Analysis of Edible Oil Industry

ANALYSIS
OF PAKISTAN INDUSTRY
PRESENTED BY:
HUSNA BADAR(7164)
KOMAL SHAHDEV(756)
MISBAH SALEEM(4258)
SUBMITTED TO:
SIR AFTAB ABRO

Institute of Business Management, Karachi

Table of Contents
BRIEF HISTORY ABOUT THE EDIBLE OIL INDUSTRY .............................................................................8
PRESENT SITUATION OF EDIBLE OIL INDUSTRY IN PAKISTAN ..........................................................8
CONSUMPTION .....................................................................................................................................................8
EDIBLE OIL INDUSTRY (3 SEGEMENTS) .......................................................................................................8
Group 1(Premium Segment) ...............................................................................................................................9
Group 2(Popular Segment) .................................................................................................................................9
Group 3 (Lower Segment) ...................................................................................................................................9
MARKET SHARE ANALYSIS OF THE OVERALL INDUSTRY .................................................................10
BRANDED VERSUS UNBRANDED ..................................................................................................................11
Analysis of the total market reveals that about 43% of the market is unbranded and the remaining 57% market is
branded oil. ..............................................................................................................................................................11
MARKET SHARE INFORMATION OF TIER 1 SEGMENT .....................................................................11
MANUFACTURING PROCESS .........................................................................................................................12
The procedure that is adopted by all manufacturers of edible oil is given as follows. However organizations
modify the processes to suit their requirements. ......................................................................................................12

Step # 1: Blending of different oils in different quantities. ............................................................................12

Step # 2: Refining the blended oil. .................................................................................................................12

Step # 3: Packaging. .......................................................................................................................................12

Step # 4: Marketing and Sales ........................................................................................................................12

SOURCE OF EDIBLE OIL ..................................................................................................................................13

Important facts regarding oil seeds ......................................................................................................................16
CATEGORIES OF OIL ........................................................................................................................................17
PRODUCT .........................................................................................................................................................22
PRICING ............................................................................................................................................................23
PLACEMENT DISTRIBUTION NETWORK ............................................................................................23
PROMOTION ....................................................................................................................................................23
POSITIONING CRITICAL SUCCESS FACTOR ......................................................................................23
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COMPETITIVE PRICES .................................................................................................................................24

DALDA FOODS PVT LTD ...............................................................................................................................25
PRODUCT: ........................................................................................................................................................26
PRICING ............................................................................................................................................................26
The price of Dalda is slower than Habib in spite of the fact that it is the market leader .....................................26
DISTRIBUTION ................................................................................................................................................26
PROMOTION ....................................................................................................................................................26
POSITIONING OF DALDA CRITICAL SUCCESS FACTOR ................................................................26
COMPETITIVE PRICES .................................................................................................................................28
PORTERS FIVE FORCES .............................................................................................................................32
WHY PORTERS FIVE FORCES? ......................................................................................................................32
Are there any proprietary product differences in your industry? ................................................................33
Does the new comer face any problems in obtaining the necessary skills or people? ..................................33
Are there any established brand identities in your industry? ........................................................................33
Does your customer incur significant cost in switching supplier? .................................................................33
BARGAINING POWER OF BUYERS ...............................................................................................................34
Are there a large number of buyers relative to the firm? ..............................................................................34
Is your buyer very aware and knowledgeable? ...............................................................................................34
Is your buyer aware of the need for additional information? ........................................................................34
What is the purchasing power of your consumers? ........................................................................................34
Is it easy for your buyers to switch? .................................................................................................................34
RIVALRY AMONG FIRMS ................................................................................................................................35
Is the industry growing rapidly? ......................................................................................................................35
The fixed costs of the business are relatively low portion of total cost? ........................................................35
Are their any significant product differences? ................................................................................................35
Are their any established brand identities? .....................................................................................................35
Is the product complex and requires detailed understanding on the part of customer? .............................36
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THREAT OF SUBSTITUTES ..............................................................................................................................36

BARGAINING POWER OF SUPPLIERS .........................................................................................................36
Suppliers .............................................................................................................................................................36
OTHER STAKEHOLDERS (GOVERNMENT) ................................................................................................37
POLITICAL FACTORS .......................................................................................................................................38
GOVERNMENT ....................................................................................................................................................38
ECONOMIC FACTORS ......................................................................................................................................38
SOCIO CULTURAL FACTORS .........................................................................................................................39
TECHNOLOGICAL FACTORS .........................................................................................................................39
In the edible oil industry, the environmental changes that can be foreseen are ...............41
ISSUE # 1............................................................................................................................................................42
ISSUE # 2............................................................................................................................................................42
ISSUE # 4............................................................................................................................................................43
ISSUE # 5............................................................................................................................................................44
ISSUE # 6............................................................................................................................................................44
ISSUE # 7............................................................................................................................................................45

LETTER OF TRANSMITTAL
April 22 2010
Mr. Aftab Abro
Analysis of Pakistani Industries
IoBM.

Dear Sir,
Here is the report based on Edible Oil Industry, which you had authorized and is ready for
your perusal.

Through this report we got a chance to dot the analysis of edible oil industry and to evaluate the
attractiveness of the edible oil industry.
If there is any clarification required we would appreciate a call from you to our group members.
Sincerely,
Husna Badar (7164)
Komal Shahdev (7564)
Misbah Saleem (4258)

ACKNOWLEDGEMENT

All praise is to Allah who makes everything possible in the universe and beyond.
First of all, we would like to thank Allah, who helped us with everything and made everything
come together, then our parents and family who have always supported us in every good thing
that we do. We are greatly thankful to our course instructor, Mr.Aftab Abro, who gave us clear
concepts and a practical understanding for the subject. He made the course a valuable learning
experience for all of us and made us grow as learned individuals. For taking out time and helping
us in providing useful information for our project.
We would also like to thank our college; The Institute of Business Management, it has been a
great learning place with different academic and extra-curricular experiences, all contributing to
our growth as students.
Lastly we would like to thank our fellow classmates for making this learning experience a
thoroughly productive and enjoyable one.
Hopefully this report will serve a good purpose.

Thank you,
Husna Badar (7164)
Komal Shahdev (7564)
Misbah Saleem (4258)

EXECUTIVE SUMMARY

In this report we have tried to conduct an in depth analysis of the oil industry in Pakistan,
focusing mainly on Habib oil along with its competitors Dalda and Soya supreme of Agro
Processors & Atmospheric Gases. We have tried to derive the nature of competition existing in
the edible oil industry and have observed that the competitive pressures in the industry are very
intense. In the premium segment of oil industry, Dalda is the market leader having around 25%
with Habib as its closest competitor, having a market share of about 20% and Soya supreme
having a market share of 16%.these companies try to engage in head to head rivalry. We have
also extensively analyzed the external factors in the industry and how it is affecting the
companies within the industry. How the awareness of health, changing lifestyles, worsening
economic conditions and environment affects an individuals life forms the crux of this report. It
is the prime responsibility of these firms to create health awareness among masses, which will in
turn lead to their increased sales.
The report also focuses on the internal activities and value chain management done by Habib in
making its brand improved and in creating a competitive advantage. Habib oil mills has
constantly evolved, innovated and changed with times. It product line includes different oil
variants and ghee thus offering a complete range of cooking solution for house hold as well as
for industrial consumers .In order to gain a sustainable competitive advantage, the generic
strategy used by Habib is broad differentiation. Finally a brief action plan for the
implementation of the recommended strategies has been stated.

EDIBLE OIL INDUSTRY

BRIEF HISTORY ABOUT THE EDIBLE OIL INDUSTRY
In 1972 the edible oil industry was nationalized and a ghee corporation of Pakistan (GCP) was
established .Since 1988, private sector has also been allowed to enter this industry. With the
passage of time most of the units which were previously controlled by GCP have been privatized
(93-95%).

PRESENT SITUATION OF EDIBLE OIL INDUSTRY IN PAKISTAN

The cooking oil and vegetable ghee industry is another large manufacturing sector. A shortfall
has been witnessed over the last two decades.
This shortfall is made up through the import of cooking oil, which is added to the local
production. Pakistan spends 2nd largest amount of foreign exchange on the import of edible oil
which puts a lot of strain on the economy and it is still increasing. The gap is widening
constantly as the population increases and standard of living improves.
Vegetable oil is obtained from edible oil seeds grown especially for this purpose. Pure butter oil
is produced in small units; many people prefer to use this instead of cooking oil or vegetable
ghee. Vegetable ghee is formed when edible oil is hydrogenated. The market for vegetable oil
and ghee is spread all over Pakistan. The manufacturing units are also widely distributed.
The number of vegetable oil and ghee plants operational in the country is about 183 with a
capacity exceeding two million tons.
The edible oil market is about 2.5 million tones (65% of total oil industry), out of which
Banaspati market accounts for 1.5 million tones and Edible oils for about 1 million tones.

CONSUMPTION
Per capita consumption in 2002 was 15 kgs. Because of growth in population in increase in
consumption it is expected that the per capita income of edible oil will reach 24kgs in 2010.

EDIBLE OIL INDUSTRY (3 SEGEMENTS)

The oil industry is subdivided into three segments according to target market i.e. according to
preferences, buying habits, price structure, nature of product; income group .

Group 1(Premium Segment)

Group 1compromises of 6 oil companies that have formed an oligopoly.
This group includes Dalda, Seasons Canola, Habib, Soya Supreme, Eva, Foreign Brands

Brand loyalist in this segment account to 50%.

Consumers do not switch to other brands easily due to strong positioning.
They are not price conscious in-fact they prefer quality.
Upper class/health conscious people mostly contribute to this segment.
Consumers are willing to pay a high price for this product backed by a higher income group.

Group 2(Popular Segment)

This group includes, Kisan, Kashmir, Manpasand, Sufi, Meezan and Rafhan

Upper middle/lower middle class mostly prefer such brands.

price conscious consumers form a major part of the segment
5% of consumers are brand loyal.
They keep on switching to other brands due to price instability.

Group 3 (Lower Segment)

This group includes Loose oil, Family, A-1, Gulab, Zaiqa and Sultan.

Consumers who are not at all health conscious add to this segment.
They are highly price conscious.
In this segment the product is more or less a commodity and there is no concept of branding.
This segment mostly covers poor people and rural consumers.

MARKET SHARE ANALYSIS OF THE OVERALL INDUSTRY

The Pakistani edible oil industry overview of the major players is shown as follows by means of
a pie chart:

Market share analysis of overall indstry

Dalda
Habib, 7%
Habib

Dalda, 9%

Soya Supreme, 4%
Soya Supreme
Seasons Canola, 1%

Foreign brands , 5%

Seasons Canola

Foreign brands

Eva
Non branded/Small
local brands, 69%

Tullo, 3%

Eva, 2%
Tullo

Non branded/Small
local brands

The analysis reveals that most of the market is non-premium segment taken by a large number of
very small regional brands, as shown above that the other small /non-branded market amounts to
69%.The analysis also reveals that Companies with national presence dominate the premium
segment. Dalda is the market leader in the Banaspati and edible refined oil market in Pakistan
with a significant market share position.
The statistics of the total edible oil market with a clear indication of the market leader is as
follows:

Dalda 9%
Habib Cooking Oils 7%
Soya Supreme 4%
Tullo-3%
Seasons 1%
Non branded/small local brands 69% % (includes all those companies that either do not
have a brand name as such, or they do have a name but it is not established)
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BRANDED VERSUS UNBRANDED

Analysis of the total market reveals that about 43% of the market is unbranded and
the remaining 57% market is branded oil.

BRANDED VERSUS UNBRANDED OIL

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

57%
43%

branded oil

mkt share

unbranded oil

MARKET SHARE INFORMATION OF TIER 1 SEGMENT

In the tier segment 1, Dalda is the market leader having around 25% with Habib as its closest
competitor shaving a market share of about 20%.and Soya supreme having a share of 16% .The
rest of the market share in this category is captured by the some local brands as well as some
other companies in the market including Seasons canola, Eva and foreign brands.

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Market share analysis of premuim segment

Eva
9%

Tullo
8%

Dalda
25%

Foreign brands
14%

Dalda
Habib
Soya Supreme
Seasons Canola
Foreign brands

Seasons
Canola
8%

Eva

Habib
20%

Soya Supreme
16%

Tullo

FACTS ABOUT EDIBLE OIL

Edible oil is the blend of various seeds oil. These seeds include:

Cotton Seed
Soya beans
Sunflower seeds
Castor seeds, etc.

MANUFACTURING PROCESS
The procedure that is adopted by all manufacturers of edible oil is given as follows. However
organizations modify the processes to suit their requirements.

Step # 1: Blending of different oils in different quantities.

Step # 2: Refining the blended oil.
Step # 3: Packaging.
Step # 4: Marketing and Sales

A variety of seeds are used in the manufacturing process which includes Soybeans, Cottonseeds,
Ground seeds, Rapeseeds, Sesame seed, Linseed and Castor seed. The blend of the seed depends
on the oil. The differentiation of oils/Banaspati is created by altering the proportions of the seeds
that are added in producing the oil/Banaspati.

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SOURCE OF EDIBLE OIL

The countries main source of edible oil is cottonseed. The major oilseeds include traditional
crops like cotton, rapeseed, canola and mustard, and non-traditional crops such as soybean,
sunflower and safflower. There are two kinds of crops:

Rabi crops:

These include rapeseed, mustard, linseed, sesamum, sunflower and safflower.

Kharif crop:

Under this category are cottonseed, groundnut and soybean. Their maturing period extends over
three to four months. It should be noted here that cotton is cultivated for fiber and not for oilseed.
The main edible oil consumed in Pakistan are:
Palm Oil
Rapeseed and Mustard oil
Cotton seed oil
Soybean oil
Sunflower oil
Canola oil

EDIBLE OIL AVAILABILITY IN THE COUNTRY

Domestic production of edible oil has been fluctuating for the last couple of decades. These
fluctuations are due to indigenous marketing, low support price and high cost of production
which is making these crops non-profitable to the farmers. Only sunflower has shown some
positive results in area and production compared to other oil crops.
In domestic production, major share comes from cottonseed contributing 75% of local
production. Rapeseed, mustard and canola contribute 15%, whereas sunflower, soybean,
safflower and corn contribute the remaining 10%. Domestic production of edible oil during
1991-92 was 0.486 million tons which substantially increased to 0.646 million tons during 20002001 due to canola and sunflower plantation on a considerable area. Sunflower and canola are
the two potential crops, which can fulfill some requirements of edible oil in the country. A
comparison of the domestic production, import of edible oil and cost of import is given on next
page.

13

DOMESTIC PRODUCTION, IMPORT AND VALUE OF EDIBLE OIL

Year

Domestic Production
(000 tons)

Import
(000 tons)

Value of import
(Rs. Billion)

1999-00

607

1091

21.4

2000-01

642

1149

19.04

2001-02

646

1197

24.03

2002-03

665

1281

39.29

2003-04

678

1361

37.91

2004-05

842

1605

44.98

INCREASING GAP BETWEEN DEMAND AND DOMESTIC PRODUCTION OF

EDIBLE OILS

The gap between demand and supply has been filled with edible oil imports over the years.
Pakistans edible oil import bill is increased by 1608 times between 1959-60 and 2008-09. Since
1999-00, the import bill grew by 11.1% on average annually till 2008-09 which is significantly
less than 21.2% reported by Chaudhry Mahmood (1998) for the period of 1959-60 to1997-98.
Problem of increasing imports persists as share of imports in total consumption is increase from
64% to 72% in this period which may have contributed to the increase in household food
expenditures.
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One policy to deal with the increasing import bill of edible oil could be the tariff policy.
Shivakumar (2007) found in their study for India that tariff had significant impact on Banaspati
and edible oil household consumption however consumption of oilseeds were not changed.
Table-1 compares the production of oil seeds and extraction of edible oil from different oilseeds
in 2006-07 and 2007-08. Cottonseed accounts for 57.5% and 51.3% of total oil production in
FY07 and FY08 respectively. Sunflower accounts for 27.7% and 31.7% in FY07 and FY08 and
share of Canola increased from 7.4% to 9.96% in FY08.

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I MPORTANT FACTS REGARDING OIL SEEDS

Due to shortage of locally available seeds, imports of edible oil, palm oil and soybean oil
have continued since the early 1970's, mostly from Malaysia.
During the 1970's, it was less than half million tonnes rising to one million tonnes by the
end of the 1980's.
By the 1990's the imports ranged between 1 million and 1.4 million tonnes.
Between 1995-96 and 1998-99, increase in import was 5 % annually.
From 2000-2005 the increase in imports were 7 to 8% annually.
At this rate, by 2010 the import will exceed 2 million tonnes, putting extraordinary
pressure on the balance of payments.

The position can be summed up in the words of the report of the National Commission on
Agriculture of 1988.
"The past performance of oilseeds production stands in sharp contrast to the rest of the
agriculture sector; gross output of all agricultural products has quadrupled since
independence, but the production of oilseeds has stagnated. As demand in the past decade has
grown by about 9 per cent per year, import of edible oil has climbed sharply. Import costs have

16

grown to a level which, if left unchecked in the years ahead, will exert considerable pressure
on the balance of payments".

CATEGORIES OF OIL
The first is loose oil which has no name on it and is sold in plastic bags.
The second category includes brands, which do have a name but are not
established and occupy a very small share in the he market.
The final category of oils are called branded, under which only three
brands are mainly included Soya Supreme, Habib and Dalda along with
various other brands,

TYPES OF CUSTOMERS IN THE EDIBLE OIL INDUSTRY:

Category of Oil

Category Specification

Customer Defined

Highly Refined & High Price

oil

Health Conscious with medium to

upper income class

Average Refined & Average

Price Oil

Health conscious as well as price

conscious with medium to lower
income group.

Low Refined & Low Price Oil

Price Conscious with lower middle

to lower income group.

17

18

SELECTED 2 PLAYERS OUT OF THE EDIBLE OIL INDUSTRY

The companies that we have chosen out of the edible oil industry of Pakistan are as follows.

Dalda
Habib Oil Mills (Habib)
The details of respective companies are also mentioned. We have chosen the following players
because they have the highest market share in the market are well known by the industry and the
customers.

19

20

21

HABIB OIL MILLS

CORPORATE PHILOSOPHY
Customers
HOM is customer driven. We strive to provide products and services of superior value to meet
the expectations of our internal and external customers.

Innovation
HOM constantly strives to be creative and innovative in all its endeavors. All HOM employees
are encouraged to bring forth new and better ideas for improved performance, whatever our
responsibilities.

Ethics
HOM demands openness and honesty throughout its operations to engender trust, and integrity
underscores everything we do. We believe that every activity must be able to pass the test public
and internal scrutiny at all times.

People
HOM employees are all partners, working together in the pursuit of the mission and strategy. We
strongly value teamwork, and we want every employee to be motivated to succeed.

PRODUCT
Habib Cooking oil and ghee is a premium quality product which enjoys a market share of 20%
(second in the industry). The various products of this company are as follows:

Habib Cooking Oil

Habib Banaspati
Super Habib
Friyo (industrial use)
Handi Banaspati/cooking oil (regional brand)
Nayab Banaspati (regional brand)

Among the various oils/ghee manufactured by the company each of them has its own unique
blend of oils and seeds. Habib cooking oil is a blend of Palm oil, Soya oil and Canola oil.
22

Habib Oil Mills are the pioneers in introducing pet bottles in part of the world. They are very
particular that the best quality of oil/ghee should be provided to their customers.
PRICING
The pricing of the product was higher than the market leader Dalda but now both Habib and
Dalda are priced same
PLACEMENT DISTRIBUTION NETWORK
Habib as the best distribution network as far as effectiveness of distribution is concerned. The
product is made available in all retail outlets that stock oil/ghee.
PROMOTION
Habib does not indulge much in promotional activities. This is because it feels that it has a solid
customer base and all its customers are loyal towards the brand. For this reason any kind of
promotion is not necessary for Habib to sell its brand in the market. At Habib they believe that
Consumer pull should be the tactic for a good quality product. And that is what Habib
primarily enjoys, that is the consumers themselves demand the product and in case of a shortage
they refuse to purchase any other brand.
POSITIONING CRITICAL SUCCESS FACTOR
Habib entered the edible oil industry in the year 1954-55. When they launched their product
Habib Cooking oil/ghee the market for this kind of a product was already established and ready
to accept any new entrant. The initial tough work of educating the market was already done by
Unilevers. At the time of launching Habib, the management decided a different kind of
positioning for their product. They said Kyunkay yeh dil ka muamla hai. The reason behind
this is that Habib realized that now the customers are fully aware of the product features and its
pros/cons. Thus the best method to attract people towards Habib was to make them realize that
ghee affects the heart, and since a human heart has extreme importance so people should not
settle for anything lesser in quality. They attached a lot of family values and traditions to their
product claiming that Habib is a family product, a family ghee/oil.
The positioning adopted by Habib was yet another emotional strategy which created a point of
differentiation from the market leaders Dalda. Presently the scenario is that Habib has a market
share of 20%. Inspite of the fact that there is no crucial difference between Dalda or Habib, yet
Habib managed to develop a difference through their advertising and positioning strategies.

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MARKETING & ADVERTISING

The advertisement message of Habib is also very effective and emotional.
The positioning used by Habib for their product is as follow:
Kyun kay yeh dil ka muamla hai.
The reason behind this is that Habib realized that the best method to attract people towards Habib
was to make them realize that ghee affects the heart, and since a human heart has extreme
importance so people should not settle for anything lesser in quality. They attached a lot of
family values and traditions to their product claiming that Habib is a family product, a family
ghee/oil. The positioning and adopted by Habib is yet another emotional strategy which has
created a point of differentiation from Dalda.
Habib managed to develop a difference through their advertising and positioning strategies.

PROMOTIONAL ACTIVITIES:
Habib is rated low in promotional activates relative to its competitors because the management
of Habib rarely indulges in any kind of promotional activities. The reason is that its management
believes that Habib has a solid customer base and all its customers are loyal towards the brand.
For this reason any kind of promotion is not necessary for Habib to sell its brand in the market.
At Habib they believe that Consumer pull should be the tactic for a good quality product. And
that is what Habib primarily enjoys, that is the consumers themselves demand the product and
in case of a shortage they refuse to purchase any other brand.
Some of the promotional activities conducted by Habib include Ramadan Khazana. In Eid season
they sometimes come up with an Eid offer called Eidi Lakhon Ki.
One of the recent promotional activities conducted by Habib is that they place convertor girls in
supermarkets whose job is to convince the customer to buy their products.
In December 2008 they plan to come up with some new promotional activities.

COMPETITIVE PRICES
As far as competitive pricing is concerned, Habib used to charge more than Dalda. This was one
flaw in its pricing strategy the but now both the brands are priced same. We know that Habib is
striving to be the market leader so a suitable pricing strategy for Habib would be to set its prices
lower than the market leader Dalda, which it is currently not doing.
Pricing strategy of Habib is as follows:
24

Habib is available at different prices in various localities of Pakistan at different prices.

PRODUCT QUALITY
The management of Habib is very strict about quality control criteria. . It is evident form the fact
that Habib is the First Edible Oil & Food Company to achieve ISO 9001:2000 (E) & ISO 14001:
1996 (E). Another milestone which has been achieved through continuous quality improvement
and efforts of each individual of HOM in the shape of ISO 9001:2000 (E) and ISO
14001:1996(E) certifications. The achievement of the same shows an indication of continuous
growth featuring Key parameters of Quality as well as Environment
"It is our policy to provide good quality products to customers at reasonable prices. We make all
efforts to involve every employee of the company in the achievement of this objective."

DALDA FOODS PVT LTD

Dalda as a brand has a strong heritage in Pakistan. It is synonymous with assured quality, which
is why the business has been able to charge a premium over its competitors year after year. The
Dalda is the market leader in the edible oil industry.
Dalda as a brand has a history of 50 years. Previously, Dalda was a brand of Unilever and
contributed to 25% of the total revenue of Unilever. Dalda got separated from Unilever three
years back and thus has embarked on a journey of its own. Divesting Dalda was part of
Unilevers international strategy to pull out of cooking oil sector from the South Asian region as
part of their long term goals. The new directors who took over the company were former
employees at Unilever and headed the Dalda brand. Their task was made easy as Dalda was
already a household name and was a popular brand. They just had to maintain the quality and
live up to the expectations.
Dalda is a premium quality that has the highest market share of 25%they are the price market
leaders They are the innovators who introduce new product variants time after time. However
not all their products have been a success like for example Dalda Melange was a failure product
and could not sell.

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PRODUCT:
The variants of the product Dalda are:

Dalda Cooking Oil

Dalda Banaspati
Dalda Melange
Dalda Planta Cooking Oil

PRICING

The price of Dalda is slower than Habib in spite of the fact that it is the market
leader

DISTRIBUTION
There is a supply chain manager who is responsible to dispatch products to warehouses, and then
goods are transported to distributor, retailer and wholesaler. One distributor covers more than
one area. Dalda has a network of 350 distributors across Pakistan that makes sure that product is
available in every corner, village, town and city of Pakistan. Distributors are supplied the
products using a dynamic replenishment model. The model is based among other things on
preset safety stock levels, sales of retail outlets, promotional activities and competitor activity.

PROMOTION
The company does not believe in giving trade discounts on their product as they feel in this way
control over the product is lost. However they have various sales promotion schemes like khul
ja sim sim in which they distributed over 100,000 prizes. They also raised money for the
Shaukat Khanum Memorial Hospital by increasing the price of their products and also making a
note of the same on the tin/bottle that this is for a social cause. The most successful of the
schemes was cross promotion with Lux which raised the volume of purchase by 30%!

POSITIONING OF DALDA CRITICAL SUCCESS FACTOR

UPLs competitive marketing strategy is primarily drawn from the trust and emotive attachment
of people to its established brands. The brand story for Dalda has revolved around the core of
Pakistani society: A mothers love. Whether it is an upscale urban family from Karachi or the
26

more traditional eastern setup in the north, the mother symbolizes all that is pure. Daldas slogan
Jahan Maanta, wahan Dalda became a synonym for this purity and quality and has been the
platform for the brand for many, many years. The language may have changed, the pictures may
have altered but the core of this message still rings true. This symbolism was of course
established over the years with well-crafted and executed communication campaigns across the
different medias, touching consumers everywhere.
Dalda has been in this part of the world since a very long time. It has developed a positioning of
their product keeping in mind the importance of a mother in the life of a child. They have tried to
tap the emotional side of a mother saying that if she loves her children, then she will give them
the best which is Dalda. The English translation of the tagline Jahan mamta wahaan Dalda is
Mothers love is Dalda. They have managed to utilize this strategy in a very effective manner
as people have come to realize that it is only Dalda that provides high quality features thus
making food tasty/delicious.

MARKETING & ADVERTISING:

Dalda marketing strategy is primarily drawn from the trust and emotive attachment of people to
its established brands. The brand story for Dalda has revolved around the core of Pakistani
society: A mothers love. Whether it is an upscale urban family from Karachi or the more
traditional eastern setup in the north, the mother symbolizes all that is pure. Daldas slogan
Jahan Maanta, wahan Dalda became a synonym for this purity and quality and has been the
platform for the brand for many, many years. The language may have changed, the pictures may
have altered but the core of this message still rings true. This symbolism was of course
established over the years with well-crafted and executed communication campaigns across the
different medias, touching consumers everywhere.
Due to the fact that they have associated their brand with Mamta since their
establishment, their advertisement concept has been the most effective concept out of all.
Dalda has associated its image as a familys possession where mothers pass Dalda to their
daughters who are future mothers and are the foundation of another family. Thus, Dalda has been
able to position itself as a family health need for which there is no compromise.

PROMOTIONAL ACTIVITIES:
Dalda stand first in promotional activities. the owners of Dalda strongly believe that promotional
activities are the one of the most feasible alternatives to attract consumers and a huge budget is
spend on theses activities. The Company does not believe in giving trade discounts on their
product as they feel in this way control over the product is lost. However they had various sales
promotion schemes like khul ja sim sim in which they distributed over 100,000 prizes. They
27

also raised money for the Shaukat Khanum Memorial Hospital by increasing the price of their
products and also making a note of the same on the tin/bottle that this is for a social cause.
When Dalda was under Unilever one of the most successful schemes was cross promotion with
Lux which raised the volume of purchase by 30%.

COMPETITIVE PRICES
Considering the fact that it is the market leader, it still charges lower price than Habib therefore
we can say that it has competitive prices. They prices of Dalda Cooking Oil and Dalda ghee are
set comparatively with the price of competitors. The company still tries it best to resist the price
increase as they are aware of the fact that the market is price sensitive

PRODUCT QUALITY
Dalda is offering the most premium quality oil. Daldas slogan Jahan Maanta, wahan Dalda
has become a synonym for purity and quality and remained the platform for the brand for many,
many years.

GENERIC STRATEGY

Overall Low-cost
Provider Strategy

Differentiation
Strategy
Best-cost
provider
strategy

Focused Low-cost
Strategy
28

Differentiation
Strategy

Focused
Differentiation
Strategy

At Habib we get the competitive advantage by providing buyers with a value they
perceive as superior i.e. we basically provide a superior product line to our customers that
is worth paying more.

We can see that Habibs differentiating strategy is successful because it creates buyers
value in a way which is not at easily matched by rivals

The following evidences help us to conclude that Habib is using a broad differentiation strategy

RESEARCH AND DEVELOPMENT:

Habib allocated a large budget to its R & D department. It has a strong research and
development department which constantly tries to come up with new product variant, and tries to
respond to the changing market trends and consumer preferences. They are expanding in a wide
variety of products including Masala mixes. In order to reduce the environmental hazards they
have made In-house improvement measures related to waste reduction at source and adoption of
environment friendly processes. Thus their strong R & D serves as a differentiation attribute for
them.
For example: Habibs research and development alters the texture and composition of same oil
for two different regions of Pakistan. In Punjab as people prefer using thick oil whose texture
resembles to ghee, the oil manufactured for Punjab is made thick and viscous. On the other hand
the people of Karachi prefer using light oil so for them Habib manufactures light oil with less
viscosity and thickness

REGION WISE PRODUCT:

Habib Oil is not only catering to the major cities but also to the other cities and towns in the
interior areas of the 4 provinces It is almost available in 400 towns they have region wise
product which clearly emphasizes that they are broadly differentiating For big cities they have
brands like Habib Cooking Oil Habib Banaspati Ghee, Super Habib etc and for the smaller
towns and cities they have brands like Handi and Nayab.
Habib has come up with different products for different regions because they understand the
purchasing power and preferences of the people from different places. By purchasing power here
we mean that the standard of living of rich in a rural area and the standard of living of rich in
Karachi are different.

29

The value Habib is being delivered through its wide product range and healthy products. Their
target Market comprises up of the health conscious people who are aware about the major
diseases like cholesterol and heart diseases which are caused by the use of Ghee. This is one very
major point of differentiation and we see that the target market understand the value of the brand
and is willing to pay the premium price for the brand and hence Habib is successful in this area.

OUTBOUND LOGISTICS:
Habib has highly skilled sales force that has extremely good communication and go to various
hotels and restaurants in order to convince them to use Habib oil.Habib has a very good
distribution network which differentiates it from its competitors it caters to almost 400 towns
with about450 distributors all over the country. Its well connected information system helps it to
remain connected with its distributors.

OPERATIONS:
In the edible oil industry the processes which are used to refine oil are such that they produce a
lot of pollution and waste substances that isnt good for the environment. So in order to deal with
this problem Habib Oil has differentiated itself and now it is using systems that do not cause
harm to the environment. They have made huge technological investments in this area.
Habib Oil has also made production methods which are safe for the environment. This is being
done as they are quite aware that how important it is to be socially responsible these days.

PROS AND CONS:

Pros:

When there is intense competition in the industry then its differentiating attributes helps it
to stand out among the industry players and also helps it to maintain a good profitable
growth.
Sometimes the differentiating factor is so unique that it becomes a symbol or creates a
major association in the mind of consumers.

30

Cons:

One of the major cons of differentiation is that most of the features are easy for rivals to
copy.
Sometimes in an effort to differentiate the company comes up with an attribute which is
not perceived as valuable by the buyer and therefore he is not willing to pay the cost and
hence the company has to face losses.
Over differentiating sometimes creates a product or a service that is not needed by the
buyer.

31

PORTERS FIVE FORCES

WHY PORTERS FIVE FORCES?
Two fundamental questions in developing a strategy are the attractiveness of industry and the
companys position within the industry. Therefore the essence of formulating competitive
strategy lies in relating a company to its environment. Although the relevant environment is very
broad, the key aspect of the firms environment is the industry in which it operates. The state of
competition in an industry depends on porters 5 forces. The strongest force out of these becomes
important from the point of strategy formulation. The strength of these forces also determines the
profit potential of the industry.

Potential
Rivalry

Entrants
High

High

Low

Suppliers

Industry
Competitors

Medium

Buyers
Buyers

Suppliers

Medium

Substitutes
Substitutes

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THREAT OF NEW ENTRANTS:

Is a lot of capital needed to enter the industry?
The industry is classified as labor intensive industry and there is not much use of extensive
capital requirements. The machines that are used in the manufacturing process are quite
inexpensive. In the processing stage the majority of processing units are pipes and vessels that
are locally made. The content of local parts being used is high and the reason being that these
parts can be easily manufactured in Pakistan. The machines required in packaging of the finished
product also cost very less.
Are there any proprietary product differences in your industry?
There are no such proprietary product differences in the edible oil industry.
Does the new comer face any problems in obtaining the necessary skills or
people?
The skill requirement for labor in the processing of edible oil industry is very basic. According to
Habib oil the skill required is very nominal and types of employees are usually skilled or semi
skilled.
Are there any established brand identities in your industry?
There are about some very strong branded companies existing in the market. The top players in
the edible oil industry include Dalda, Habib oil, Soya Supreme. Some others include Rafhan corn
oil. Kissan oil, Corroli, Tullo, Planta, Meezan and Seasons canola cooking oil.
Does your customer incur significant cost in switching supplier?
Buyers have the flexibility to fill their needs by switching brands because that does not require
any significant cost. Therefore a new comer can easily get customers when he enters the market.
Therefore we can conclude that the Edible oil industry is such an industry where there are less
entry barriers for any new entrant to come and make their place. For this reason the threat of
potential entrants in this industry is quite high.

33

BARGAINING POWER OF BUYERS

Are there a large number of buyers relative to the firm?
There are a very large number of buyers of edible oil as it is a basic food commodity and therefore it is required
by every household and family.

Is your buyer very aware and knowledgeable?

The consumer is basically illiterate when speaking of knowledge about the edible oil industry,
they have no knowledge regarding the processes used in manufacturing and the fact that how
important it is to consume an oil which has undergone proper refining, blending, heating and
boiling.
Is your buyer aware of the need for additional information?
There are some health conscious people who are trying to be more aware and more
knowledgeable consumers so that they can make a right decision of choosing that brand which is
best for health. Majority of them are not aware and are not even interested.
What is the purchasing power of your consumers?
As far as purchasing power of buyers are concerned there are two types of buyers. One category
includes those who have low purchasing power and this category constitutes the major segment
of edible oil consumers .They prefer to buy loose unbranded edible oil. These buyers are targeted
by the unbranded oil manufactures. As their purchasing power is low they have a high power
over the edible oil firms
The other category includes consumers having high purchasing power (premium segment/tier 1).
This segment is targeted by branded oil manufactures. The users of branded oil have low price
sensitivity and therefore their power is low over the firms. Habib caters to these kind of buyers.
Is it easy for your buyers to switch?
The users of branded edible oil are hard- core loyal, they wont switch because of the price
differentials but they may switch because of the quality. However it is very easy for the buyers of
the unbranded oil to switch as they are very price sensitive and are not all concerned with the
brand. They just go for the company which is offering them the lowest price.
Conclusively We also know that the buyers of edible oil cant investigate or confirm that the
manufacturing processes used by the company were following quality control criteria or not.
Therefore theses branded buyers from the point of view of the ultimate consumers remain
34

uneducated about the oil manufacturing processes, thus the power is not that strong. But we
also observed that the buyers are getting health conscious with the passage of time therefore
we can conclude that the buyer power is moderate.

RIVALRY AMONG FIRMS

Is the industry growing rapidly?
The industry is not growing rapidly because its almost on the maturity stage.
The fixed costs of the business are relatively low portion of total cost?
The machines that are used in the manufacturing process are quite inexpensive. The machines
required in packaging of the finished product also cost very less. The fixed costs out of total cost
are not a very significant portion.
Are their any significant product differences?
The manufacturing process used by all the oil manufactures is very similar and there is no such
product difference with respect to features or ingredients.
Are their any established brand identiti es?
There are about 13 large and medium sized firms competing on the basis of quality, price and
marketing. These include Dalda, Planta, Habib, Soya supreme, Seasons canola, Sundrop, Kissan,
Corolla, Pure cooking oil and Rafhan cooking oil.
There is a great deal of rivalry persisting among the top players of the industry Dalda, Habib
and Soya Supreme. All of them are struggling to either become the market leaders (Habib and
Soya Supreme), or if they already are the market leaders then to maintain their current position (Dalda).
The companies also engage in head-to-head rivalry with each other through price wars and
advertising. Habib for example some years back ran a campaign against Dalda Melange that it is
mainly a deception and is not really ghee cum oil. Habib fiercely attacked the product, by
advertising that oil should be very smooth and if it is not smooth and dilute, then it cannot be oil.
Dalda Melange was very thick and thus this led its customers to believe that Dalda Melange is
actually ghee and not oil. In order to counter this argument, Dalda Melange responded by saying
that their product is itna refined jitna zaroori hai.
Besides, there are also companies that simply copy/imitate the market leaders and continue their
business safely. For instance, Soya Supreme follows the risk-free-texture, that is they

35

introduce products that are similar to oil/ghee that have been launched by either Habib or Dalda
and are selling in the market, thus avoiding any kind of risk associated with the product.
Is the product complex and requires detailed understanding on the part of
customer?
No, the edible oil is a very basic product and there are no such technicalities involved in its
usage. Therefore it is a very simple product and does not require and detailed understanding.
Conclusively we can say there is a great deal of rivalry going on in the edible oil industry.

THREAT OF SUBSTITUTES
There are no direct substitutes of oil/ghee; as such in this market thus the threat of substitutes is
quite low. However, a few of them that can be potential substitutes include the following:

Butter/margarine
Desi ghee
Flora margarine has been recently introduced in the market this product claims that it is
for the health conscious consumers and also claims that food can be cooked in it therefore
we can say that it is a emerging substitute of cooking oil

BARGAINING POWER OF SUPPLIERS

Suppliers of the industry can be categorized in to Domestic and Foreign Suppliers
The foreign suppliers usually import at a lower price than the price demanded by local suppliers.
For this reason the power of local suppliers is low over the firm.
Suppliers
Suppliers of the industry can be categorized in to Domestic and Foreign Suppliers.

Domestic Supplier

The local supplier can be divided into two categories.

1) Agriculturist: Provider of cotton oil seed, maize, etc for oil extraction.
2) Provider of other supporting raw material to companies which includes supplier of
chemicals, flavors, tense, tin and plastic bags used in packaging of oil.

36

Foreign Suppliers

This includes supplier of imported seeds. Following are the names of some countries though are
regular supplier of oilseeds:

U.S.A.,

Argentina,

Vietnam,

Germany,

Nether land,

Brazil,

South Korea,

India,

Bulgaria,

Ukraine,

Poland and Australia

OTHER STAKEHOLDERS (GOVERNMENT)

Government has established Pakistan Standards Institute (PSI) to monitor the standards that are
specified and are met or not. These standards are relating to the level of refining or the type of
packaging that is appropriate. However, government is not all that strong to impose their
rules/standards on the organizations, and companies tend to break the rules/regulations
frequently in order to save costs at the expense of the lives of the consumers.

37

PEST ANALYSIS
Forces outside the industry in the mega environment are significantly primary relative in a sense,
since outside forces affect all firms in the industry, the key is found in differing abilities of firms
to deal with them. The Pakistani environment has made a major impact on the procedures and
strategies of the local firms as well as the multinationals operating here, as they have to
formulate their tactics according to the customer psychology and culture that are prevalent in this
country. Some major environments that affect the edible oil industry are discussed below:

POLITICAL FACTORS
As Pakistani environment is not very stable every time there is something or the other happening
that rejuvenates the already existing problems. Secondly Government policies changes every
now and then, which further give, rise to these problems.
Sometimes Govt. allows imports, which is a bad signal for the local manufacturers but a good
point for the foreign manufacturers. All these things together make problems to the sale of the
local products manufacturers because due to this instability nobody wants to create any trade
relationships with Pakistan
Thirdly because of the political instability in Pakistan especially during the past decade and the
rapid changes in government without even completing their tenure, a negative image has been
created in the minds of the investors coming from abroad.

GOVERNMENT
All the laws applicable to Pakistani industry are applicable to Edible Oil Industry also
government of Pakistan has established some supporting organizations for the development of
different industries of Pakistan, such as Export Promotion Bureau and Federal Board of Statistic.
These governmental bodies help the edible oil/ghee manufacturers in supplying information
regarding the oil trends in various parts of the world. They provide data relating to those
countries that have demand for oil/ghee but a shortage in the local market, and about those
countries that are the largest exporters of oil/ghee and pose a threat to the Pakistani market.

ECONOMIC FACTORS
Pakistani economy keeps on fluctuating with the passage of time. In Musharafs era we could see
stabilizing of economy and gradual removal of trade barriers, thus helping the Pakistani business
enterprises as well as the MNCS to enjoy the benefits of rapid growth. The accelerated growth
38

in GDP coupled with the positive economic environment of the country had enabled the edible
oil manufacturers to reap the benefits of increasing their production every year. This had also
impacted the edible oil industry in the sense that the buying power of people had improved. At
present Pakistani economy is again facing a downturn. From the last year the economic
conditions are getting of worse and the economic crises in the country is affecting everybody.
The GDP this year has declined to 5.8% and the country witnessed terrible inflationary pressures
with Food inflation registered 15.49 percent growth during the period under review. Nonperishable food item prices increased 14.76 percent whereas perishable food items recorded
21.30 percent increase in their prices. In such a situation the lower income strata and the middle
income strata are founding it almost impossible to make their both ends meet. Only the
purchasing power of higher income strata are not affected much. Additionally the government
has increased the sales tax that worsen the situation because through this price of the single tin
of oil increases.

SOCIO CULTURAL FACTORS

It has been seen that the health awareness among masses is also increasing day by day; therefore
people are shifting from oil to ghee. Previously a large chunk of the population was hard core
loyal of ghee/Banaspati. Under no circumstances were they willing to settle for a taste less than
what was produced by ghee. however this major segment of loyal ghee lovers have been
transforming into a minor segment with a majority of people shifting from ghee to oil .majority
of the population has now become health conscious individuals who prefer oil and have
discarded the use of ghee/Banaspati in preparation of food, due to health related reasons. Thus
there is a huge demand for oil this part of the world. For the small segment that prefers using
ghee, the manufacturers have launched extensions of their brands that is to produce oils as well
as ghee.
Besides, the increasing trend in population has also ensured that the sales of the oil/ghee continue
at a steady or rather increasing pattern.

TECHNOLOGICAL FACTORS
Pakistan is not very advanced while talking on the technological aspect. However during the last
decade we have seen a rapid growth in the technology that has impacted every industry. Office
automation systems have become a necessary part of office operations. Production has also
become easy, quick and accurate with the help of technology. With the advance in technology
the expectation of the people has increased. . The Local manufacturers face the problem of
adopting new technological advancements because they dont have enough resources available
with them to acquire new and mechanized machineries very often. Multinationals get benefited
from their parent company with respect to technology and resources.
39

The basic techniques used in production of edible oil are rather similar for all the companies. The
difference lies in the projection of the brand by the company and the image that they want their
brand to acquire in the consumers minds. In most of the companies having branded oils,
automated methodology is adopted to manufacture the oil. A few oil manufactures have acquired
ISO 9000 certification and some are passing through the implementation phase, other still lag far
behind. The management of major oil companies alike Dalda and Habib are keen to take
environmental initiatives but most of the unbranded manufactures dont have the resources to do
so.
Since it is perceived that environmental protection calls to large extent for technological
investments with low or nil payback, it is natural that most of the companies tend to postpone the
environmental protection act as long a possible. There is an intense need for new methodologies
so we can reduce the environmental hazards.
Some of the dangerous environmental hazards include:
Wastewater this is generally caused directly from processes, mainly from
neutralization of oil. Wastewater results in pollution load and concentration on the
atmosphere.
Solid waste solid waste generations from the oil mills are mainly in the form of spent
earth, filter cloth, and spent catalyst. Though most of this is used in by-products,
however, the carbon oil extracted from theses elements can be harmful to the
surroundings.
Soil contamination this can be seen around oil storage tanks in oil mills due to spillage
on uncovered ground. This also poses the risk of contaminating the ground water.
Air emissions major sources of air emissions are generator exhaust and emission from
the gas cracking unit. From both the sources carbon monoxide is emitted in high
concentration.
Noise emissions industrial equipment and machinery create high noise levels during
operation. The main noise sources in edible oil industry include: steam ejectors, tin can
manufacturing unit, gas cracking unit, boiler building, hydrogen compressor and
ammonia compressor. The noise levels from some of the above sources are higher than
the permissible limit given by ISO 14000
There can be in-house improvement measures related to waste reduction at source and adoption
of environment friendly processes. At the same time, a number of cleaner production
40

technologies also need to be implemented in order to minimize the level of pollution as well as
increase the efficiency of energy use.

I N THE EDIBLE OIL INDUSTRY , THE ENVIRONMENTAL

CHANGES THAT CAN BE FORESEEN ARE

Firstly, the regulations of World Trade Organization to have liberal import policies.
These regulations may affect the local industry.
Growth is the main trend concerning the edible oil segment, which is growing at a rate of
12.4% per year.
Catering to the needs of diverse, demanding and aware consumers and the employees, so
as to keep them satisfied and to keep them from running away or switching.
Moving with the ever-changing technological advancement and adopting the new
technology rapidly.
Foreseeing changing customer attitudes, trends and tastes, so as to remain alive in the
market.
To be the pioneers and innovators of any new product, which caters to the mass market of
the Pakistani population

41

ISSUES OF EDIBLE OIL INDUSTRY

ISSUE # 1
SUBSTANDARD PROCESSING AND PRODUCT
Due to the fact that there are no such strict government regulations on the edible oil
manufacturers, a lot of local oil manufacturers are using substandard processes. The packaging
machines used in the edible oil industry are quite cheap. This has encouraged the small investors
to invest in this market/industry and produce low quality Product.
The producers generally purchase the packaging equipment, while the other process is done in a
substandard manner. That is, the manufacturers just boil/heat the oil on a normal stove, without
undergoing any kind of refining or blending and using the packaging machine to pack the
oil/ghee sell off their product. These sellers are selling this low quality, least refined oil at a
market price or slightly lower than the markets rates prevailing in the mark. This has hindered
good reputable companies to sell there product in the market because the customers are not so
literate. The cost of production of these companies is very high because they are fulfilling the
standards determined by the Pakistan Standard Institute. The customers dont really know that
the companies though are selling at a slightly lower prices are not selling the right product.

RECOMMENDATIONS
The players of the Edible Oil Industry need to educate the public/consumer that why are they
charging a high amount as compare to loose and low brands. The companies have to create
market awareness, as already discussed that consumers are becoming health conscious. This can
be a company effort or combine efforts of the premium quality edible products, may be via
Pakistan Banaspati Association. This kind of a strategy can avoid easy entrants in the industry
.this will also discourage the local manufacturers who do not follow the quality specifications.

ISSUE # 2
DEPENDENCE ON IMPORTED OIL
(Low production of edible oil seeds, high amount of foreign exchange is invested in importing
crude oil and increasing crude edible oil prices).
A very important aspect here to mention is that until 1970,s we were self sufficient in edible oil
production but after that the share of imported oil has been increasing rapidly to meet the
growing demands .Pakistan spends second largest amount of foreign exchange on the import of
42

edible oil (average 700 million $ per year) and 70% our demands requirements are met through
imported oil. Our local farmers are hesitant to cultivate oil seeds because they are not sure that
whether their product will be sold in the market at the right price or not, because the imported
edible oil price is lower than local oil price. This indicates that are edible oil manufacturers are
largely dependent on imported oil which is not good and economically viable in the long run.

RECOMMENDATIONS
The edible oil industry is agro based and Pakistan being an agrarian economy lacking in oil seed
cultivation seems to be a shocking thing. There is a strong need for the government to Pakistan to
protect the local suppliers of oil and farmers and provide subsidies to them so that they cultivate
the oil seeds in sufficient amount and thus we can at least we can again try to become self
sufficient in our edible oil production and save our foreign exchange. The government already
knows the importance of this matter. The government has taken various steps regarding this issue
and formed certain association to encourage the production of oil seeds. But the current situation
(Data form SBP annual report, Economic survey and other sources) reflects that issue is still
unresolved.
The government needs to consult industry specialist of our country and other countries though
can assist the government to come over with this issue. The Pakistani farmers and manufacturers
also have compromise on some of their benefits in order to get a long term gain for the country.

ISSUE # 3
COUNTERFEITER BRANDS
Because of the fact that edible oil sector is unorganized and entry is easy there are Counterfeit oil
brands existing in the industry. These counterfeiters copy the product of existing market leaders
and sell them with inferior quality. These counterfeiters just by charging a little low price are
playing with the lives of consumers. This also affects the sales of the original companies.

RECOMMENDATIONS
The companies should try to create brand awareness and make the consumers knowledgeable
about these counterfeiter brands, so the consumers dont get fooled by these counterfeiters.

ISSUE # 4
ENVIRONMENTAL HAZARDS
The Edible Oil Industry has created great hazards to the environment. This issue is already in the
notice of the government but the government is not taking any action right now. The companies
43

have certain important responsibilities towards the environment and need to take concrete
measure in order to gain long term benefits.

RECOMMENDATION
It is recommended that in-house improvement and adoption of cleaner technologies be
undertaken immediately. The in-house improvement and adoption of cleaner technologies have
the potential to reduce the pollutant.
ENVIRONMENTAL MANAGEMENT SYSTEMS (EMS)
Edible oil mills in Pakistan should implement Environmental Management Systems (EMS) in
their industries for a better, environment Friendly management. The companies need to hire
management though have experiences in some what same area, because the release of gasses
during the process is the normal phenomenon in many industries, for example Textile Industry.

ISSUE # 5
UNAWARE CONSUMERS
The consumers dont know have the proper knowledge about the storage and usage of the edible
products, thus creating an unethical stance for the organizations in this industry.
RECOMMENDATION
The consumers should be educated about how to store a product. Some precautionary measures
should be communicated either through advertisements or print material on the package or tin.
The ads should also tell the consumers that Banaspati (Ghee) should not at all be consumed by
the heart and blood pressure patients but none of the organizations teaches this to the consumers.
Mostly consumers get to know about this from their doctors. The reason the company needs to
educate their consumers because the companies, otherwise, are damaging the trust of innocent
consumers. We have the example of cigarette industry who clearly state in their advertising as
well as on their cigarette packets that how important the health issues are.

ISSUE # 6
MARKET SATURATION
The edible oil industry seems to be very saturated with about 183 small and medium size
enterprises operating. There are about 10 big players with Dalda, Habib and Soya Supreme
Being the top three.

44

RECOMMENDATIONS
The best way to differentiate is to be exceptional in value addition. Only making the oil tin or
package more attractive is not enough. The companies should try to communicate that how their
particular brand of oil is of a greater value as compared to other brands by mentioning the health
benefits which the consumers would get by using the product. This can be ensured through heavy
promotional campaigns and bright new selling ideas.

ISSUE # 7
SMUGGLING
Smuggling is also an important factor which affects this industry. Government estimates that .87
million tones of oil is smuggled into Afghanistan every year and 0.05 million tones is smuggled
to Iran as well.

RECOMMENDATION
The companies can export oil to the areas where oil is being smuggled .if the demand of local
people in the smuggled areas will be fulfilled in the right way they wont need to smuggle oil for
Pakistan. Also the Recent developments in Afghanistan have allowed the oil companies to export
their oil to Afghanistan. This was only possible due to the improved road link.

45