Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Jan 2019
Outlook of Pakistan
Economy, Consumer & Retail

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Copyright © 2017 The Nielsen Company. Confidential and proprietary.

PAKISTAN’S ECONOMIC OUTLOOK

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 COUNTRY SNAPSHOT
Demographics of Pakistan

Urban POPULATION BY AGE GROUP

36%

14.8% 15.7%
13.0% 13.6%
10.4%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Rural 9.0% 9.2%

6.7% 7.7%
64%

0 to 4 5 to 9 10 to 15 to 20 to 25 to 35 to 45 to 55 &
14 19 24 34 44 54 above

207.8 million 32.2 million 106.4 million 101.3 million

Population Households Males Females

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 TOUGHER ECONOMIC TIMES AHEAD FOR CONSUMERS AND
CORPORATIONS…

Depleting FX
Rupee devaluations
reserves REAL GDP GROWTH
Real GDP Growth
Consumer Price Index
5.3 5.6
5.8 5.8
4.4 4.2
5.2 5.1
4.7 4.9
3.8 3.2 3.7 4.5
4.1 4.1
Rising Inflation 3.7
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JAN FEB MAR APR MAY JUN JUL AUG SEP

Only 9 Billion in
Foreign Reserve 2013 2014 2015 2016 2017 2018 2019 2020

FORECASTED

Agriculture is the largest contributor to GDP

2016: 839,353 followed by Wholesale & retail trade
Decline in registered to
overseas workers 2017: 496,286

Source: Pakistan Economic Survey 2017-2018, State Bank of Pakistan 4

 …REFLECTED IN RECENT CONSUMER SENTIMENTS…

Consumer Confidence Survey (Jul’18)

Unemployment Vehicle Purchase Food Prices

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Expectation

50 53
42 58 43
30
8 12 4

Will Neutral Will High Neutral Low Will Neutral Will

Decrease Increase Decrease Increase

5
Source: State Bank of Pakistan
 …RESULTING IN CONSUMERS SPENDING CONSERVATIVELY

SAVINGS 39%
40%

NEW CLOTHES 27%

23%

HOME IMPROVEMENTS 29%

20%
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HOLIDAY/VACATIONS 22%
17%

NEW TECHNOLOGY PRODUCTS 21%

18%

OUT-OF-HOME ENTERTAINMENT 16%

11%
INVESTING IN SHARES OF STOCKS/MUTUAL 18%
FUNDS 11%

I HAVE NO SPARE CASH 17%

15%

2018-Q1 2018-Q2
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 HOWEVER, DESPITE THE LOW PER CAPITA CONSUMPTION
TODAY, COMPANIES ARE INVESTING FOR THE FUTURE
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Inaugurated $45 million Launched 20 acre state- Announced $120 million Plans to invest $330 million
bottling plant in Faisalabad of-the-art factory in Kasur investment to open diapers/tissue plant

Sources: coca-colajourney.com.pk, Ernst & Young, State Of The Economy Report, www.unilever.pk/, https://tribune.com.pk 7
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

PAKISTAN’S CONSUMER OUTLOOK

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 URBAN HOUSEHOLDS DOUBLED OVER THE LAST TWO DECADES
207.8 million people - 6TH most populated country in the world
To be 4th most populous country by 2030 at current rate

Households
In millions

Urban Rural
68%

32

52%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

19 102%
20 Urban’s 2.7% growth outpacing
Rural’s growth of 2.3%
12 13

Total Urban Rural

1998 Census 2017 Census

27% Millennials <4 years population makes

15 – 29 age group booming up 14.3% of the population
over the years

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 INCREASING FEMALE PARTICIPATON IN THE WORKFORCE

58% LITERACY RATE

With Female literacy rate Ratio of Female to Male Labor
at 46% Participation Rate
30.1
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

19.2

51% EMPLOYED
(76% male & 26% female)

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1.4mn females added to the
workforce over the last 4 years

Source: Nielsen CMM, UNICEF online database, PBS (Census Results, PSLM Study), World Bank, Pakistan Bureau of Statistics, 10
 FEMALES BECOMING MORE LITERATE BUT MALNUTRITION
AMONGST CHILDREN REMAINS A CONCERN

FAMILY STRUCTURE BIRTH RATE

74% Nuclear family with at 2.62 children born per woman

least 1 child
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

(6% increase from 2011)

3.9%

HOUSEHOLD MALNUTRITION

1/3rd of all households 88% of the children less than 2

have at least 1 infant years do not meet the criteria
for a minimum acceptable diet

Source: Nielsen CMM, UNICEF online database, PBS (Census Results, PSLM Study), World Bank, Pakistan Bureau of Statistics, 11
 RISING MIDDLE CLASS

RANKED 18TH GREW 8% SINCE 2010

2010 – 30%
GLOBALLY
2016 – 38%
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

INCOME & WEALTH REAL GDP PER CAPITA (PPP)*

24% increase in urban income. 5035

4857
Rural income has increased by 14% 4576
4696
4464
Expenses are growing 3X of inflation 4284 4310 4367

6.1% of Pakistani adults

have wealth within PKR1.5mn - 15mn
2010 2011 2012 2013 2014 2015 2016 2017
*INF ADJUSTED

Source: Nielsen Establishment Survey, Wall Street Journal, Credit Suisse Wealth Report, Govt of Pakistan, World Bank 12
 NEW AGE CONSUMERS

Digital Inclination Social Animals Promo Dependent Informed Parents Fitness & Health
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Source: PTA, PAS, World Bank, Nielsen CMM Study (2016), Nielsen Establishment Survey (2011), 13
 And with this evolution, media habits are also changing

82% Television Incidence

141 mn Cellular Subscribers
A decrease of 8%
from 2011 44 mn 3G/4G Subscribers
(51% increase in the last two years)
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

*Television Incidence – Urban Pakistan (watched

TV in past 24 hours)

149 TV Channels 25 mn Social Media Users

Google.com & Google.com.pk rank amongst

18% Internet Incidence the top3 sites visited in Pakistan

Doubled since 2011

Source: PTA, PAS, World Bank, Nielsen CMM Study (2016), Nielsen Establishment Survey (2011)
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 Copyright © 2017 The Nielsen Company. Confidential and proprietary.

PAKISTAN’S RETAIL LANDSCAPE

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 RETAIL LANDSCAPE

There are 582,652 FMCG outlets

across 472 Cities & 17000+ Villages

Urban 267,282
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Rural 315,370

On average we have 1 stores

per 356 Pakistanis

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 TRADITIONAL TRADE IS DOMINANT

Urban Channels Rural Channels

Urban General Store / General Rural Kiryana Store
Medical and Departmental Store
1 1

Urban General Medical / Exc Medical Rural General/General Medical Store

2 2
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Urban Departmental / Utility Rural Kiosk/Pan/Hawkers

3 Stores 3

Urban Kiryana Store

4

Urban Pan Shop

5
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 Copyright © 2017 The Nielsen Company. Confidential and proprietary.

However, there is

A RISE OF MODERN TRADE

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 MODERN TRADE IS DRIVING SHIFT IN
RETAIL STRUCTURE
SHOPPERTAINMENT
URBAN MODERN TRADE CULTURE
MODERN TRADE CONSISTS OF…

 Hyper markets
 Hyperstar having 6 stores in
Key cities
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

 Super markets
15%  Includes stores with selling
area of more than 1000 sq. ft.
e.g. Al-Fatah, CSD etc.

 Mini markets
18% Value Growth Selling area falls between 101-
400 m2, with at least 1 checkout
counter.

Nielsen Retail Audit of 50+ audited categories excluding

Source: Nielsen Census, Nielsen Shopper Trends (2018) 19
Cigarettes
 Traditional Trade vs. Modern Trade

Traditional Trade Modern Trade

Demand Erratic or seasonal Consistent (Interim promotions)

Order Placement Based on current stock Strategically planned to meet demands

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Customer Interaction Personal (Retailer hands out items) Customer pick items & proceed to counter

Lead Time Short Structured

Product Range Limited Extravagant

On-time Deliveries Lower focus Higher focus

Retailers absorb cost & give promotional

Economies of Scale Goods traded at MRP
discounts

Credit Cycle Short Long (customized) 20

 THE EVOLUTION OF
OMNICHANNEL

This artwork was created using Nielsen data.

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.
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Copyright
Copyright 2017
©© The
2017The Nielsen
NielsenCompany (US),
Company. LLC. Confidential
Confidential and proprietary. Do not distribute.
and proprietary.

E-COMMERCE ERA

PKR 9 Bn
market size
E-commerce

and expected to
grow 3X by 2020

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 E-COMMERCE CHANNEL EMERGING

FUTURE PROSPECTS

No. of start-ups in Pakistan

Unilever partnered with Daraz for its beauty and
About 40% more start-ups forecasted to be launched each year.
personal care products
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

300 1,000
(2016) (2020)
44 million broadband users, which is greater than the
population of Canada.

Penetration of Smartphones

35% of Cash on Delivery parcels are delivered to non

KLI cities.

19% 51%
(2016) (2020)

Source: The News, Primed Growth Analysis Pakistan E-commerce Market 2016, Pakistan Today, ATKearney & Jazz Report 2017, Techinasia.com 23
 FOUR FORCES TO WIN IN OMNICHANNEL

AGILITY
FLEXIBILITY
and proprietary. Do not distribute.

In four years retail The drivers and

ecommerce size will rival barriers are
global FMCG unique to each
market
and proprietary.

INFLUENCE
LLC. Confidential

The elusive food APPEAL

Confidential

basket is both a
challenge and Wooing the
(US),

omnichannel
Company.
Company

opportunity
shopper is key to
Nielsen

success
Copyright
Copyright 2017
©© The
2017The Nielsen

24
Copyright
Copyright 2017
©© The
2017The Nielsen
NielsenCompany (US),
Company. LLC. Confidential
Confidential and proprietary. Do not distribute.
and proprietary.

COLLECT
CLICK AND
CLICK
TIE-UP
BRICK AND

DELIVER
CLICK AND
LOCAL
HYPER

DELIVERY
MULTIPLE OMNICHANNEL MODELS DEVELOPING

020
AND
RESERVE

COLLECT/
LOCKERS
DELIVERY

25
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Copyright © 2017 The Nielsen Company. Confidential and proprietary. 26