Published in Jan-Feb 2018
As Pakistanis become increasingly hygiene conscious and convenience-driven, the marketplace is witnessing a huge growth in the number of branded food products across various categories, ranging from spices to dairy products. A segment that has evolved significantly is frozen, raw chicken and value-added (ready-to-cook/eat) chicken products.
A recent development in this segment was the launch of Sabroso by Sabirs’ Group at the end of the last year. Previously, a market leader in the poultry industry, Sabirs’ capitalised on their existing strength and expertise and shifted from a strictly B2B business model to a consumer-centric one.
According to Muhammad Salman Sabir, Executive Director, Sabroso, the shift to packaged food is a global phenomenon. Furthermore, Pakistan’s poultry production sector is dynamic and well-organised and can lay claim to an annual growth rate of 10 to 12% and a turnover of about Rs 750 billion. Yet, frozen raw chicken and value-added products only have a five percent share in the market.
The brands we compete with do not have a complete vertically integrated infrastructure in place, whereas we can guarantee superior quality because if anything goes wrong in our product, we can trace it back to the feed a chicken ate or which flock it belonged to. Also, we are not followers. We are investing in R&D to develop unique products; our chicken donuts are one example.
“My father’s vision was for full vertical integration, and the huge space in the market presented a great opportunity. Many of the processed chicken brands, including Menu, were procuring chicken from us. We have our own broiler farms, breeder farms, hatcheries and feed mills. So we had all the ingredients required to run a successful brand. All that was missing was a processing plant and construction for this was completed in May 2017.”
Nevertheless, Sabroso may well face an uphill task to establish a foothold in a segment dominated by established players such as K&N’s (the market leader with a 65% share) and brands such as Big Bird, Menu and Sufi, all of which have been consistently introducing innovative products and implementing price promotions, thereby making the category extremely competitive.
Sabir doesn’t think this will be a major challenge mainly because of Sabroso’s developed infrastructure. This includes Pakistan’s largest broiler production facility, breeder stock and cold storage facilities (with a capacity of 5,000 pallet place).
Although Sabroso’s own outlets are limited to Karachi, Lahore and Islamabad, the brand is ensuring nationwide availability at all major supermarkets through an efficient distribution system, in line with plans to penetrate the smallest and remotest areas as well. To this end, Sabroso is in the process of building a large cold-storage facility in Multan and Gilgit.
“The brands we compete with do not have a complete vertically integrated infrastructure in place, whereas we can guarantee superior quality, because if anything goes wrong in our product, we can trace it back to the feed a chicken ate or which flock it belonged to. Also, we are not followers. We are investing in R&D to develop unique products; our chicken donuts are one example. In addition, most of the other brands are not focusing on extending the sales and penetration of their raw, frozen chicken products to second-tier cities as they do not consider this to be profitable. We, however, are doing our best to increase penetration there and at the lowest possible prices. These strategies will give us an edge.”
However, these challenges apart, there is the fact that Pakistan’s grocery and food segment is dominated by independent grocers who operate through low-investment, small neighbourhood stores and this does present problems for the entire branded and frozen food category. Secondly, shops and supermarkets with refrigeration facilities are scarce and this is a major obstacle to increasing the penetration of raw frozen and value-added chicken products, especially in view of the fact that the general trade accounts for over 90% of the overall food and grocery retail segment. Although Sabroso’s own outlets are limited to Karachi, Lahore and Islamabad, the brand is ensuring nationwide availability at all major supermarkets through an efficient distribution system, in line with plans to penetrate the smallest and remotest areas as well. To this end, Sabroso is in the process of building a large cold-storage facility in Multan and Gilgit.
The major challenge, according to Sabroso, is changing customer perception about raw frozen chicken and value-added products as the majority are wary of such products and prefer to buy fresh poultry since it is widely believed that the long shelf life (up to a year) of frozen chicken is achieved by adding preservatives while the value-added products are thought to have artificial flavours in them. The issue of the excessive use of hormones and steroids to accelerate the growth of chickens that is constantly flagged by the media is an even bigger concern.
“In reality, the extended shelf-life is due to a quick freezing process called blast freezing and no artificial flavours are used in value-added products. The cost of hormones and steroids and their administration to chickens is extremely high, making it commercially unviable to use them. However, communicating these facts to our customers is a big challenge,” said Sabir.
To overcome this, Sabroso plan to introduce a rigorous awareness campaign, which includes a dedicated Facebook page to communicate with their customers about these issues.
For the moment, according to Sabir, the company is focusing on registering the brand in the mind of the consumer by using the entire media mix. “The recommendation was that we should feature a celebrity in our TVC, but in my opinion, we needed to make the brand the celebrity. We developed the TVC in-house and opted for product shots instead of using typical family mealtime situations.” BTL activities are also on the cards, with free product testing across major stores and activation activities in schools.
Going forward, evidence shows that consumers are indeed looking for convenience, hygiene and quality and will spend extra to have access to healthy poultry. Given this increasing demand, industry analysts are of the view that this product category is likely to attract more players.