From ‘farm to fork’

The processed food industry in Pakistan – responsible for providing value-addition to a variety of agri-products – has been through major changes in the past few years. The production landscape has gone from a focus on traditional processed food items, such as cereals, biscuits, jams, pickles, juices and spices to higher value-added products, such as frozen, ready-to-cook, fully-cooked food, dressings and sauces and processed meat and poultry. Seeing the growth potential of the food industry and the rapidly changing needs of the new consumer, a large number of companies have started to cater to this segment.

Also termed as a ‘farm to fork’ process, value-addition entails changing a raw product into something new through packaging, processing, cooking, drying or any type of process that differentiates the end product from the original and enhances its value. Value-addition not only adds incremental value to products, it helps make the appearance and taste of the product more consistent, increases the off-seasonal availability of many food items, extends shelf life and plays a vital role in augmenting a country’s exports.

Aurora spoke to two major food processing companies: Mitchell’s Fruit Farms Limited and Shezan International Limited (the first two home-grown brands which pioneered the food processing business in Pakistan) and asked them how they have diversified their range in line with changing trends.

Mitchell’s Fruit Farms, the oldest food company in Pakistan, was established as Indian Mildura Fruit Farms Limited in 1933 by Francis J. Mitchell. The company’s name changed to Mitchell’s Fruit Farms Limited after Independence. Their farms are located in Renala Khurd, district Okara. Mitchell’s produced Pakistan’s first squashes (mango and orange, Lemon Barley and Rose’s Lime Cordial) in 1933, jams and jellies in 1951, marmalades in 1937 and canned products in 1953.

Shezan International was conceived as a joint venture between the Shahnawaz Group of Companies (Pakistan) and Alliance Industrial Development Corporation (USA) in 1964, to produce citrus juices due to a huge production of citrus fruit in Pakistan. Their Nawazabad Farms are a sister concern of Shezan International and are located in Mirpurkhas in Sindh. The company started off by offering juices in returnable glass bottles and later introduced disposable glass bottles and tetra packaging. They added new fruit flavours to their product portfolio, such as guava, grape, apple, peach, pineapple, pomegranate and strawberry (recent).

Both companies started with squashes as their main product and then diversified their range to include ketchups and preserved, ready-to-cook, ready-to-eat foods, pickles and mayonnaise. According to the companies, the demand for squashes has been declining as it takes relatively more time to prepare them compared to instant drinks. Another reason for the declining demand is the fact that in marketing terms, it is difficult to relate squashes to different occasions, in the way for example, red syrups relate to Ramzan and Muharram. Furthermore, the use of squashes is limited to thirst quenching, while red syrups can be used in milk and dessert toping as well.

This is why Mitchell’s have launched Jaam-e-Hayat sherbet in the red syrup category. They also produce chocolate confectionary, have a dairy segment and have recently relaunched their two original classics – Milk Toffee and Butter Scotch.

Both companies have continuously made investments in equipment and automation to enhance productivity. “Technology is a driving force of innovation and plays an important role in the company’s growth,” remarks Amna Iqbal, Manager Marketing, Mitchell’s. “We have all the expertise and facilities to process and can fruit and vegetables without using preservatives because of our state-of-the-art technology.”

As for Shezan, Waseem Amjad Mahmood, Director Marketing, Shezan International, explains that “beginning with a joint venture helped us acquire more advanced technical and professional skills. These later helped us provide up-to-the-market quality to consumers.”

Although for both companies the majority of their revenue comes from the local market, foreign markets are important as “we want to cater to a wide range of consumers and the families who want a taste of Pakistan while living abroad,” says Mahmood. Hence, most of their products are exported to other markets (Bangladesh, Canada, China, Germany, Middle East, Norway and the South-West to name a few) and include ready-to-cook items such as saag, haleem, daal makhni, kari pakora etc. and canned fruit and vegetables.

The companies have also overhauled their packaging over the years to further ensure their ingredients are well-preserved and have introduced different SKUs to cater to different consumer segments and lifestyle trends. In 2006, Mitchell’s extended their sauces line by serving up their ketchup and chilli garlic sauce in pouches and their squashes moved to pet bottles in 2007. Mahmood adds that although adapting to different packaging formats is important for convenience and recycling, “we have observed that the shelf life and taste remained best in glass bottle packaging.”

The new, smaller SKUs have helped both companies make their products reachable and affordable. “Smaller SKUs are preferred and adapting to new packaging trends have helped the company in expanding reach in the Horeca segment,” adds Iqbal.

As the product portfolios of both companies range from table top products to ready-to-cook products, their target market varies from product to product, although the primary target for both are households (housewives and children) from SEC A and B. After the installation of a state-of-the-art pulping plant, Mitchell’s has expanded into the B2B business. Though the squashes segment does not carry any further potential for growth, Mitchell’s aim to retain their existing customer base (heavy squash users) as they have not shifted to other brands despite the availability of substitutes.

According to Iqbal, not compromising on product quality (the USP for both companies) is how Mitchell’s have retained brand loyalty for these many years. Furthermore, continuous customer engagement activities at different forums improve top-of-mind awareness and increase trial. “If need be, we readily compromise on our price margins but never sacrifice product quality under any circumstances.” Mahmood echoes Iqbal, adding that “quality is our strength; in this era of communication, we believe in prompt and customised communication. Our problem and complaint handling systems are very efficient, which further strengthens customer loyalty.

The big challenge facing both companies is the water scarcity issue. In the spring of 2018, Mitchell’s, due to unavailability of canal water, had to use underground water to irrigate corn which added to their costs. As part of their contingency planning, they have brick-lined their minor plantation to conserve water, have initiated drip irrigation over an area of 80 acres and installed two water turbines to overcome water scarcity at their Renala and Kissan farms. Equally, Shezan consider water scarcity a serious challenge as a shortage could hinder production and push costs up. “We are planning on the most efficient usage of water and have implemented a system to recycle it in our factory.”

Although for both companies the majority of their revenue comes from the local market, foreign markets are important as “we want to cater to a wide range of consumers and the families who want a taste of Pakistan while living abroad,” says Mahmood. Hence, most of their products are exported to other markets (Bangladesh, Canada, China, Germany, Middle East, Norway and the South-West to name a few) and include ready-to-cook items such as saag, haleem, daal makhni, kari pakora etc. and canned fruit and vegetables.

Competing with each other, Mitchell’s and Shezan also compete with international players such as Nestlé (dairy, juices, cereals, confectionary and noodles), Unilever (dressings and sauces) and National Foods, Shan Foods and Engro Foods among the local companies.

Looking ahead, Mitchell’s plans are to further expand into new product lines and evolve their portfolio in line with changing market trends. Shezan is focusing on revamping their existing products, “although one of the overall challenges to the food and beverage industry is to ensure quality products at market competitive prices. As consumers become increasingly health conscious, they only choose quality products from trustworthy brands,” says Iqbal.

The big challenge facing both companies is the water scarcity issue. In the spring of 2018, Mitchell’s, due to unavailability of canal water, had to use underground water to irrigate corn which added to their costs. As part of their contingency planning, they have brick-lined their minor plantation to conserve water, have initiated drip irrigation over an area of 80 acres and installed two water turbines to overcome water scarcity at their Renala and Kissan farms. Equally, Shezan consider water scarcity a serious challenge as a shortage could hinder production and push costs up. “We are planning on the most efficient usage of water and have implemented a system to recycle it in our factory.”

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