Fauji Foods further increases in market share
Aftab Ahmed
Islamabad: Covid-19 pandemic provides opportunities to expand the business. Fauji Foods Limited is eying a larger market share after restructuring. It also hires professionals from leading FMCGs at key management positions to increase its market share.
Fauji Foods Limited made a major restructuring. Therefore, it hired professionals from the leading Fast Moving consuming goods sector at key management positions. Resultantly it will increase its market share. For the first time in history, the Fauji Foundation Group appointed a CEO from the corporate sector.
After intensive marketing campaigns, Fauji Foods achieved 36 percent growth in its sales in the quarter ending June 2020. After restructuring, Fauji Foods has rationalized Distribution and Admin costs, which declined by 53 and 16 percent in recent quarters.
Talking to the Newztodays, industry officials said, “ the company witnessed significant sales growth. Because people across the country avoided buying loose milk due to precautionary measures and preferred packed milk.”
Processed milk companies including Fauji Foods, increased their prices by an average of 10% for their UHT milk brands. Fauji Food has witnessed the majority of growth in UHT milk sales.
READ Fauji Foods further increases in market share
Loose milk prices also declined by 25% from Rs 60 per litter to Rs 45 per litter in rural areas in June 2020 quarter due to less demand and disruption in the supply chain. Simultaneously, processed milk companies remained able to grab this opportunity and increased their utilization to build inventory for the next quarter.
The company also benefited from a delay in the axle load regime. Also, a decline in fuel prices registered a decrease in distribution costs.
Fauji Foods also did some financial restructuring in recent days and successfully converted an Rs2.63 billion loan from its parent company (FFBL) into equity investment. As a result, it issued 274 million new shares to FFBL. Similarly, Fauji Foods aims to save Rs927 million in interest expense annually.
Company business has remained volatile since the acquisition of Noon Pakistan Limited due to economic slowdown, and the company focuses on product development. During this time company has undertaken intensive marketing campaigns and launched Dostea in the tea whitener segment, Nurpur original in the UHT market, and Nurpur pasteurized milk.
However, on the restructuring front, a senior official of the company has said that “Fauji Foods is constantly looking to reduce costs, improve efficiencies, increase reliance on automation, and adopt changes in supply chain models to achieve long-term sustainable growth rate.
The company would do well to continually invest in bringing more popular products with customers to the market. Doing so does not necessarily mean that Fauji Foods has to revamp its brand portfolio. It could also choose to reinvest in its already household names but update them for the 21st-century consumer.
