You need not have spent a significant amount of time in a kitchen to know that the right blend of spices is crucial to Pakistani cooking.

In fact, no dish, not even the humble daal, is complete without at least featuring the basic triumvirate of coriander, red chilli and turmeric. This dependence on spices to create the perfect karahi, nihari or basic saalan has many implications, not least of which is the fact that Pakistani cooking can be very intimidating for the uninitiated.

So, enter the spice masters; National Foods (established in 1970) and Shan Foods (established in 1981), companies which have been making cooking simpler by providing boxed recipe mixes that take away the confusion and guesswork and facilitate both experienced and novice cooks in creating the perfect dish every time. The variety of recipe mixes available from both companies is enormous, ranging from biryanis, karahis, qormas and barbecue marinades to recent features such as mixes for Arabian and Chinese dishes. It’s very safe to say that National and Shan have revolutionised the way Pakistanis – at home and abroad – cook their meals.

Category in focus

According to Faisal Mubin Ganatra, COO, Shan Foods, the volume size of the overall spices category is 60,000 tonnes, of which 25,000 tonnes is branded. Although it is hard to translate this into rupee terms as prices fluctuate a great deal, figures from SMEDA (Small and Medium Enterprise) in 2010 suggest the value size to be about Rs 25 billion. However, Adnan Malik, Chief Commercial Officer, National Foods, believes the value size to range between Rs 35 and 40 billion.

In the overall category (branded and unbranded spices), there are two main divisions: plain spices such as red chillies, coriander, turmeric and cumin, which account for 75 to 80%, and recipe mixes such as qorma, biryani or chicken tikka masala, which make up the remaining 20 to 25%.

Despite the fact that plain spices account for the lion’s share of the category, it is the recipe mixes that rake in the revenues. Shan Foods, which has a strong reputation in both local and international markets, has an eight percent market share in plain spices and a 41% market share in recipe mixes. National Foods, which enjoys a better standing in Pakistan (although it does export to international markets), is the market leader with a 10 to 12% share in plain spices and a 49% share in recipe mixes. The only other player worthy of mention as an important (albeit smaller) contender in the spice category is Mehran Foods.

Established in 1975, Mehran Spice and Food Industries operated solely in the Middle East market, especially Saudi Arabia, until 2011 when the company decided to enter the local market. Since then it has managed to gain shelf space as well as recall with consumers (not an easy feat considering the competition). According to Sajjad Qaisar, Head of Marketing and Sales, Mehran now has an eight to nine percent market share in recipe mixes, although Ganatra puts Mehran’s market share significantly lower at 1.5 to two percent.

Other players include Chef’s Pride and Laziza, both of which are only found sporadically on supermarket shelves in major cities. Another company worth mentioning is Habib Oil Mills (HOM) which launched a range of MSG-free recipe mixes in 2010 and last year added a range of plain spices to their product line-up. Although HOM has not yet made any waves in this category, it could become an important player in the future considering the company’s reputation and the size of its distribution network. There are also plenty of smaller regional players.

Growth potential

One of the reasons why the spice category is interesting is because like most commodities (tea, milk, oil, etc.), it offers tremendous opportunities for growth, not only because there are only two major players and therefore plenty of room for new companies to enter the market, but because roughly two thirds of the category is unbranded and up for grabs.

According to Ganatra, plain spices are growing by 10% annually and recipe mixes by 20 to 25% every year. Growth in the plain spices market is tricky for brands because they face competition from unbranded spices as well as supermarkets’ own brands, which are significantly cheaper than their branded counterparts. Furthermore, most consumers are not particularly brand loyal when it comes to plain spices. It is primarily for these reasons that spice brands have not traditionally focused their marketing efforts on plain spices, although National’s Kitchen Cabinet campaign is now trying to do this.

Recipe mixes are a totally different ballgame and this is where Shan and National focus the bulk of their efforts both in terms of increasing consumption of existing consumers as well as in attracting new consumers. Consumers are also far more brand loyal when it comes to recipe mixes. Ganatra explains this by saying that while the recipe mix is priced at Rs 50, consumers will invest Rs 500 to 700 worth of ingredients in the dish and consequently want to ensure that the brand they are using will guarantee a good result.

This essentially means that once a consumer is hooked on a recipe mix brand, it takes a lot of time, effort and money for another brand to snatch that consumer. While this is a strong advantage for brands like Shan and National which have the first mover advantage, it presents tremendous challenges for newcomers. In Ganatra’s view, companies looking to enter the spices category have to “sustain themselves with lots of investment to establish the brand.”

This is something that Mehran has been able to do quite successfully because of its experience in international markets and because the company, says Qaiser, has invested in “massive taste trials and wet sampling as well as offering two recipe mixes for the price of one, which has really helped us.” However, he concedes there is still a long way to go.

Market share of Shan Foods and National Foods.

As Sami Qahar points out, one of the big problems with growing the market is that most companies are focusing on the same target audience and Mehran is no different in this respect, as it too is targeting women between the ages of 15 and 35 from SECs A, B and C – which seems to be the standard not only for spices but practically all food brands.

Shan changed its tactics in 2014 and decided to make a concerted push to penetrate deeper into the market with a new brand of recipe mixes called Maa Masalas aimed at SECs B, C and D. According to Ganatra, Maa retails at half the price of Shan and the taste profile is significantly different because the ingredients come from different sources. For example, Shan Masalas use black pepper imported from Vietnam (black pepper is not found in Pakistan) which is 100% more expensive than the black pepper from Madagascar which is used in Maa Masalas.

Marketing to consumers

According to Qaisar, Mehran has 54 recipe mixes, but “if you look at the overall market, there are really only 12 popular recipes and 75% of the total sales come from those recipes.” He adds that for Mehran, 60% of recipe mix revenues come from biryani mixes. Although Ganatra does not fully concur with the ‘12 popular recipe mixes’ theory, he does admit that Bombay Biryani is Shan’s highest selling mix.

When it comes to ATL marketing, and TVCs in particular, it is perhaps not surprising to see families tucking into platters of steaming beef and chicken biryani while seated at a table laden with shami kebabs and qormas. In fact this is terribly predictable advertising. However, there have been efforts to break the monotony; for example, National’s Kitchen Cabinet which focuses on the daily question of ‘aaj kya pakaein’ (what shall we cook today?) and then shows the many options available (especially in terms of plain spices but also recipe mixes, salt and rice) for the home cook to experiment with, is one such endeavour. In the past, National’s experiments with branded content in the form of National Recipe Princess (which targets young girls in colleges) and National ka Pakistan (a travelogue/cooking show) have also been well received by audiences because they go beyond the predictable. The brand is also targeting younger audiences with its National Made Easy recipe app.

Shan’s marketing efforts have been more haphazard. For many years the company decided to forego advertising altogether based on the management’s religious values and even now it will only show food in its communication. While there is nothing wrong with this approach per se, perhaps a bit more innovation is required. Where the company has managed to be innovative is in terms of product development; not only has it introduced Arabian and Oriental recipe mixes but the most recent addition to the local product portfolio is cooking sauces (this product was launched in Shan’s export markets two years ago), which as Ganatra explains is an upward sequencing of recipe mixes.

“In a dry recipe mix you have to add onions, ginger, garlic, etc., but with a cooking sauce all you do is pour in half a bottle of sauce with your rice or meat and the meal is ready, so there is lots of convenience.”

Apart from marketing and product innovation, one area where both companies have invested significantly is in packaging. National was the first to undertake a major repackaging initiative in 2008.

As Malik puts it, “Although packaging plays an extremely important role in both plain spices and recipe mixes, it is especially important in plain spices, as these are not often advertised. The colours of the product on the packaging and the information provided (no artificial flavours, no added colour, halal certification, etc.,) can convince a consumer to buy the product.”

Shan’s repackaging initiative, carried out in 2014 (after nearly 10 years of sticking to its iconic red and gold packaging) was undertaken for slightly different reasons. According to Ganatra given that Shan represents Pakistan in nearly 65 countries around the world, the company wanted to create world class packaging that would “convey that when you buy our plain spices, you get better value with premium quality and when you buy recipe mixes, you are buying world recognised recipes.”

The company also wanted its new packaging to make the product more appealing to everyone and not just ethnic Pakistani consumers in international markets. Therefore the new packaging is colour coded according to product (green for biryani, pink for qormas) and includes lots of product, caloric and usage information as well as QR codes for extra information.

One of the reasons why good (read: information laden) packaging design is so important is because of the growing footprint of modern retail. Ganatra says that with changing trends and more supermarkets opening up in the major cities, “modern retail contributes about 20 to 25% of revenues, whereas previously the contribution was 10 to 12%.”

This is something that Mehran tried to capitalise on when trying to break into the market. Qaisar says one of Mehran’s strategies is that if there is no shelf space available in a supermarket, the company will ask for a counter top and “once the product starts moving they will give you shelf space.”

Once a consumer is hooked on a recipe mix brand, it takes a lot of time, effort and money for another brand to snatch that consumer. While this is a strong advantage for brands like Shan and National which have the first mover advantage, it presents tremendous challenges for newcomers.

The way forward

Ganatra says that the spices category, and recipe mixes in particular, offer “huge potential for growth because women don’t want to spend a lot of time cooking with basic spices.” To this Malik adds that investing heavily in marketing and advertising is the key to unlocking the potential of the category for newer players.

Clearly the eventual entry of new companies and brands that are able to give the big two a real run for their money will benefit consumers. While convincing consumers to buy branded plain spices so that they can get better value for money and recipe mixes for more convenience is all well and good, however category leaders need to be more innovative. For Shan this may mean more innovation in terms of marketing initiatives while for National it could involve launching new product formats to target different types of consumers and smaller and larger SKUs to improve consumption in different segments. Malik says all these developments are on the cards but “you have to find the right time to capture the consumers’ unmet needs.”

Although Shan has launched a new product format in the shape of cooking sauces, Ganatra does not think that the majority of Pakistani consumers will progress from using dry spices mixes to sauces anytime soon because the “market is not mature enough and women still prefer to cook properly at home.”

For the time being, therefore, the majority of the efforts will be focused on encouraging consumers to switch from unbranded to branded spices for reasons of taste, convenience, consistency and value for money.

As Qaisar puts it, “The opportunity is 200 million consumers; the challenge is that all that glitters is not gold. Lots of smaller players introduce a brand and then disappear because they cannot sustain themselves. They are not a threat but they disturb the market because consumers start thinking that new brands are not consistent. Initially we faced this challenge but people now have greater confidence in us.”