Pakistan: Engro expanding the Halal way


(February 01, 2011) : Many in Pakistan understand the importance of putting their best foot forward in international markets, but few actually take a step. Engro Corp, however, is one such company that recently decided to take the plunge, to mark its presence in the international community.

The Pakistani conglomerate recently announced that it has reached an agreement with a Canada-based company to purchase its halal food business.

The disclosure reveals that the company means business (pun intended) when it comes to the international market; although ice cream exports may not be in the works at the moment, access to the international market is being tapped via a different channel. For the moment, Engro intends to run according to the existing operations of the company being acquired – Al Safa Halal. It will be targeting the existing North-American market – Canada and US to be more precise – and is not looking into expanding the current business but more into simply taking over initially.

The reason for selecting Al Safa, according to Ruhail Mohammed, CFO Engro Corp, was that it is a relatively smaller company, which would help Engro assess the halal food market more profoundly.

“We also selected the category of halal foods because it is a relatively small but growing segment, which would help us gain some competitive advantage,” he told BR Research.

Engro seems to be treading slowly but steadily. Acquiring a relatively smaller player, and acquainting itself with the current operations of Al-Safa rather than jumping into exuberant plans of growth and expansion appears to be a careful and discreet stance. “This acquisition can be looked as being a pilot project,” he said.

The existing products of Al Safa include frozen, meat-based products such as burger patties, nuggets, meat slices, sausages, and similar halal, deli products. The halal meat market has tremendous potential amongst international consumers, thus rendering Engros decision a quite sound one.

One study by Albertas ministry of food and rural development organization, estimates the size of the Canadian halal meat market to be around $214 million, with Muslim households spending about $31 per week on halal meat products alone.

There are roughly around 600,000 Muslims in Canada, according to various estimates, and around 8-11 million in the United States. With the Muslim population in the world expected to swell up to 30 percent of the total population by 2025, the potential for growth in this sector, therefore, is widely believed to be tremendous.

Since credibility and trust are also important aspects for marketing halal products, having the name of Engro, a Pakistan-based company, will be an additional advantage as far as subliminal endorsement of the product from a religious standpoint is concerned.

Engros move seems to be a fairly calculated one. One hopes it will set up a precedent for other local companies to take initiatives and establish the image of Pakistani businesses as being sound and savvy.