In 2014, the AW Group of Industries bought the manufacturing and marketing rights for Shahtaj Cooking Oil and Shahtaj Banaspati from a government-owned oil manufacturing set up with the objective of leveraging the brand identity of an established brand. In a market that had an estimated demand of 3.5 million tons of edible oil in the year 2016-2017 (source: Global Agriculture Information Network Report, 2015), AW Group of Industries aims to establish Shahtaj as a premium quality brand.

The edible oil and ghee industry of Pakistan comprises six cooking oil variants (palm, cottonseed, mustard, soybean, sunflower seeds and canola oil) and banaspati ghee. Despite such clear product breakdowns, there are no evident market leaders in the industry. Dalda is the oldest oil and banaspati ghee brand in the country, but still does not have domination in the market. The presence of a host of regional brands is a major reason behind such a fragmented market structure.

Despite changes in eating habits and lifestyles, Pakistan remains a predominantly oil and ghee-consuming nation. According to Hamid Waheed, MD, AW Group, the split between banaspati ghee and edible oil is 60-40, and this presents a significant opportunity for a brand such as Shahtaj which uses state-of-the-art manufacturing processes, strives to meet quality standards, and comes with a Halal certification from the Halal Foundation (a Karachi-based, ISO-registered certification).

Although Shahtaj re-entered the market in 2014, no major campaigns have been introduced in the last three years because the company was focusing on their manufacturing processes. The plant, which is based in Port Qasim (Karachi), is equipped with a lab to test and improve quality and this, says Waheed, has permitted the brand to claim that their product is better in quality compared to some of the leading oil brands in the market. This, allied with a price differential of almost five percent compared to other premium brands, has made the company hopeful of a successful future.

“A 35-year-old brand was being advertised for the first time and this required a revamp in the packaging and new SKUs.”

To date the brand has established itself across KPK and Punjab; in Sindh the distribution networks are being improved to increase market penetration there.

Finally, in January this year a campaign was launched with the objective of increasing brand awareness. “We want people to know that Shahtaj is a quality brand in the edible oil and banaspati category,” says Waheed.

The 360-degree campaign was developed by MCOM and according to Baber Tony, Creative Manager, MCOM, “a 35-year-old brand was being advertised for the first time and this required a revamp in the packaging and new SKUs.”

The campaign emphasises the brand’s superior manufacturing process and health benefits and the tagline has moved from ‘Har Dil Pe Karay Raaj’ to ‘Sehat Bhari Khushiyon Ka Raaj.’

According to Waheed, a major challenge is the seasonal nature of cooking oil and ghee; in summer, people tend to avoid eating fried or greasy food. Then there is the Ramazan factor, when the category usually sees a surge in sales. However, as Ramazan now falls in the summer months, this surge is less significant; as Waheed puts it: “in summer, Ramazan is not oil friendly; rather it is beverage-friendly.”

Waheed says that 95% of the ingredients are imported from Argentina, Brazil, Canada, Sweden and the US, and this makes pricing a major challenge as the import price of these ingredients tends to fluctuate. As a result, the company needs to have a very accurate demand forecast, with orders placed at least three months in advance to ensure timely delivery. Achieving this level of planning in the initial stages of an awareness campaign is yet another challenge. Furthermore, to aid market penetration, the brand is priced at almost Rs 10 to 15 below the market price per kilo. This could leave a temporary dent in the company’s profits, but it is deemed essential in creating demand.

Speaking in terms of the overall industry, Waheed says they are looking to the Government for support, particularly because the industry pays significant taxes and custom duties to the national treasury. The sector has also been urging the Government to improve the availability of oil seeds to avoid a heavy dependency on imported ones.

Despite these challenges, the relaunch of Shahtaj and the initial response to the campaign has left the AW Group feeling rather bullish. The company is continuing to focus on improving its distribution network in the hope of gaining deeper market penetration across Pakistan.