Pakistan's bright stars: beer and bottled water

Despite counting on a highly favorable demographic outlook, Pakistan's consumer story continues to be restrained by a tense security climate and a fairly subdued economic outlook that reflects the inability of its economy to takeoff, according to a Fast Market Research report.

Pakistan is not undergoing the transformative economic lift-off gripping much of emerging Asia.

On a competitive level, multinational food and drink investors will probably remain hard pressed to devote significant capital to a Pakistani market held back by security concerns and a drab business environment.

However, with real private consumption growth expected to outpace GDP growth to 2014 and key food and drink indicators pushing up of a low base, lots of room for growth exist.

Here are some of the statistics of the country.

* 2010 per capita food consumption is +4.85%. About +15.21% is forecast to 2014.

* 2010 soft drink sales is at +8.46%. About +29.3% is forecast to 2014.

* 2010 mass grocery retail sales is at +8.50%. About +27.26% is forecast to 2014.

Nestle and Unilever, two of the leading food and drink companies in Pakistan have been reporting strong growth in headline sales.

Both companies grew their headline sales revenue by more than 20% year-on-year in the year to December 31 2009.

Their annual sales are now approaching $500 million.

Against the odds, demand for beer is strengthening off the back of strong growth posted by Murree Brewery.

Despite Muslims accounting for 97% of Pakistan population and extensive bans on the consumption of alcohol in place, Murree has been reporting strong financials.

Its Q1 (three months to September 2009) after duty and tax sales climb by 16% to PKR539.4 million, while net profit after tax increased by 26% to PKR63.9mn.

Strengthening health consciousness across Pakistan is strengthening demand for low calorie carbonate substitutes and bottled water.

With concerns about the safety of tap water extensive, demand for bottled water is growing strongly off the back of modest gains in per capita incomes and more importantly, more widespread product investment by leading players.

Pakistan's fragile security climate remains a key risk to outlook with unrest impacting on Pakistan's ability to grow its economy at a quicker rate.

Security tensions have plagued the economy, particularly since the presidency of Pervez Musharraf ended.