems in imposing VAT especially in the meals sector because this area has been largely unregulated, "
If federal applied VAT on packed milk which is just about 15%, the prices of milk packages would sharply climb. The difference between loose dairy and packaged dairy would become astonishing. Consumers will switch to loose dairy and packaged milk which includes been growing season to yr will all of a sudden default. Already the packed milk sector has only 13% share in the dairy products market. The industry won't make it through and eventually Pakistan would need to import packaged dairy products. The loose dairy industry is currently not in tax bracket so that it would be unfair to own taxes on packaged dairy products.
Emerging marketplaces will drive growth of dairy industry
According to a study conducted by tetra pack in 2012, rising new markets on earth including Pakistan, India, Brazil, Russia and china will drive the expansion of LDP industry. The LDP market is defined for accelerated demand in years 2011-2014. Pakistan happens to be the third most significant milk producing country and has third major herd size. Most of the populace of Pakistan is deeper in the pyramid (60%). This provides great opportunity for companies and local farmers to profit. Pakistani food suppliers have made many new progressive products which are affordable and good. One such product is the tea whitener. 32% of milk is used for making tea so that it is an essential market. Products like tarang that happen to be cheap and best for tea are ideal to permeate into DIP portion of the society. Once the packed foods enter in this section the expansion will be substantial. Today's low-income individuals are tomorrow's middle income, " said Azhar Ali Syed, Managing Director Tetra Pak Pakistan, noting that "this is a gold opportunity for dairy products processors to cultivate consumer commitment among a new generation of dairy consumers in developing countries such as Pakistan. " The usage is to incease from 70 billion litres to 80 billion in the entire year 2014. Many of the loose milk consumers are expected to transfer during this time period to packaged dairy.
"Low-income consumers symbolize one of the biggest progress opportunities for the dairy products industry. The main element to tomorrow's success is getting these consumers today, " said Tetra Pak Chief executive and CEO Dennis Jonson. "They make up almost 40 percent of the world's society and stay in economies driving a car our industry's expansion and they are growing more affluent. "
Tetra load up also declared that LDP demand worldwide will expand at 2. 9% CAGR from 2011-2014. The biggest potential markets will be Asia, Africa and Latin America.
The packaged dairy industry of Pakistan in the beginning faced slow development. People did not adapt to the thought of packaged milk and avoided eating it. Within the last decade this craze has changed. People now have become more alert to the packaged products and its own nutritional prices. The awareness resulted in consumer evaluation and liking the packed dairy. Thus the milk consumption began to transform. You can find two types of packaged milk available, the tetra load up and the pouch packed milk.
In days gone by five years the expansion has been immediate. The industry has prospered in this time around period. The boom in packaged dairy industry has seen many new rivals enter the market. Your competition has increased and out of the blue the industry has become fiercely competitive. In the first days, the packed dairy market was dominated by nestle milk pak. Milk pak was just like a monopoly. Now with new companies coming into, the market talk about has dropped but nonetheless milk pak leads the market. Olpers now has second highest market talk about, was launched throughout this period of time by engro foods.
The competition within the industry itself is becoming intense. There are many brands available offering nearly the same product at almost the same price. The style and vitamins and minerals of the milk brands are also same. Consumers have unlimited choices. The prominent brands competing in the market include: milk pak, olpers, haleeb, halla, good milk, gourmet, prema, anahar, nurpur, omung, and white gold. The combined ratio share of tetra pack and pouch load up dairy brands of the dairy products industry is 29% (22% tetra load up, 7%pouch load up). All these brands are struggling to get maximum of this 29% talk about of the dairy products market which makes the packaged milk industry.
Of the 29% show of packaged milk in dairy products industry, 22% is tetra pack milk. Currently dairy load up has around 40% share of the pie whereas olpers is second at 27%. Other significant rivals in this category are haleeb and good milk. These tetra jam-packed dairy brands offer pasteurized milk. It is a little expensive too in comparison to other categories.
In the other category, Gourmet dairy dominates the pouched dairy category as it has more than 70% talk about of the 7% pouched milk market. The main competition in this category is halla and dairy products queen. These brands offer UHT milk that can come in pouches and are considered economical.
Apart out of this inside competition experienced by packaged milk industry, enormous competition exists beyond your industry. This competition is given by the fresh milk or unprocessed milk category. This category is by far the most popular & most used one. It accounts for 71% of the total dairy market share. The fresh milk has this huge market show credited to various factors. Among these factors price, style, availability and vitamins and minerals are key. The new milk is readily available and supplied to households on daily basis. Local milk men who have their own cows source fresh milk on daily basis. The milk is delivered to consumers doorstep fresh every morning. This easiness is also one of the primary known reasons for its success. The fresh milk also is cheaper to get. As compared to the packaged dairy it almost costs Rs. 10/litre less. Another factor that has business lead to the huge market share is lack of awareness regarding packed dairy. People still think that fresh dairy is more nourishing whereas to them packaged and processed dairy is artificial. One key thing to notice is that the fresh milk has a 70% share in rural market while in metropolitan its only 30%.
According to a study on Dairy marketing conducted by FAO in Pakistan in 2003, "out of 33. 6billion litres of creation of dairy, 80% of the dairy in the united states are collectively produced by rural commercial and rural subsistence companies. The semi urban producers take into account 15% of the milk production, whereas metropolitan producers add 5% to the total milk creation in the united states. Only 5% of the dairy is processed which is promoted through formal circulation programs whereas the other 95% is being distributed by the middlemen in the metropolitan and rural areas. This accounts to be 0. 43% contribution of the formal sector to the real GDP of Pakistan in the entire year 2004-2005. The formal sector (UHT) market are the milk producers in Pakistan which totals to be only 3%, which is merely a small percentage, are growing at a stable rate of 20% a year. "
Initially the dairy products sector didn't obtain much attention. As mentioned before, the packed milk industry began in Pakistan in 1981. Dairy pak became the pioneer by bringing out its packaged dairy. Later Haleeb and dairy products queen and Halla adopted Milk pak footsteps. The industry at the beginning never looked encouraging and was rarely seen replacing the new milk. In fact, the concern of adulteration, bacteria, outdated and old ways of incorrect handling of dairy products, particularly loose dairy and curd by milkmen and shopkeepers, are forcing a huge volume of consumers in the country to change their old buying patterns and move away for traditional milkmen sent fresh milk. Consumer preferences have altered in the favour of packed milk products (Austin and Kohn, 1990), which offers better hygiene, nutritional value and value for the money. In the first 90s Tetra load up started their campaign of hygiene bacteria free milk; in addition their main aim was to teach the masses about the health risks of loose dairy which is supplied by the neighborhood milkmen. Also they wished to build understanding about the product quality, purity, freshness of the packaged dairy which is clear of preservatives. Till the mid of 90s dairy production was the least commercialized enterprise in the agricultural current economic climate. It was during the early years of the 21stcentury that the dairy products sector became slightly more commercialized with the introduction of two new companies in the sector: "Olpers" and "Goodmilk". The former enterprise surfaced as an intense player with attractive new advertisement campaigns appearing after nearly every six months and managed to gain second highest market talk about as a UHT milk designer in Pakistan after "Nestle Milkpak".
The dairy sector now stands at its turning point. The advertisements campaigns and your competition between the oligopolies of milk enterprises have benefited its consumers the most (Pakistan Dairy products Development Company, 2006). A demand transfer can be looked at from that of loose milk to packaged dairy. Milk consumers will have a number of brands of dairy to choose from which would suit their needs. Nearly all nationwide livestock herd is distributed in small models throughout Pakistan. About 55 million landless or small land retaining farmers are accountable for the majority of milk production produced in the country. Buffalos being the major milk producing animals produce most of the dairy in Pakistan whereas only little bit of milk is produced by cows as Pakistan's consumers prefer buffalo dairy over cow's milk.
UHT makers of dairy have made collection points in rural areas from where they gather milk from small scale farmers. It produces into a headache for the lovers as they need to face problems credited to poor infrastructure, quality guarantee of the milk produced by farmers, inexpert manpower and seasonality issues. Low production and uneven farm base helps it be inefficient for enthusiasts to collect dairy from farmers as collection becomes ineffective because of this. These challenges create serious hazards to the dairy industry of Pakistan which can only just be eliminated by providing subsidies by government to the farmers. To create Pakistan's dairy industry competitive against world's dairy sector Pakistan's dairy industry needs to be developed regarding international expectations.
For this research project most of the info has been gathered from secondary resources. due to limits and small time span only small range main research has been done. The primary research done because of this review is has been limited to Lahore area only. The respondents were mainly students belonging to few universities of Lahore. the sample size chosen for this research was 100. These hundred people stand for the whole inhabitants for this research only. This sampling has been done merely to get an idea of how much our research claim is valid.
The major research data gathering has been done through questionnaires. A fourteen close concluded questions questionnaire was floated in our test. The questionnaires were stuffed under the supervision of the researcher and everything precautions had been taken to avoid any bias.
When the respondents were asked which kind of dairy they consume 30 said fresh dairy, 60 tetra pack, 9 plastic material pouch and 1 went with others. The next questions resolved the regularity factor. 30 respondents said they take in milk twice per day, 50 used it once a day, 15 said few times weekly and 5 only used once weekly. The 3rd question asked the reason behind consuming dairy. Most respondents said they ingest for tea, caffeine and drinking. Out of the sample of 100 respondents, when asked 70 said that they use tetra pack milk while only 30 said no they don't really. Typically the most popular kind of packed milk according to our respondents is the UHT milk as 60 respondents went with the option. When asked about the packaged milk brands most people used milk load up 49, olpers being second and good dairy third. In pouched milk category premium was the most well-liked choice along with halla. The next question was perhaps the most significant one. We asked respondents which may have they ever consumed loose dairy or are its past users. 97 out of 100 said yes. Almost everyone has been a past consumer of loose dairy. In another of the questions we mentioned that 70 out of 100 people inside our sample use packaged milk. This means that almost 70% people inside our sample have shifted to packed dairy. This shows the growth of the packaged milk industry as 70% of your targeted consumers have shifted from loose milk. In next question we wished to know how long ago they shifted so that we can get a better notion of the growth development. 93% in our test has shifted to packed milk in last 5 years. With increasing rate yearly since 2007. Another question addressed the reason why behind change. People were required to rate each factor from 1 to 5, 5 being most significant and 1 the least. Majority of individuals regarded adding of water, poor handling and unhygienic as the most frequent and important reasons behind there transfer. Now we wished to know that what people consider when they purchase milk. Most of the respondents said that quality is their primary matter along with flavor and vitamins and minerals. This all exists in packaged milk and loose milk market is unable to provide this. Which means this also lays the basis for growth in packaged dairy portion as people requirements are changing and much more suiting the packaged milk industry. In response to affordability, 80% people said yes packaged milk is affordable. So our comparison is valid as people have fair choice between the two types of dairy. The very last question which is also very important still provides completely different picture. Individuals were asked which type is more healthy, 56 said loose dairy while 44 said packed. Despite all the above evidence and evaluation that support that individuals prefer and feel that packaged milk is way better, still bulk considers the loose fresh dairy to become more healthy as it's our traditional response.
So this examination of our key research provides us the clear picture of how people are thinking and making decision and the way the tendencies our changing to favour the development of packaged dairy industry.
SWOT evaluation of a business helps us in getting an perception of the advantages and weaknesses of the industry. The analysis highlights the inner strengths of the company that are valuable to the company and can prove to be vital in further progress. Similarly the weaknesses spotlight the issues that company encounters internally and can prevent company's improvement. The opportunities and risks highlight the exterior environment and the issues that it brings.
The packaged milk industry also has its own talents and weaknesses. There are various opportunities for the packed milk industry they can capitalize on. The external environment not only brings opportunities but also poses great threats. The following graph shows a thorough SSWOT research of the dairy industry.
Abundant supply of raw milk
State of the skill technology and handling plants
Reasonable revenue margins
Increasing demand for packed milk
Large pool of technically and appropriately trained human being resource
Safe and healthy
High dietary value
High quality standards
No ownership of dairy products farms
Reliant on farmers and suppliers for organic milk
Limited consumer base
Limited consumer reach
High costs of packaging
Lack of control over suppliers
Weak distribution channel likened o loose milk
Ease of availability
Decreasing quality of loose milk
Increasing number of people demanding packaged milk
Awareness of packed milk
Increasing prices of loose milk
Usage of produce enhancing drugs by loose dairy suppliers
Low width of loose milk
Increasing gap popular and supply
Price competition from loose milk suppliers
Low quality of raw milk
Health and produce of cattle's
Mishandling of milk
Lack of chillers and storage facilities at resource end
The major advantages of the filled milk industry is the fact it has a abundant way to obtain unprocessed milk. As Pakistan has one of the largest herd sizes on the planet, large volumes of milk are produced. The industry is seeing upsurge in demand as increasing numbers of people are moving to packaged dairy and the belief of its quality and diet is getting much better. The profit margins in the milk industry are also very good. The firms in packaged milk sector have installed technologically progress plants with latest machinery. This increases productivity as well as the produce. Through these technology and advanced techniques the nutritional values are maintained right and quality is guaranteed. Companies in the industry are utilizing high quality criteria which are ISO certified and at par with international manufacturers. To handle all this, industry has at its disposal band of well skilled and certified individuals.
The packaged milk industry has weaknesses that it requires to triumph over to expand into a primary stream industry. The industry presently depends on farmers and small livestock households for its milk supply. The companies operating on the market only have a minor amount of dairy way to obtain their own. This insufficient company had farms means that poor milk has been supplied. The quality is not regular. Even the supply itself is not regular as there are no fix suppliers. Another weakness that industry faces is that their consumer platform is very limited. Mostly the educated and wealthy homes use packaged milk. The marketplace lacks awareness. A lot of the population continues to be consuming fresh milk. People who can afford packaged dairy still choose for loose dairy. Therefore the companies need to broaden their consumer platform. One factor that causes this low consumer foundation is high costs of product packaging. As the tetra packages are expensive packaging the costs of the merchandise goes up so its impossible for the companies to remain competitive on price basis with loose milk suppliers. Another weakness that was discovered is the distribution and simple availability. Loose dairy suppliers go door to door everyday and deliver milk. Whereas packaged dairy is only available in the market. So people have to go and buy the dairy unlike fresh milk which is delivered to your home no matter where your home is.
The opportunities for the packaged dairy industry are huge. Consider the fact that Pakistan is one of the most populated countries and yearly population keeps growing at an alarming rate, there is a huge demand for milk. The demand and usage of milk has already been one of the best in the world. In this lucrative industry the demand for packed milk is being increased. Increasing numbers of people are demanding packed milk when compared with lose milk. Increased awareness scheduled to heavy advert and consisted quality has increased demand. Alternatively fresh dairy suppliers have provided huge opportunity for the companies to step in. Non constant quality of dairy, mixing of drinking water, use of drugs to enhance yield and poor handling of dairy has caused people to think of alternates which come in form of packaged milk. The prices of loose milk are also increased so people are actually increasingly more inclined towards packed milk.
Though the costs of fresh milk have increased but nonetheless price remains a continuous threat. As companies have huge presentation and handling costs they can not be competitive on price with loose dairy suppliers. Another hazard that comes through loose dairy channel is the low quality of raw milk that is received by the companies. This raw dairy originates from the same channel that provides the loose milk. So the quality is not regular or more to the standard. This factor also increases the supplier electric power as companies do not have proper suppliers to deal with. Another factor that causes threat is the reduced yield of our animals and lack of healthy give food to. This cause the cattle have to be less successful. The shelf life of loose dairy is suprisingly low. Lack of proper chillers and storage area facilities augments the risk of wastage and expiry of dairy. The industry lacks proper facilities specially on the supply side.
Porter's five makes model
The five makes model recommended by porter assists with understanding the dynamics of the industry. It analyses the industry from competition viewpoint and help in developing strategies. Businesses looking to type in new industries also get a fair idea about the industry's appeal through porter's five forces model.
The model appears in detail five major factors that summarize the industry. These factors include risks of new entrants, power of buyer, power of suppliers, substitutes available and degree of rivalry. In depth analysis of these factors helps understands the pro's and con's of an industry. The relative strength of these causes shape the procedures and strategies of the companies. Like setting of prices and income all are dependent on these pushes.
Following is the porter's five causes model made with value to the packed dairy industry of Pakistan.
Threat of new entrants:
Low barriers to entry
Low barriers to exit
Favorable authorities policy
Low capital requirement
Threat of backward integration
Low buyer concentration
High quantity of suppliers
Low switching costs
High distributor concentration
Low amount buyers
Low transitioning costs
Degree of rivalry:
moderate quantity of competitors
high industry progress rate
moderate advantage intensity
low product differentiation
low exit barriers
Low switching costs
Threat of new entrants
The dairy industry faces potential threat of new entrants. The real reason for this is that the entry and exit barriers aren't high. Not large ventures are necessary for having processing vegetation. Secondly the insurance policies made by federal also prefer the dairy industry. The fees for example are extremely low for the loose milk which is the primary insight. The demand side is also very high so increasingly more milk is demanded that means high potential for sales and revenue.
The dairy industry has various substitutes available in the market. The firms offer same quality dairy without differentiation in products. Different brands are plentiful in the market. The prices of the products are same. Very less variation exists in milk products and prices. The cost of witching to the substitutes is nonexistent. So on these basis your competition is high as all the companies offering same products are struggling for the same share.
Buyer electric power:
The attention of buyer is low in the industry as compared to the suppliers. The suppliers are plentiful but there is limited number of potential buyers. Substitution is no problem as there can be found perfect substitutes at minimal cost of substitution. Though there exist the threat of backward integration as many buyer or companies can threaten by owning their own farms and cattle. Hence doing backward integration for his or her own good.
There are high amounts of suppliers. Supply aspect has plenty of competition. Many suppliers of dairy are plentiful and therefore the ability of suppliers is poor. The product being truly a generic product with abundant source can be substituted easily. So suppliers have very less bargaining electric power. The amount of buyers though is concentrated. There aren't many firms that are in prepared dairy business. The turning costs are also nonexistent. Companies can turn to another supplier without any trouble as there are many suppliers with nearly the same product.
Degree of rivalry:
The competition on the market is not huge. Though its growing as new players enter into the market but at this time it still is very reasonably contested industry. The industry is very attractive as it includes seen consistent progress during the last 10 years. The industry comes with an annual progress rate in double digits which is very good for just about any industry. The product offering is the same. Very less product differentiation is present in the industry. The costs for setting up are also average. Asset intensity is reasonably high but not large. So on these basis the industry appears attractive and we can expect many new players to enter the market and boost the competition.
Pakistan is one of the primary milk products countries in conditions of both development and consumption. Milk is one of the most consumed commodities all over the world. Pakistan being the 7th most filled country requires a large amount of milk resource to fulfil its demand. Most of the milk in our country though comes through the casual loose milk sector. The packaged milk industry caters to not a lot of consumer base. However this tendency is changing fast. The packaged dairy industry has seen its increase in last decade. But the real growth arrived in previous five years. After calendar year 2007 the packed milk industry has seen enormous development. Industry has consistently seen development rates in double statistics. Many new brands have emerged in these years. The demand for dairy has also increased in these years however the major factor that has contributed to the success of this industry is people shifting from loose milk to packaged milk. The awareness created through multimedia and marketing programs of companies has triggered people to change their understanding of milk ingestion. People now have are more quality and health conscious and demands packed and clean healthy milk. The malpractices of loose dairy suppliers have also reverted people from its consumption.
The industry is thriving and in approaching years is likely to expand further. Still the loose milk essentially dominates market but speedy move in consumer preferences will soon make the program milk industry to meet up with numbers.
Q1. Which kind of milk does one consume?
A) Fresh milk
B) Tetra pack milk
C) Clear plastic pouch brands
Q2. How often do you really consume dairy?
A) Twice a day
B) Once a day
C) Few times a week
D) Once a week
Q3. For what purpose do you ingest milk?
A) Drinking plain milk
B) For tea/coffee
C) For making deserts
D) For every one of the above
Q4. Does one consume packaged milk?
Q5. What kind of packaged milk?
A) Tetra Load up (UHT)
B) Clear plastic pouch (pasteurized)
Q6. Which brand of Tetra load up do you utilize?
A) Milk pack
D) Good milk
Q7. Which make of pouched milk will you consume?
C) Dairy products queen
Q8. Perhaps you have used fresh milk previously?
Q9. How way back when does one shifted to packed milk?
A) 0-1 years
B) 2-3 years
C) 4-5 years
D) A lot more than 5 years
Q10. Rate the reasons behind this change? (1-5, 1 being least important and 5 the most)
A) Lack of freshness
B) Adding of water
C) Bad flavor/smell
E) Poor nutritional value
F) Trouble of boiling and storing
G) Improper controlling by milkmen
Q11. What is your basis of purchasing dairy? (Rate 1-5, 1 being least important and 5 the most)
D) Nutritional value
Q12. Is packaged dairy affordable?
Q13. Which milk is more healthy?
A) Fresh milk (loose dairy)
B) Packaged milk
Q14. Your family income please?
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