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2.OVERVIEW OF THE SPICE INDUSTRY

OF PAKISTAN
Food industry around the globe comprisesa niche within itself, referred to as spices.
According to the American Spice Trade Association, today spices have become known as
any dried plant product used primarily for seasoning purposes. This all-inclusivedefinition
seems to cover a wide range of plants like herbs, spice seeds and even dehydrated
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vegetables and spice blends.

Putting spices in a Pakistani perspective, they also comprise the authentic recipe mixes used in
traditional cuisine. The Pakistani spice industry can be divided into branded and unbranded industry.

7000 spices and salt grinding units operating in Pakistan,60% of

SMEDA found out that there are about

American Spice Trade Association, [online] Available at: http://www.astaspice.org

.
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which are rural based . But with the emergence of modern industrial units, the share of these rural
based units is decreasing.
Spices form a substantial portion of Pakistans business in terms of imports

and exports.

2.1. Major Food Exports of Pakistan

FY2011 VALUE
(in Million PKR )
COMMODITIES

S.No
1
2

Rice

11,821.0

FishandFishPreparations

2,482.0

Fruits

2287.4

Spices

1935.0

2.2. Major Food Imports of Pakistan

S.No.

COMMODITIES

FY2011 VALUE
(in Million PKR)

Animal or Vegetable Oil/fats

20,165.7

Wheat Un-milled

7367.4

FoodandLiveanimals

13,835.6

Tea

15030

Spices

5733

Based on the estimates of the existing spice business operators.

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Since the last decade, there has been tremendous growth in the spices industry of Pakistan. In the
recent past, many new companies have been setup due to high growth prospects in this industry. To be
at par with local and international demands, these companies have come up with secure packaging and
branded packs, with technological changes having quite an impact. However, growth in this industry
revolves around quality, promotion and distribution network.
The following illustration gives an understanding of how work is routed in a conventional spices

processing, packing and marketing business:

processing, packing and marketing business:

(SMEDA)

There are many factors behind increased demand of spices in Pakistan; a major factor is the changing
lifestyles of people who now prefer ready to use ingredients over traditional home made spices. Also,
spices have always been in demand due to the sub-continental style of cooking where quality spices are
termed synonymous with good food. However, according to SMEDA report 2006,sudden increase in
demand for spices has never been experienced implying that the growth has been steady and is
dependent on:
Pop ulation growth in both urban and rural area.

Ratio of younger people in the population (according to 1998 census 64% belongs to age group
of 15 to 34).
Increase in urban life phenomenon.
Preferences shifting from popular homemade curries to ready to use cu
rries.

2.3. DRIVING FORCES

The spice industry of Pakistan is a very difficult industry to compete in. The two main reasons of this
difficulty are low price competition and involvement of many unbranded suppliers. Brands, whether
branded by a food company, retailers brand or unbrand ed and open commodity merchants including

indirect competitors in the business of providing ready to cook, ready to eat, canned/ processed food
directly and indirectly compete against one another.Because the price sensitive buyers prefer to buy
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unbranded spices as they provide a local touch, it becomes difficult for major players of the industry
who deal in branded spices, to attract more buyers. A major factor that creates competition in this
industry is brand loyalty because certain taste attitudes can only be satisfied with certain brands. Apart
from this, some of the major driving forces in the Pakistani spice industry are changes in societal
concerns, lifestyles and attitudes, product innovation and changes in who buy the product and how they
use it.

2.4. KEY SUCCESS FACTORS

An organizations key success factors (KSFs) can be related to any of the following six categories:

An organizations key success factors (KSFs) can be related to any of the following six categories:

technology, manufacturing, distribution, marketing, skills and organizational capability. Apart from
these, there can also be other KSFs for a company. All the aforementioned factors apply to the spice
industry and their individual importance cannot be denied in makingindustry players successful over the
long term.

2.5. BRANDED SPICE INDUSTRY

According to SMEDA market share of spice industry in Pakistan is as follows:

Brand

Business Volume

Brandedandpacked

Rs.8billion

Loosespices

Rs.10to15billion

Estimated Market Share

40%
60%

Market Share

Branded and packed Rs. 8

billion

40%

Loose spices Rs. 10 to 15

billion

60%

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Some of the major players in this industry are Shan, National, Mehran
, and Chefs Pride etc. New players
have also come up which includes Habib, Kitchen Secrets (with brand name Rivaayat) etc. The prices of
the branded packs are around30% more than unbranded ones.
Pakistan does not exist among the major spices exporters, and hence presents a great opportunity and
enormous potential for investors to invest in this sector

2.6. MAJOR INDUSTRY PLAYERS

Major players of packed spices in theindustry are:
Shan Foods
National foods
Other players in the industry are:
Chefs Pride

Mehran Foods
Ahmed Foods
Habib Foods

Zaiqa Foods
Kitchen Secrets
It sometimes becomes difficult for firms to compete and this is one of the main reasons due to which
many firms leave the industry. A noteworthy players were there in themarket in the last decade but
has closed down it operations now.The vital reasons due to which the firms might leave the industry are
low consumer response to the companys offerings due to dissatisfaction, high brand loyalty already

towards other brand/player, not shifting to other brands, and monetary and trade concerns. Despite
these possible reasons, there are number of players who have survived the stiff competition and have
come out successful.

Market share of branded packs, according toSMEDA are:

Brand

Market Share In %

ShanFoods

50%

NationalFoods

35%

Chefs Pride

Others

10%
5%
10