The Packaged Milk Industry Marketing Essay

The occludeage Milk application Marketing EssayIntroduction match to dairy farm Index 2012, Pakistan is the third gear bountifulst take out producing and consuming country in the world with 64 part of the countrys cosmos classified as Deeper in the Pyramid (DIP), which represents 60 percent of LDP use. The bloodline sector alone contri onlyes 11% of the countrys gross domestic ingathering,with an estimated 42 billion litres of take out produced per annum. The total revenue from these dairy farm products is estimated as US$ 26 billion per annum.As per the Economic Survey of Pakistan 2009, Pakistan has a herd size of around 63 million animals, which is the 3rd largest in the world. About 35 million state ar multiform in dairy farming, deriving to a greater extent than(prenominal)(prenominal) than 40% of their total in rally from get laidstock. For these farmers, dairy animals depart take out for domestic spending as rise up as s whoremongerty income by dint of the sale of take out. In agrestic Pakistani culture livestock is a storer of wealth. It is viewed as back upant social cracking and offers insurance to the possessor in times of financial distress.Pakistan lacks the essential infrastructure that is needed for riskless storage and transportation of farm produce. According to the Livestock and Dairy tuition Board, 20 percent of the current draw production is lost out-of-pocket to poor infrastructure. Poor interrogation facilities, technological backwardness and lack of process facilities arrive at resulted in generating fewer jobs and adding virtually no foster to its agriculture produce. Of all the draw produced in the country, only 3 percent is processed. resi referable of it is consumed as late draw which is non hard-boiled and is mostly supplied by gawalas. These Gawalas account for around 80-85% of total take out egress in the country. oerdue to this informal sector most of the take out in Pakistan is o f impoerished feeling and is untreated. The sightling of draw is miserable and no precautions ar interpreted. population come to in this process atomic number 18 mostly uneducated and open low preference to health issues. They do not understand the importance of intercession procedures. Due to this lack of education, the productivity of draw is similarly low. The methods used for drawing argon old and no machinery is used. E rattlingthing is done purely by hand. In auxiliary the live stock argon not properly cater and taken c ar off. sight do not understand the ways through which productivity target be leavend. The lack of equip custodyt to a fault causes 20% of the milk to be lost during carriage which similarly lowers the emergence and revenue produced by selling the milk.The case milk perseverance comes into picture here. This manufacturing is the black eye of the raw milk dairy application which is the major chunk. The encase milk companies start tried to introduce sunrise(prenominal) techniques, use of machinery for milking and setting of health standards. These companies beat state of the art plants installed and try to reserve the outgo tint milk. The companies mostly buy milk from these topical anesthetic milk men only when a few as well as re pretend their own farms. The local unprocessed milk is bought by these companies and processed and treated at the standards which meet internationalistic persona.So with the incr fill-in of such companies and aw atomic number 18ness among consumers, the package milk attention has started to take effect and evolve apportion of the total dairy industry. diligence backgroundThe incase milk course was originated in 1981 by keep company named Milk Pak, which opened tetra pack milk in Pakistan. The grant chain involved accumulation milk from boorish areas across Punjab, processing the milk through UHT (Ultra-High Temperature Processing) treatment, and selling it to consumers in uniquely coloured triangular and rectangular packs designed to pro massive the milks tincture. Milk Paks Milk Packs were very well-received and the denounce soon became identical with quality milk. Its first real competition came in the form of Haleeb, which introduced distinctively blue tetrapacks to the merchandise in 1986. Milk Pak later merged with come close-fitting and continued its harvesting and leading the current risque likely industry.By 2006, the dairy milk category was growing at 20 percent annually, and Milk Pak and Haleeb were well-entrenched brands with distinctive colours and brandpromises of providing naughty quality, natural and level-headed milk. Milk Pak was identified by its jet and white packaging-the colours of the country-and offered a brand backed with the strong equity of Nestle, coupled with its own traditionalistic heritage. Haleeb was recognized as the blue brand, and professed to support the naturally thickest milk which wa s also claimed to give tea the best taste.At that time, viands commercial-gradeize was dominated by these devil strong and widely respected brands. The industry looked completely sound for the new comers. But button up milk industry in Pakistan had colossal prospects for ontogeny. heretofore Olpers, new milk brand backed by a powerful company engro, emerged to the scene and with its heavy promotional activities it soon started reservation its presence felt. The company gained share in the merchandise quite cursorily and in couple of historic period time accounted for 13% of the market share. some other big companies saw this as the sign of say-so profitable market and first get intoing the box milk business. Good Milk was some other brand backed by Shakargunj also launched onto the scene and started qualification electrical shock. local anaesthetic companies like Nirala sweets also took the opport unit of measurementy and launched their milk products. In this g rowing market some old products such as Nurpur started reviving their brand and started making tetra pack milk. Numerous small brands like Halla, foodie and Prime launched their credit card box milk too which was cheaper than tetra pack.The industry took real boost in long time 2008 and onwards. Countless brands started emerging, umteen on small scale. People started import cows from Australia and other countries and marketed their milk. Educated people also stepped into this business. They brought in new techniques, live stocks and feeds to enhance the productivity and sell quality healthy milk. respective(a) brands like Fresh milk, Farm merry, Anhaar, White gold followed this trend. The industry curiously looks profitable as Pakistan is one of the largest milk producing and consuming country in the world. Milk is one of the main components of Pakistani people diets. join on in urbanization during these years also helped the industry to smash up. People came from rural area s started adopting to new trends. Mass media created an impact as companies used vigorous advertising to enamour consumer choices and make them believe that the case milk is repair, safe and healthy. The refreshed milk suppliers also helped the industry as the fresh milk they supplied was constantly missing quality, rumours of coalesce of water into milk, unsanitary treatment of milk and medications given to animals to enhance milk produce led people to give-up fresh milk consumption and avert to packaged milk.Research marksIdentify how many new packaged milk companies have get going functional in dying five-spot years.What is the growth of milk production in go five yearsWhat are the reasons behind the growthWhat is the projected growth for coming yearsWhy is require for packaged milk increasingWhat are potential new markets for packaged milkHow many consumers are allowing to transpose fresh milk with packaged milkIs the non packaged milk industry slowly transformin g into packaged milk industry?What impact does increasing existence has on milk demandIs large youth population a driver for growth in packaged milk?Research apparent motionAnalysing the growth of packaged milk sector in Pakistan over the finis five years.Research MethodologyThis section will explain what persona of research would be conducted and by which means. It covers the details of the research design, methodology for collecting the information, population, questionnaire training and entropy analysis.Data TypeThe type of data can be either primary or secondary. In this particular written report both primary and secondary data would be used. The primary data set will be gathered via questionnaire whereas the source of secondary data are produce articles from Jstor journal and other credible sources. Further the data can be qualitative and denary in nature. Qualitative data refers to data that whitethorn categorize items in terms of certain characteristics and / or q uality. This type of data can be ob take cared and recorded however, it cannot be calculated. Quantitative data refers to data that is numerical and can be measured using various statistical techniques .The majority of the data regarding this paper is quantitative in nature. This is due to the fact that quantitative data is easier to measure and prove and reduces biasness that can occur in qualitative data. Information with regards to the demographics of the research subjects would be termed as qualitative data this includes information about the respondents gender, age, etc. consume ProcedureConvenience, non-probability sampling will be used, based on the ease of access for the researcher.Sampling FrameFor the purpose of this research, the list of elements upon which the sample is selected from the population include the fact that they should be easily accessible to the researcher (as appliance sampling is used). The other element of is that atleast 50% of the sample should fall into the atomic number 16 B income bracket. This is because research shows this class to be the most frequent users of these products. age FrameThe time frame for this research project is 5 months, starting from August and ending in December.Research proffer entry (August 2012)Revisions to Proposal (1st phratry 2012)Literature Review (8th September 2012)Hypothesis Generation (8th September 2012)Theoretical Framework (8th September 2012)Methodology (8th September 2012)Data appeal (22nd September 2012)Data Compilation (6th October 2012)Data Analysis (13th October 2012)Results and Findings (20th October 2012)Final Submission (3rd November 30th 2012)Literature ReviewHussain M et al, researches in his article compute outs bear upon the milk production in buffaloes, a case study the factors that impact the production and sacrifice of milk production in buffaloes. For this research the indite has taken dry fodder, green fodder, number of lactations and labour hours as his variab les of research. The research tried to establish the link between these variables and the subsequent effect they have of the rejoinder of milk produced. Generally the Pakistani milk industry is not known for high conceding cattle. The yield among the leading milk producing countries is very low. This is majorly due to old techniques, lack of education and improper feed. To study and decree the variables that can reform this yield this research proves to be significant. A stochastic sample of farms in jhang was used to monitor the effect of these variables. The research put outed over a couple of months and 60 buffaloes were observed. According to the results of the study increasing green fodder consumption in cattles by 1% increases the milk yield by 2.64%. similarly if number of lactations were decreased and do systematic the yield would increase. Currently every lactation is decreasing production by 0.76%. Increase in number of labour hours also significantly increase the y ield. So from this research we can see that to improve yield the buffaloes should be fed the green fodder more that is they need to graze the natural grease more and number of lactations and labours hours should be made more systematic and routine. However the dry fodder did not have any effect on this yield.M. A. Ali et al in his article prevalence of sub clinical mastitis in dairy buffaloes of Punjab, Pakistan published in journal of animal and plant sciences, identifies mastitis to be one of the major diseases prevailing in buffaloes in Punjab. This disease is not only decreasing the yield and affecting the health of animal but also produces unhealthy or contaminated milk. Mastitis is also the disease that economically hurts the dairy sector. As the dairy sector contributes almost 11% to the GDP of Pakistan, the disease proves to be a setback for the economy as well. therefrom researching and finding the prevalence and cure for it is important. The study was conducted in four d istricts of Punjab including Lahore, Sialkot, Narowal and Okara. Cattles from exclusive holding, organized and nonunionised farms were sampled. The sample was block outed with white side test to measure the extent of the problem. According to the results the most problem of mastitis occurred in idiosyncratic holding (58%) followed by the unorganized farms (42%). This is a major indicator that the practices in most of these farms are unhealthy for animals. About 80-85% farms of Pakistan are under these unorganized farm categories which mean that most of the buffaloes face this problem and hence yield low levels of milk. Mastitis causes production losses in the form of condemned milk, loss in milk yield, earlier culling of animals and replacements (Khan and Khan, 2006). Clinical mastitis can cause 10% or more of milk loss. Moreover in most of the cases of mastitis the milk produced is contaminated. and then this problem of mastitis is a key hurdle in high yielding buffaloes which not only hurts economically but also provides low quality milk. this also is a major reason behind lack of quality in our large-minded milk industry. The packaged milk industry has correct quality as the rate of mastitis is low in organized farms and yields better quality milk. this kind of better quality milk also is better. These stats at large talk about the standards of our milk industry and highlight the conflict between the packaged and loose milk industry. Recently few programs have been carried out in prevention of this disease and are making inroads.The power of the article talks about the increasing trend of consumption of brand or packaged dairy products in urban areas. According to the informant the transition of dairy industry from unprocessed loose products to formally treated hygienic packaged products has took a long time. The packaged milk industry initiated in 1981 but till the early 2000s the growth was very slow. People did not adapt to the idea and kept o n consuming fresh products. Milk from Gawalas and yogurt from local milk shops were widely preferred. In the last decade the consumers became more aware of the benefits of the packaged milk. People also started lettered about the improper treatment of dairy products by the local milkmen. Germs, mixing of water, poor treatment techniques and medications to enhance milk yield from cows contributed to consumers dismay. People suddenly started looking at packaged milk as more healthy, nourishing and safe. According to the figure given in the paper, the packaged milk industry is growing at 20% annually.The article researches the reasons behind advantage of packaged milk in recent times. The industry has boomed in last five years. Many new companies have come and impacted the industry. The fresh milk is being substituted for the packaged milk.According to the author the impact can be seen by studying the selling strategies of fresh milk producers vs. Packaged milk producers. The author sees advertising as a key factor that has contributed to this boom in packaged milk industry. The marketing strategies and advertising has tiltd consumers perception. Consumers are made aware of the advantages of packaged milk. The hygienic values, purity and freshness have been promoted massively. The marketing has also shown the dark side of fresh milk. The improper handling, unhygienic and old methods and contamination in the milk have led to change in people preference. Moreover the companies have targeted changing people lifestyles. The toilet facility of packaged milk, hassle free handling and easy storage has also caused positive attitude towards packaged milk. The packaged milk makers have also success affluenty promoted milk as essential product for as well as main ingredient for various items. Like the best tea, best desserts and best drinks are made from packaged milk.On the other hand the fresh milk industry being largely unaccounted and informal has failed in this as pect. They are lacking innovation as well as mod techniques. The uneducated milkmen have failed o understand the significance of marketing. They are still surviving on massive demand, price and staunch users who do not want packaged milk.The ever increasing concerns of contamination, germs, bacteria and improper handling of dairy products peculiarly milk has led many consumers to opt for packaged milk consumption. The perception and understanding of packaged milk being more safe and healthy is fast catching the minds of consumers. People are more informed about the hazards of consuming unhygienic loose milk. This change is the a key indicator of huge potential and enormous untapped market that has great potential for growth in packaged milk industry. charge in mind this huge potential and changing lifestyles of consumers, the packaged milk companies have come up with different varieties of milk. Consumers now have more choices than they could have imagined previously. Companies li ke Milkpak and Olpers offer normal sometime(prenominal)eurized milk with full fat content as well as low fat, high calcium milk better known as skimmed milk. Consumers specially the ladies are targeted with the skimmed milk categories whereas men and children are promoted the normal brand of milk. Talking about choices and innovation, companies have even made milk a specialized item. For example olpers markets it milk Tarang specially for making tea. It says that Tarang is the best milk for tea. Similarly come on has done this for many years with its dry milk brand called every day. So with changing consumers need and evolving lifestyles, companies have come up with new and innovative products and have successfully specialized their options.In the dairy sector, milk continues to be the largest consumed commodity. In this category of drinking milk, Khula doodh continues to be the preferred choice of consumers as high dowry of population consumes it. portion out of packaged milk i s still very low in the dairy industry. The main reason behind this is that still majority of people call for the loose milk to be more fresh, nutritious and affordable.Drinking milk products is expected to see a constant value CAGR of 8% over the forecast period, departing from the high annual growth of 21% seen in 2011 as well as similar high double-digit growth seen in the noncurrent few years which had been mainly led by hikes in unit prices. During the forecast period, prices are expected to see only modest growth since companies are concerned about the inability of consumers to cope with soaring food inflation.In this high growth industry, packaged milk has also seen dread(a) growth. The competition has increased and new companies have started making impact in the market. In 2010, Engro foods a young company was tied with Nestle Milkpak a pioneering company in packaged milk for the share value of gross revenue which stood at 33%. Haleeb closely followed these companies with 20% value share.The basic objective undertaken in this paper is to activate the resource potential of rural Pakistan and serve as a key engine of economic growth, thus radically changing the landscape of Pakistans agriculture economy through dairy development the conversion aims at empowering small farmers and providing them with mechanized farms. The revolution is trying to improve the overall infrastructure of the dairy sector so that its full potential can be exploited. By introducing modern techniques, white revolution will influence the lives of millions and enhance urbanization through innovation and quality. The white revolution aims to satisfy consumers by providing quality milk, affordable, wide product range and high nutritional value. To meet the needs of the farmers, white revolution will train, empower, provide resource, improve yield, link to formal markets and provide a thriving parcel to growth. This way the supply chain will become better off, local milk producti on will adapt to new techniques and foreign investors would also be attracted. Overall a standardized industry would take shape. close to stats shared in the paper give us brief of the industry. These stats are as followsCapture.PNGCapture2.PNGThrough these statistics we can clearly see that the dairy industry has great potential for growth. The packaged milk industry is also modify more and more every year. The growth trend is strong and may lead the industry in near future. All this would be made possible by achieving the objectives as mentioned in the paper.The Gawala system is one of the long standing traditions of Pakistan milk industry. The result of this tradition can be seen by dominance of unprocessed milk which accounts for 93% of all liquid dairy products. From 2006-2009 consumption of LDP has increased with increase in the population, With a CAGR of 2.4% (according to Tetra Pak data). In 2009, LDP consumption reached 18.9bn litres, maintaining its position as the fourt h largest LDP consumer after India, China and the US.In the equivalent period, the rate of growth of packaged LDP was at CAGR of 8.4% compared with unpackaged products, which grew at a CAGR of 2.1%. according to tetra pack this trend is going to continue in near 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 change to this change. Emerging middle class, increasing young population and education has caused people to demand safer and healthier products. In the alst decade the urban population of apkistan has increased by 3 percentage points. In 2009, 35.5% (59.9m) more people were biography in urban areas. This change or urbanization has limited the supply of dear healthy fresh milk as people have moved away from rural areas. Their access to good quality loose milk has been limited due to the lack of a cold supply chain. This has provided packaged milk companies with the probability to pr ovide good quality, safe milk in an alternative form.Increasing educational class and sophisticated consumers have demanded more and more packaged products as they perceive it to be healthier and more convenient. From 1999-2009, packaged LDP grew by 19%.In 2010 the article published in tribune raised concerns of dairy industry as governance considered applying value-added tax on packaged milk. According to Pakistan dairy association (PDA) the ad valorem tax would in earnest hamper the growth of the industry. According to Muzammil Aslam, economist at JS global capital ltd. Government will face difficulty in applying VAT on food industry. The government will face problems in imposing VAT especially in the food sector because this area has been mostly unregulated,If government applied VAT on packaged milk which is around 15%, the prices of milk packs would sharply rise. The difference between loose milk and packaged milk would become extraordinary. Consumers will shift to loose mil k and packaged milk which has been growing year to year will suddenly default. already the packaged milk sector has only 13% share in the dairy market. The industry wont survive and eventually Pakistan would have to import packaged dairy products. The loose milk industry is currently not in tax bracket so it would be unfair to have taxes on packaged dairy products.According to a study conducted by tetra pack in 2012, emerging new markets in the world including Pakistan, India, Brazil, Russia and china will drive the growth of LDP industry. The LDP market is set for accelerated demand in years 2011-2014. Pakistan is currently the third largest milk producing country and has third largest herd size. Most of the population of Pakistan is deeper in the pyramid (60%). This provides great opportunity for companies and local farmers to cash in. Pakistani food producers have made many new innovative products which are affordable and good. One such product is the tea whitener. 32% of milk i s used for making tea so it is a very important market. Products like tarang which are cheap and good for tea are ideal to penetrate into DIP segment of the society. erst the packaged foods enter this segment the growth will be enormous. Todays low-income consumers are tomorrows middle class, said Azhar Ali Syed, Managing Director Tetra Pak Pakistan, noting that this is a golden opportunity for dairy processors to cultivate consumer loyalty among a new generation of dairy consumers in developing countries such as Pakistan. The consumption is to incease from 70 billion litres to 80 billion in the year 2014. Many of the loose milk consumers are expected to shift during this period to packaged milk.Low-income consumers represent one of the biggest growth opportunities for the dairy industry. The key to tomorrows success is reaching these consumers today, said Tetra Pak President and chief operating officer Dennis Jonson. They make up almost 40 percent of the worlds population and live in economies driving our industrys growth and they are growing more affluent.Tetra pack also announced that LDP demand worldwide is going to grow at 2.9% CAGR from 2011-2014. The biggest potential markets will be Asia, Africa and Latin America.Competitor analysisThe packaged milk industry of Pakistan initially faced slow growth. People did not adapt to the idea of packaged milk and avoided consuming it. In the last decade this trend has changed. People now have become more aware of the packaged products and its nutritional values. The awareness led to consumer testing and longing the packaged milk. Thus the milk consumption started to transform. There are two types of packaged milk available, the tetra pack and the pouch packed milk.In the past five years the growth has been rapid. The industry has prospered in this time period. The boom in packaged milk industry has seen many new competitors enter the market. The competition has increased and suddenly the industry has become fier cely competitive. In the early days, the packaged milk market was dominated by nestle milk pak. Milk pak was like a monopoly. Now with new companies entering, the market share has dropped but still milk pak leads the market. Olpers now has second highest market share, was launched during this period of time by engro foods.The competition within the industry itself has become intense. There are many brands available offering virtually the homogeneous product at almost the same price. The taste and nutritional value of the milk brands are also same. Consumers have endless 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 percentage share of tetra pack and pouch pack milk brands of the dairy industry is 29% (22% tetra pack, 7%pouch pack). All these brands are fighting to gain maximum of this 29% share of the dairy market that makes the packaged milk industry.Of t he 29% share of packaged milk in dairy industry, 22% is tetra pack milk. Currently milk pack has around 40% share of this pie whereas olpers is second at 27%. Other significant competitors in this category are haleeb and good milk. These tetra packed milk brands offer pasteurized milk. It is a little expensive too when compared with other categories.In the other category, Gourmet milk dominates the pouched milk category as it has more than 70% share of the 7% pouched milk market. The main competition in this category is halla and dairy queen. These brands offer UHT milk which come in pouches and are considered economical.Apart from this inside competition faced by packaged milk industry, immense competition is present outside the industry. This competition is given by the fresh milk or unprocessed milk category. This category is by far the most popular and most consumed one. It accounts for 71% of the total dairy market share. The fresh milk has this huge market share due to various factors. Among these factors price, taste, availability and nutritional value are key. The fresh milk is readily available and supplied to households on daily basis. Local milk men who have their own cows supply fresh milk on daily basis. The milk is delivered to consumers doorstep fresh every morning. This ease is also one of the main reasons for its success. The fresh milk also is cheaper to get. As compared to the packaged milk it almost costs Rs. 10/litre less. Another factor that has lead to this huge market share is lack of awareness regarding packaged milk. People still believe that fresh milk is more nutritious whereas to them packaged and processed milk is artificial. One key thing to mark off is that the fresh milk has a 70% share in rural market while in urban its only 30%.Industry analysisAccording to a study on Milk marketing conducted by FAO in Pakistan in 2003, out of 33.6billion litres of production of milk, 80% of the milk in the country are collectively produced by rural commercial and rural subsistence producers. The semi urban producers account for 15% of the milk production, whereas urban producers contribute 5% to the total milk production in the country. however 5% of the milk is processed and is marketed through formal distribution convey whereas the other 95% is being distributed by the middlemen in the urban and rural areas. This accounts to be 0.43% contribution of the formal sector to the real GDP of Pakistan in the year 2004-2005. The formal sector (UHT) market are the milk producers in Pakistan which totals to be only 3%, which is only a small percentage, are growing at a stable rate of 20% a year.Initially the dairy sector did not receive much attention. As mentioned before, the packaged milk industry began in Pakistan in 1981. Milk pak became the pioneer by introducing its packaged milk. Later Haleeb and dairy queen and Halla followed Milk pak footsteps. The industry at the beginning never looked promising and was hardly see n replacing the fresh milk. In fact, the concern of adulteration, germs, obsolete and old methods of improper handling of dairy products, particularly loose milk and curd by milkmen and shopkeepers, are forcing a large number of consumers in the country to change their old buying patterns and move away for traditional milkmen delivered fresh milk. Consumer preferences have changed in the favour of packaged dairy products (Austin and Kohn, 1990), which offers better hygiene, nutritional value and good value for money. In the early 90s Tetra pack started their campaign of hygiene bacteria free milk moreover their main aim was to educate the masses about the health hazards of loose milk which is supplied by the local milkmen. Also they wanted to frame of reference awareness about the quality, purity, freshness of the packaged milk which is free from preservatives. gutter the mid of 90s milk production was the least commercialized enterprise in the agricultural economy. It was during the early years of the 21stcentury that the dairy sector became slightly more commercialized with the emergence of two new companies in the sector Olpers and Goodmilk. The power enterprise emerged as an aggressive player with attractive new ad campaigns emerging after almost every six months and managed to gain second highest market share as a UHT milk producer in Pakistan after Nestle Milkpak.The dairy sector now stands at its tour point. The advertisement campaigns and the competition between the oligopolies of milk enterprises have benefited its consumers the most (Pakistan Dairy Development Company, 2006). A demand shift