Food retail to Pakistan
Trends and opportunities
Pakistan is a growing market for premium, imported food products. The A$3.1 
fast-moving consumer goods (FMCG) sector is dominated by in-country brands,
but premium retailers in Pakistan carry a large number of imported food
products from the UK, US, Thailand, Europe, Indonesia, Sri Lanka, China and
Malaysia. This demonstrates existing demand for high-quality products – for
which consumers are prepared to pay a premium.
Attitudes to food brands are changing. Pakistanis are travelling more – for
business, leisure and study – and this is triggering an increased appetite
for foreign brands. A rising middle class is also showing a preference for
premium products and a taste for new shopping experiences, including
Pakistan’s first retail malls. Demographics plays a role – approximately 60
per cent of Pakistan’s population of 208 million is aged under 30.
Access to overseas brands is becoming easier. The dominance of traditional
grocery outlets is being eroded as modern supermarket chains become
established in Pakistan’s principal cities, especially Karachi, Lahore,
Faisalabad and Rawalpindi. Today, Pakistan’s A$1.9 billion (PKR 205.9
billion) modern grocery sector is growing at over 20 per cent, per year.
As a result, overseas food chains and food products are expanding in
Pakistan. Established food brands such as Nestle (UHT, infant formula),
Mondolez (Cadbury) and Unilever (Walls ice-cream) are being joined by
international brands, and dining and takeaway franchises. Currently these
franchises include McDonald’s, Pizza Hut, Nando’s, Dunkin’ Donuts and
As Pakistan’s food retail market becomes more dynamic, it creates new
market entry opportunities for overseas producers. The opportunities are
changing quickly, as new purchasing behaviours lead to new forms of
consumption. For example, the growth of franchised ‘quick service
restaurants’ and e-commerce will increase sales of imported packaged food
and bottled beverages.
Australia is well positioned to benefit from this change in retail habits.
Australia is regarded as a supplier of quality and healthy food products.
For example, fruit juice is available in modern retail venues such as
Western-style supermarkets. The Australian-made spread, Meadow Lea, is
visible in a large number of retail shelves.
Modern retail in Pakistan is facing many challenges. These include the
high cost of capital, a lack of supply chain management systems and the
availability of relevant skills. The fact that modern grocery attracts a
narrow urban customer base limits demand to a few major cities. Importers
must also manage price-related risk. The depreciation of the Pakistani
rupee has undermined the competitiveness of low-margin imports.
Exporters will invariably encounter competition from locally manufactured
brands, which enjoy entrenched customer loyalty and a significant price
advantage. These locally manufactured products cover almost all FMCG
including jams, spreads, butter, cheese, confectionery and beverages.
Competition for imported foodstuffs will principally derive from other
premium imports that are subject to the same custom duties and tariffs (see
Two new arrivals are driving change in Pakistan’s food retail market:
supermarket chains and e-commerce. Both are helping to transition Pakistan
from traditional to modern grocery, as characterised by the breadth of
products, the elimination of independent distributors and customers who
bulk buy. Growing at approximately A$280 million (PKR30 billion) per year,
modern grocery was worth A$1.9 billion (PKR205.9 billion) in 2018. 
Following the success of Imtiaz Supermarkets, Alpha stores plan to
introduce the UK’s Tesco house brands across the country. Galaxy
International has introduced the SPAR retail chain in Karachi and plans to
add another two in Punjab province in 2019. The French retailer, Carrefour,
is becoming an anchor stall for new shopping malls. Currently a novelty,
these shopping malls are extending across Pakistan.
Pakistan’s e-commerce industry is currently small (A$30 million) but has
the potential to grow extremely fast. While the size of the online grocery
market is difficult to gauge, there are currently over 20 e-grocery stores
operating in Pakistan , most of which are startups. Typically,
groceries are categorised into packaged or perishable items that include
fresh produce (fruit and vegetables).
Based on the growth of the e-grocery sector in other countries, Austrade
anticipates online purchases will gradually extend into dairy, such as UHT
milk and cheese, as well as cereal, honey, confectionery and sauces.
Tariffs, regulations and customs
Pakistan imposes high import duties on most foodstuffs. There is anecdotal
evidence that some wholesalers import food products from Dubai through
channels that enable them to evade full custom duties and charges. This may
impact the competitiveness of some Australian products entering Pakistan.
It should be noted that Pakistan has very few trade agreements, the
exceptions being agreements with China, Malaysia and Sri Lanka.
New packing rules may also impact exporters. In February 2019, Pakistan
introduced new regulations for food packaging and product shelf-life that
- A minimum 66 per cent shelf life at the time of clearance of goods
Labelling of nutritional values and usage instructions in Urdu and
Reporting of the certifying ‘halal’ authority in the country that
validates the product. 
For some exporters, halal certification requirements may prove onerous,
since the certifying authority must be a member of the International Halal
Accreditation Forum, or the Standards and Metrology Institute for Islamic
countries. Existing regulations that each food pack must display the date
of production and date of expiry have been retained. In addition, labelling
requirements are subject to volumes meeting minimum order quantity (MOQ)
The retail industry recognises that meeting new labelling requirements may
make small shipments uncompetitive. Currently, importers are trying to
convince the government to relax the new rules, and are asking the
government to introduce them over a two-to three-year period.
Pakistan has a well-established FMCG distribution system. Three
distributors – Udl, Premier and UDL Distributors – cover the whole of
Pakistan, while many others operate in small, regional areas. Smaller
operators are generally independent and typically charge a fee for product
distribution. Their employees take orders from shops and institutions,
deliver the orders and collect payment. They also ensure products gain
shelf space and are not displayed after their use-by date. Distributors may
also re-distribute products with an approaching expiry date to avoid loss
from date expiry.
In Pakistan, distributors play a major retail role. Distributors develop
the brand and promote it in both wholesale and retail markets. Some
distributors own delivery vehicles, which travel between shops and service
them. Others adopt a hybrid system, where fellow distributors manage some
outlets for products they have imported, especially in small cities.
Austrade can connect Australian suppliers to the market and work with
importers, supermarkets and Australian suppliers to carry out promotional
activities for Australian food and beverages.