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Executive Summary

The following document is the business plan for the export business of

canned fruits and vegetables. The canned food industry has seen exceptional

growth in the past few years due to the increase in the people that make up

the target market. The increase has been widely noticed in the UAE market.

Sales of canned food in the United Arab Emirates (UAE) grew by 7 percent in

current value terms in 2012 to reach USD69 million. Moreover, the better

economic conditions the country has experienced, with the GDP growing at

3.5 percent that same year and the higher disposable income, contributed to

the development of canned food market. Prospect wise, this market is

expected to grow between 2013 and 2017, registering a constant value

CAGR of 5 percent.1

In the beginning Natura Foods plans on catering specifically to the UAE. The

country has seen a growth in the number of working class that is single

(which is the target market of Natura Foods) and hence presents a great

opportunity for the canned food business. Aside from working singles,

students living alone are also a target market for the business.

The following business plan has extensively analysed the markets and the

opportunities that they present and also includes the production and

financial costs and activities necessary for launching the business. It then

1 Euromonitor

2
covers the marketing and promotion activities necessary to establish the

brand in the market with the retailers. The plan also explores the forecasted

sales and profits, which have been created based on the market evaluation

data, the percentage of target market and the expected product sales that

Natura Foods will be able to generate.

Business Model

The business model is fairly simple. We will source the raw material from

local farms in the rural areas of Pakistan. The fruits and vegetables will be

processed and packaged/ canned in the factories. Eventually, they will be

exported to countries majorly in the middle east. Later we will move on to

the United Kingdom and the United States of America. The processing and

canning function is further elaborated later.

Source Process and

Export
locally can

The Opportunity

Due to an extremely fast life in developed nations, households barely have

time to cook food at home. The west is characterized by dual income

households in which both the husband and the wife work and do not have

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time for other basic tasks like cooking food and buying groceries etc. They

need options which save them time and help them accomplish tasks quickly.

Canned and processed food is a great way to save time for such people.

Furthermore, research says that the nutritional value of canned fruit and

vegetable is equal to, if not more than, fresh fruit.

Canned food is a cheap option available to large rural working class in the

country. The hot weather of UAE is also one of the contributing factors of the

popularity of canned food. The conservation of food has become an issue

and canned food seems to solve the problem for the UAE citizens. Canned

tomatoes registered the highest growth of 7% in 2012. The growth of canned

tomatoes is attributed to awareness about the consumption of healthier

foods and by the push to prepare meals at home. The most popular canned

food product is Canned fish with Tuna as the subcategory. This is because of

wider product availability, larger shelf space and promotion by

manufacturers. Second to canned fish, canned beans are popular among

middle eastern countries as it gels well with the local dishes.

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 Sales of Canned Food by Category in AED Million (2007-
2012)

The sale of canned food is likely to increase between 2013 and 2017 due to

population growth in the UAE. The demand will be pushed as more

expatriate workers join the existing labour. The low to middle income classes

are also expected to lead the consumption in the category. The tourism

industry is also expected to play a vital role in terms that 15 million visitors

are estimated to visit the country b 2015. Canned food consumption will be

greatly increased through this increase in tourism. However unit prices are

expected to rise over the forecast period . This can be attributed to the lack

of local produce by UAE as it mostly imports food which is necessary due to

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its arid weather conditions. Even though, the government protects the price

of some food items, inflation still poses a threat in the future2.

Target countries

In the beginning of our operations, we will focus on United Arab Emirates,

China, and some Middle Eastern countries such as Saudi Arabia and Jordan.

The first target would be UAE as it will be the easiest to penetrate there.

These countries have been chosen primarily because Pakistan has trade

agreements with them3. This will help us slowly penetrate in other bigger

markets, like the US, as well. The US is one the biggest consumers of canned

food in the world with annual consumption of 21.2 Kg per capita4 with a great

market waiting to be served. There are a number of students who are

studying in the US away from home and need canned food for their daily

food needs. Serving this market though would be uphill task and would be

part of the long-term plans of the company.

UAE is a growing market for Pakistani food products. According to Pakistans

Ambassador to UAE, The UAE is the biggest market for Pakistani products in

the region, as our rice, fresh fruits and vegetables, canned food items and

spices are highly popular here, he said and added that the UAE is an

2 www.euromonitor.com/canned...food-in-the-united-arab-emirates/report

3 http://www.presidentofpakistan.gov.pk/index.php?lang=en&opc=6&sel=2

4 http://www.mapsofworld.com/world-top-ten/world-top-ten-canned-food-consumer-
countries.html

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important regional hub but Pakistani exporters have not benefitted from

opportunities available here.5

Target Market

The target market mainly consists of age group 25 and above. The rationale

is that in the UAE people tend to marry at a relatively young age and so it is

assumed that this age group consists of people who are either married or

youngsters who are in the UAE for education or employment purposes. The

latter are students away from their families and lack the time necessary to

cook food, so canned foods come as a convenient option for them.

Industry analysis

In 2015, the global canned food market is forecast to have a value of

$92,694.1 million, an increase of 14.9% since 2010 6. Del Monte Foods

Company is the leading player in the global canned food market, generating

a 5.1% share of the market's value.

The global canned food market is highly fragmented with top three players

accounting for 9.9% of the total market value.

The Canned food industry is growing in the international market due to the

increasing number of individuals who are the target market. Hence, many

5 http://www.nation.com.pk/pakistan-news-newspaper-daily-english-
online/business/26-Feb-2013/pakistan-aims-to-double-food-exports-to-uae

6 Datamonitor: Global canned foods market report

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players have emerged in this market to cater to the consumer needs. Some

of the brands which are catering to this market through retail outlets are:

Canned Fruits:

Walmart Canned Vegetables:

Roland Walmart:
Reese
Oregon
SW
SW
Giorgio
Dole
La Costena
Del Monte
LuLu Cento

LuLu Canned Pineapples LuLu:

China LuLu Canned Foods

Xiamen Fortop Imp & Exp Co. China:

Ltd
Topbase Global Qingdao Co. Yichang Tianyuan Canned

Ltd Food Co. Ltd

Windfood International Ltd
Tianjin Kunyu International
Co. Ltd
Xiamen Great Rice Business
Yantai Reiyo Foods Co. Ltd
Fujian Haishan Foods Co. Ltd
Jinqzhou Xinqdou Food and
Canned Food Co. Ltd.

Trade Co. Ltd

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The Chinese market is the most self sufficient among the countries because

of the abundance of local competition. The Canned food industry is most

developed in China with Walmart outlets being close behind in competition

hence these two will pose as a greater competition.

The industry is fairly developed and with the growth in the industry due to

growing target market will lead to opportunity to serve the audience that is

either underserved or is demanding something different in the product. Since

Natura Foods will be focusing on the Country of Origin factor as a

differentiation strategy, and Pakistan being famous for its agricultural

products, it will be able to capture the market.

Competitor analysis

Our meeting with the exports manager of International Industries yielded

some important information regarding global exports. He said that any

export oriented firm faces a three-faced competition.

1. Local Pakistani exporters

2. Exporters from other countries.
3. Local companies of importing countries.

In the US, the fiercest competition will come from the 3 rd type as there are a

number of big and experienced companies like Del Monte and Campbell

foods. Therefore, US would be a longer term target for us.

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Local Pakistani Exporters:

Major exporters include Ismail Industries that deals in sea food, rice and

fresh and frozen Pakistani foods. Omni Food Company deals in canned

coconut milk. Horizon foods are currently exporting Halal frozen foods to

different parts of the world. Multi food industries are involved in exporting

snack foods, ready to eat foods and infant foods 7. Other local companies

indulging in canned food exports are:

Mitchells Pakistan (22% local market share)

Ismail Industries
Naurus Pvt Ltd.
Hunza Valley Foods.
Khyber Fruit Products
Tops food and Beverages
Citrus Pakistan
Other small firms

Apart from Mitchells, the other competitors are operating on a relatively

small basis. Therefore, there is a very good possibility of penetrating the

market easily.

Exporters from other countries:

Exporters from other countries include Shanghai Kasmac Business Consulting

Co. ltd. that is located in Shanghai, China 8. Food euro service in Italy offers a

7 http://pakistan.tradeford.com/suppliers/canned-food-wine

8 http://www.made-in-china.com/manufacturers-
exporters/c5q0nolimit/Canned_Food-1.html

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wide range of fresh, dried and frozen Italian foods 9. Besides, Thailand is the

worlds largest exporter of canned pineapple (16% of global output) and

canned tuna. Some of Thailands exporters include Thai Bae situated in

Bangkok, it supplies canned pineapple, corn kernel, baby corn etc 10. In Izmir,

Turkey, Zeytas exports beans, green peas and mixed vegetables. Aqua Trade

international sells canned products from India.

Local Companies of importing countries:

Pakistans importers of canned food include UAE (biggest importer), Australia

and Newzealand. UAEs local companies include AL Islami that is eyeing

Africa as its export region now together with an already established base in

Libya. The firm offers halal food. In UAE, the estimated annual value of the

canned food market is $ 2.5 billion. Other UAE manufacturers include Jamal

foods and Kraft foods.11

In Australia, Rhodes Food group exports quality canned fruit and vegetables.
12
Conga foods are in canned tomato industry.

9 http://www.weiku.com/Canned-Food/buy-Italian-Canned-Food.html

10 http://bangkok-companies.com/categories/thai_companies_p86.htm

11 http://www.datadubai.com/directory/canned_foods_manufacturers_in_uae.html

12 http://www.theage.com.au/national/canned-why-local-tomatoes-cop-a-pasting-
20120526-1zc2q.html

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Product profile

The following products will be included in our initial product offering;

however, other items will be added:

Sliced mangoes
Sliced pineapples in deep soup
Fruit Cocktail
Beans
Sweet corn
Chick peas
Peeled tomatoes
Chopped green chillies
Mushrooms
Carrots
Crushed garlic
Others

Later on, we will the following products to our line:

Canned Tuna
Canned Shrimps

Production Plan

During the first two years of our operation, we will sign a contract with

Mitchells Fruit Farms to avail their Co-packing services. This means that we

will outsource packaging process to Mitchells. After two years, we will install

our own packaging, canning, and labeling facility. We will give Mitchells the

complete specifications according to which they will can and package our

products.

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Production Process13

The presence of water in foods in abundance makes them go bad quickly.

The quality of food is lost due to the presence of enzymes, growth of bacteria

and loss of moisture. In order to avoid the quality loss, canning should be

carried out with excessive care. The following are the steps in canning:

Selection of food:

First of all, food should be selected and washed carefully. Suitable and quality

foods should be selected to begin with. Food should be carefully examined

for freshness. Diseased food should be discarded.

Peeling:

After that, skin should be peeled off. In case of fish, its a longer process as

the skin peeling procedure is different and time consuming. Also, the rib

bone needs to be removed and some body parts that are not Halal need to

be removed.

Hot packing foods:

After that hot packing of foods should be carried out. 15-30 percent air is

present in almost all the fresh foods. The quality of canned foods depends on

the removal of air before the food jar is sealed. The conventional raw packing

(packing in tight jars without heating) might prove to be helpful in case of

vegetables processed in pressure canner but may not be viable in most of

the other foods such as fruits. The reason is that raw packing does not help
13 http://nchfp.uga.edu/index.html

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to remove air from food tissues. Furthermore, the food keeps floating in the

jar which may cause discoloration within 2 to 3 months of storage in raw

packaging method. However, hot packing plays an important role in removal

of air from tissues and also creates a better vacuum in the jar. Due to this,

food is also shrunk which allows more food to be filled in each jar.

Additional acids:

Additional acids such as vinegar or lemon are added to some foods.

Preservation:

Food is then preserved using specific jars and lids. Lastly, the jars are

processed in hot-boiling water.

All the above mentioned steps carry out the following functions:

Removal of oxygen
Destruction of present enzymes
Prevention from bacteria growth
Creation of vacuum in the jars used.

Entry Strategy

It would be difficult to enter the canned foods market on a small scale as

canned foods is a mass market product and consumed by all and sundry all

year round. The canned foods market is high volume, low margin market.

Therefore, NFI will enter the market with a host of products and will focus on

market penetration initially, so that we may earn on high volumes. In order

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for this to happen, we will focus on hypermarkets and supermarkets that

place all brands of canned foods on their shelves.

In the UAE, local manufacturers constitute 20 to 25 percent of the canned

foods market whereas imported products constitute around 80 percent. This

provides a great opportunity to penetrate the market. Also notable is the fact

that all major chains keep imported canned foods on their shelves. This

means that penetrating into the UAE market through the hypermarket and

supermarket channel would not pose major challenges.

NFI will first focus the top three most populous emirates: Dubai, Abu Dhabi,

and Sharjah, which constitute 75% of the population. We will then penetrate

to the smaller emirates.

We will initially be aided by The Gulfood Trade show in penetrating into the

UAE market. The Gulfood Trade show is a good way to start any food export

business. It offers expert advice along with a dependable trading platform for

all kinds of players, small or large. We plan to enter the UAE and the Gulf

market through this avenue. Through this platform, all budding and new food

business from all over the world can exhibit their products. We will promote

our offering through this platform as it is a highly promising opportunity. The

exhibitors will be meeting with the local importers and indenters and will

explore the UAE market for offering their products at a competitive price to

the Emirati and international community living in UAE & the Gulf region.14

14 http://www.gulfood.com/page.cfm/link=130

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Sales Forecast

The total population of the UAE is about 5,473,972 15. According to 2013

estimates, 65.6 percent of the UAE population is in the age group 25 and

above. This is the age group that NFI will target. 84% of the total population

is urbanized and likely to purchase canned foods. This brings to 3,016,377

the population that constitutes our target market. We aim to capture at least

10% of this market. The average price per a 450 gram can will be 6 AED. The

following table illustrates the costs and revenue

In AED 2014 2015 2016 2017 2018

217179 238897 262786 289065 317971
Sales 14 06 76 44 98
162884 179172 197090 216799 238478
Costs 36 79 07 08 99
542947 597242 656966 722663 794930
Gross margin 9 6 9 6 0
Cost of debt 200000 200000 300000 450000 600000
Advertising
cost 300000 300000 300000 300000 300000
Retailer 107503 118254 130079 143087
margin(18%) 977306 7 0 4 4
Shelf space
cost 5000 5000 5500 6000 6000
394717 439239 478162 516984 561242
Net income 2 0 9 2 6

The sales for the initial year have calculated by multiplying the target number of

customers by the average price of one can and then multiplying the product by 12,

assuming that a person will consume a can at least one per month.

15 CIA world Factbook. July 2013 estimates

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Marketing Plan

Promotion

We have decided to include the Made in Pakistan element to our product

offering. Therefore, we will show the complete nutrition and quality facts

(fruit facts, vegi facts) on the labels of our cans and that the ingredients

are completely sourced from Pakistani fields, the best in the world.

Pricing

We plan to keep prices below those of major competitors like Heinz and

California Garden, at least 15 to 20% below. The average price of the can will

be 6 AED, compared to around 7 to 7.5 AED per a 450 gram can. The

rationale for this decision is that UAE, and specifically Dubai, is a fairly

expensive place to live for expatriates. Dubai currently holds the 89th

position overall based on the latest cost of living index, as the most

expensive place in the world for expatriate living, out of 300 international

locations. This means that living in Dubai is fairly expensive 16. People have to

pay at least 15 to 20% more for food than they would have to pay in their

home country. Students therefore cannot afford to buy the expensive

products due to budget constraints. So the price discount relative to the

other products would be a great attraction for buyers.

16 http://www.guide2dubai.com/living/cost-of-living-dubai.asp

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Packaging

Initially, we plan to have only one SKU (Stock Keeping Unit) of 450 grams per

can for all our products. As already mentioned, we will explicitly display the

ingredients used and also show the nutrition facts related to the fruits and

vegetables. Initially, we will requisition the services of Mitchells through

their Co-packing Services, until we establish our own canning plant. The

process will take not more than two years.

Assessment of risk

Risks in the Business

The perpetual risks associated with operating in Pakistan are electricity, law and

order,

Evaluation of Weaknesses

According to an article published in Dawn 17, canned food is subject to hazardous

substances in the form of sulfites present in the preservatives that are used in the

processing. Sulfites are sulfur-based compounds added to food as preservatives.

They are found in canned vegetables. About one out of 100 people is sensitive to

sulfites and reactions can be deadly. The reactions from sulfites can cause

respiratory problems. This finding will act as a severe blow to our offering. Hence,

we will try our best to find an alternative to sulfites as preservatives and highlight

this fact through advertisements.

17 http://dawn.com/2013/01/12/hazards-of-canned-food/

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Contingency Plans

In case we are not able to export our products due to possibly saturated markets in

Middle East or due to any other reason, we will sell our products to Mitchells who

will export them under their brand name.

Organizational Plan

Form of ownership

The form of ownership initially will be a partnership with all partners having

an equal share in the ownership as well as the profits. We may however

consider going public depending on our growth prospects. But it would be

preferred that ownership remains in our control as the founding members

would like to manage the company on their own terms and not dictated by

shareholders. Going public will only be considered as an option if the growth

of Natura Foods outstrips the financial and managerial capability of the

founding members.

Management team background

Mohsin-ul-Ibad Haider

Mohsin is a recent BBA graduate from the Institute of Business

Administration. Armed with experience in the financial sector, he will be

leading the companys finance department. His father is the CEO of a

currency exchange company; this will help him track the fluctuations in the

currency market and hedge the risks accordingly. He has contacts in UAE and

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Europe which will aid him in keeping track of the demand trends in canned

foods. His excellent academic record will help him lead the company towards

success. He will also be acting as the companys CEO.

Hiba Fatima Ahmed

Hiba F. Ahmed, an IBA graduate with majors in Marketing, is a Partner and

the Head of Business Development at Natura Foods. Starting from a Pre-

Engineering background, she decided to take up business administration as

her formal career and hence got admission in IBA to pursue her studies of

BBA.

Usman Farooqui

Mr. Usman, 21 years of age, is currently pursuing BBA in finance from the

institute of business administration, Karachi. He has studied courses such as

financial management, marketing issues in Pakistan and methods in business

research in a span of three years. His father is an efficient marketing

manager for Arrow Distribution ltd and works in Saudi Arabia. His brother is a

financial Analyst who is currently working for Mcgrawhill Publications in the

US. He was brought up in Saudi Arabia and then came to Pakistan in 2004 to

pursue higher studies. He has also interned in Eastern Meditarranean

University in Turkish Cyprus. He hopes to use his vast experience in dealing

with people and developing contacts to set up an entrepreneurial venture

that could serve as platform for canned foods in Pakistan.

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Saad Sheikh

Muhammad Saad is 21 years old and currently a student of IBA. He has

completed six semesters of BBA. In this period of six years, he has done

various courses that include management, marketing and finance. The above

fields of studies have increased his knowledge bank and have set up a good

platform for him to start his own business.

Furthermore, his father has an entrepreneurial background and is self-

employed. His father has been doing spare parts business for the past two

decades. His father not only imports spare parts of cars but also has

established some famous brands in spare parts market. The activities of his

father have inspired Saad to start his own business where he will be

independent in carrying out the daily operations just like his father does. His

fathers extensive experience of business activities will prove to be helpful

and vital for him in starting this business.

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Management team Roles

Mohsin Haider
(CEO and
Director
Finance)

Usman
Hiba F. Ahmed
Saad Sheikh Farooqui
(Manager
(Director (Director
Business
Marketing) Oversees
Development)
Operations)

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