Understanding of Rice Industry Global Scenario of Rice Industry Introduction Rice is the most extensively distributed dietary staple worldwide. It contributes larger percentage of global farm land that 160 million hectares of land each year, just after corn which is mostly consumed as animal feed at about 175 million hectares, and wheat farmed on 220 million hectares. With the highest extraction rate in comparison to other cereal (fraction of each grain utilized as food), it produces more energy per hectares than any other cereal. Considering rice entire food protein production hectare is secondly only to wheat. Although, superior quality of rice yield per hectare of useable protein is higher for rice than for wheat. Commonly, each hectare of rice farmed yields about 4.4 tons of un-milled rice. Figures can vary as it entirely depends over local farming methods, climate, and seeds. In recent years, global un-milled rice manufacturing has been about 700 million tons, corresponding to about 470 million tones the rice milled. As each year 470 million tons of milled rice produced, only 8% (38 million tons) of global production traded each year. (Oryza)
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Rice Trade and Production Mostly rice produced and consumed in Asia. It is not only used in variety of ways to make food but also an ingredient in medicines and cosmetics and has a role in crafts and religious ceremonies.
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As per USDA 2013-2014 Crop year, the major exporters of rice are India, Vietnam, Thailand and Pakistan while one of the major importers is China after Other. Rice Quality Grading System There are quality standards of Rice and it varies from rice producing nation to nation. In general, rice is inspected to measure a particular grain samples grading standard, which will determine its price on the market price. Rice quality examination factors could be on the basis of rice grain size, chalkiness, color, odor, moisture, milling yields, integrity, milling yield, environmental conditions (temperature, humidity, rainfall) and management practices such as use of healthy seed; optimum sowing time; balanced and timely application of fertilizers; proper harvest and post-harvest operations, use of modern milling and polishing machinery etc. Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 4
Rice Industry of Pakistan Being an agro-based economy, Pakistan has natural plenty of all agricultural products that includes food items. According to Rice Exporters Association of Pakistan (REAP), rice is the third largest crop after wheat and cotton. Moreover, Pakistan is the worlds fourth largest producer of rice, after China, India and Indonesia. The country is responsible for 30% of the worlds paddy (un-milled) rice output. Most of these crops are from Sindh and Punjab region with millions of farmers depending over rice cultivation as their major source of employment. Rice farming in Pakistan is over 10% of the total cropped area. It is the major cash crop and one of the major export items. It accounts for 6.7% in value added in agriculture and 1.6% in GDP. General Process of Rice Production - Rice Plantation: Rice plantation takes place in unique climatic conditions. The first prerequisite is the torrential rains that mask the land under a layer of water. After that a long period of scorching dry climatic conditions are required. These conditions if present help grow the perfect quality of rice which is then harvested by hand with delicate care and then aged to perfection and finally processed. - Rice Processing: Rice processing takes place after the rice arrives from the fields. The rice is in shape of paddy on arrival and it is first dehusked by a rubber roll sheller to produce brown rice. During this process the outer tough protective coating is removed. This process has no effect on the nutritional composition of rice within the husk. After this, the brown rice is milled further by removing the outer bran layers which are darker in color but they are rich in nutrients such as B vitamins. This process results in production of white rice which is commonly used. Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 5
Milling Process 1. Pre cleaner: Cleaning the rice from any foreign materials 2. Destoner: Separating any stones from the rice, which may be picked up in the rice fields 3. Paddy Separator: To separate all Paddy from the white-hulled rice grains 4. Width Graders: To separate all different widths of the rice grains. Differing from both basmati and non-basmati varieties. Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 6
5. Single / Double Polish: Rice cleaner for making it look brighter and free from dust. 6. Silky Polish: Polish of rice by using a touch of water giving the rice grains a silky/pearl look. 7. Rotary Shifter: To separate all broken grains from the milled/re-processed rices. 8. Length Graders: To differentiate/separate all different lengths of the rice grains. Especially used to grade Basmati varieties. 9. Color Sorting: All discolored grains are separated from the white rice grains to give the rice an excellent retail marketable look. 10. Packing: Packing is done on automatic packing machines, enabling accurate weight and automatic seal of quality before dispatching through world renowned shipping lines.
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Rice as a Commodity Varieties of Rice Grown in Pakistan There are over 4000 varieties of rice that grows each year, most famous varieties of Basmati and Non- Basmati Rice in Pakistan are Pakistani Basmati Rice - Super Kernel Basmati - PK-385 Basmati - PK-198 or D98 Basmati Pakistani Non-Basmati Rice - Long Grain Rice PK-386 - Long Grain IRRI-9 - Long Grain Rice IRRI-6 Following are the popular export varieties. Basmati - Basmati 2000 - Basmati 385 - Basmat198 - Super Basmati - Basmati 370 - Kernal - Shaheen (Basmati)
Rice Other Varieties - IRRI-6 - IRRI-9 - PG(IRRI) - KS 282 - DR - Japonica
(Source: www.reap.com.pk) 1) Cargo Rice: (BROWN RICE, HUSKED RICE) means rice obtained from paddy of which only the husk has been removed. This includes its whole grain, head rice, big broken, broken, and small broken.
2) Plain or White Rice: means rice obtained from paddy which has been husked and milled while B) GRAIN CLASSIFICATION: means the proportional mixture of rice of difference classes to form a grade Rice Kernal is divided into four classes namely: 1) Extra Long Grain: shall be the head rice/whole grain having the average grain length of 6.90 mm or more. 2) Long Grain: shall be the head rice/whole grain Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 8
by removing its bran layers. This includes its whole grain, head rice, big broken, broken, and small broken.
3) Parboiled Rice: may be husked or milled rice processed from paddy or husked rice that has been soaked in water and subjected to a heat treatment so that the starch is fully gelatinized, followed by a drying process. having the average grain length of more than 6.0 mm but not more than 6.90 mm. 3) Medium Grain: shall be the head rice/whole grain having the average grain length of more than 5.0 mm but not more than 5.9 mm. 4) Short Grain: shall be the head rice/whole grain having the average grain length of 5.00 mm or less. C) YELLOW KERNEL: means the kernel of which 25% or more of the surface area has turned yellow in color. D) CHALKY KERNEL: means the kernel of which 50% or more of the surface area is white like the color of chalk.
E) GREEN RICE: means the kernel of green color in Cargo (Brown) rice which when broken is also green in color from inside or in the endosperm. F) BROKEN RICE: Broken of size length of grain and above shall count as head rice. (Source: www.reap.com.pk)
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Rice Commodity Trading in Pakistan Rice Consumption in Pakistan (Demand) Pakistan is not only a major exporter but also a major consumer in the world. Almost every household of Pakistan has been using rice as sidelines or main dish. Following is the consumption per year trend graph.
(Source: http://www.indexmundi.com/agriculture) Increasing trend shows that there is still lot of potential in the market. Through proper marketing tools we can penetrate in the market. Sindh Commodity Prices Punjab Commodity Prices Date Stations Commodities Sindh Min. Sindh Max. Date Stations Commodities Punjab Min. Punjab Max. 29-Apr- 14 Ghotki, Sindh Rice Basmati 1800 (40kg.) 1900 (40kg.) 29-Apr- 14 Faisalabad, Punjab Rice Basmati 2100 (40kg.) 2200 (40kg.) 29-Apr- 14 Ghotki, Sindh Rice Irri 800 (40kg.) 900 (40kg.) 29-Apr- 14 Faisalabad, Punjab Rice Irri 950 (40kg.) 1000 (40kg.) Source: http://par.com.pk/pakistan-commodity-rates/
Value Chain Analysis A general value chain of Rice is given below. Reverse Logistics is an important element of supply chain. Corporate or Food Services usually purchase bulk quantities while individual consumer buys relatively less quantity. Return claims usually happens at corporate or food service side due to large quantities. Rice as a commodity competes over price so it is essential for Brukflied to make value chain more efficient instead of responsive.
Cycle View of Supply Chain
There are five stages in a supply chain (Supplier Manufacturer Distributor Retailer Customer) and four supply chain process cycles (customer order, replenishment, manufacturing, procurement cycle).
Customer Retailer Distributor Manufacturer Farmer Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 11
Proposed Management Structure
Brukflied Rice (Pakistan) Limited Admin / Controller Information Systems Operations Trade Mkting (Sales) Finance Marketing Marketing Planning Production order planning Rice Crops B2B Buyers B2C Clients/ Retail North Region Centeral Region South Region Marketing Services ATL/BTL Execution Social Media Customer Relation Claim /queriesHandling Retailer and Supplier Development (Key Partners) Development Human Resource Compliance Business Development Corporate Affairs & LAW CEO Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 12
Proposed Marketing Strategies SWOT Analysis of Rice Industry Strengths - As rice is a staple food for worldwide population, it creates long term demand for the products that are associated with rice or rice as a main dish. High demand will increase the price of the commodity over time. This is strength for the commodity as suppliers need to be quickly and accurately compensated for demand of the product. - There are so many rice suppliers internationally that are producing in large quantities but the prices are high as compare to Pakistani suppliers so there is also a potential to compete it on price as well. - Reasonable road infrastructure and communications - Availability of few rice research centers within Pakistan - Easily availability of labors at Cost effective rates - Better water supply in rice growing region of the province - Reasonable network of banks available within Pakistan Weakness - Electricity failures affect efficiency and performance. - High transportation cost up to Port Qasim to supply the product for export markets / - Railway Stations are in active - Outdated Research institutes need new equipments and resources. - Lack of skilled labors / No vocational institutes imparting training for machine operation - / boiler handling - Low level of modernization and up gradation technology - Unawareness about export markets trend limited interaction between growers and research centers. - Limited level of capacity as association of growers as well processors have not teamed of professionals. - Growers have low level of influence in fixing of paddy support price. Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 13
- Rice processors have also limited say in policy initiatives. - Non availability of quality paddy. - Ignorance in Trade Policy to support direct exporters. - No testing lab available in Pakistan. Opportunities - Banned on Non Basmati Rice export from some world player. - Demands are growing & Prices are stable in international market - Huge potential for Parboiled rice as some major player are not active. - Possible production of organic Rice Threats - World price volatility - EU legislation and regulations on health, environment, safety, labeling. - Interrupted electric supply / higher oil/ gas prices - Law & order situation with in the cluster. - Delay in supply of fertilizers Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 14
Marketing Strategy of Rice Product Following is the marketing strategy elements that we have to follow in order to capture our target market on national as well as international level.
Social Media As social media is gaining popularity because of high reach and cost efficiency, it is recommended that company should market product through this medium. Facebook pages like SWOT Guide, Instagram and Twitter are becoming part of daily routine so through this we can generate positive word of mouth. Brukflied rice is already established but they need to add sufficient data in order to answer common queries of customer especially foreign buyers. Packaging Packaging is one the most aspects of marketing strategy as this differentiates your product from competitors product. Packaging should be user friendly and attractive. Corporate Social Responsibility (CSR) CSR activities will facilitate in earning social capital for Brukflied Rice. Like Starbucks is educating coffee growers for their CSR activity, we can also educate, develop and train farmers. This will help in Social Media Public Relation CSR PACKAGING ADVERTISING Sales Promotion MARKETING STRATEGY FOR RICE PRODUCT Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 15
improving society and quality of work. It will strengthen relationship with farmers and build positive image in corporate world as well as individual consumer. Other Factors will be covered in following section of Marketing Mix Target Market: For females aged 20-45 looking for healthy standard of life for their families at affordable prices, Brukflied Rice is internationally recognized brand that promises you high quality and healthy diet. This is also its USP, that it delivers multiple benefits at a cost effective price. This target market is SEC A and uses branded rice. This segment is mainly catered by FALAK rice and foreign Brands. The following are its attributes: Brand Loyalty in this segment account to 35% Consumers do not switch to other brands due to strong positioning Consumers are quality conscious Health conscious people Consumers are willing to pay a high price for a product if it is credible. Marketing Mix: Product: We are considering this marketing mix for both Basmati and Non-Basmati Rice. Rice is of premium quality as Brukflied rice is associated with international company through joint venture. Packaged Product depicts high quality and ensures healthy diet. Price: As a general observation, we can say that the consumers are ready to switch if a better product comes to market which is priced below branded rice. In this case we must compete with other premium brands on the basis of price point. Depending on distributor, we consider margins of 4% and 8% in pricing. Promotion: A one month sponsorship campaign would be run on GEO TVs morning show. This would help us in getting awareness for the product. Two week product placement in Chef Zakirs episode will be done to Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 16
reinforce the awareness plan. Advertisements would be run on both GEO TV and ARY for 10 seconds only for a month with complete message to increase frequency watched. Radio advertisement would be done on FM 89 and FM 91 for 30 seconds each and 15 slots on each channel. Banners and hoardings would be done in Clifton and Defence for one month that would help in keeping the product in the consumer eyes. Also participation in Dawn-lifestyle and Apna Karachi expo would be done to get better consumer engagement and awareness. Mall activation campaign would focus on Millennium mall in Gulshan and Forum in Clifton. Both of these malls would be targeted for weekend traffic for a total of fourteen weekends. This would help the product in getting maximum traffic for awareness. Two dedicated staff members would setup a kiosk in these malls and tell people about the product and its benefits for health. Store intercept activities would focus on Dolmen Mall(Clifton), Ocean Mall, Imtiaz (KPT and Bahadurabad), Naheed (Bahadurabad) and Chase (Seaview and Bahadurabad). All of these stores would be targeted for one month awareness campaign along with free sampling. Dedicated staff would be present here that would setup a kiosk and make Chinese rice for taste trial. Banners and store hoardings would also be place and consumers would be handed out informational pamphlets. Place: The product would be introduced in major IMT (International modern trade) stores such as Chase, Imtiaz, Naheed, Dolmen Mall and Ocean Mall. Those branches of these stores which are in Clifton, Defence, Gulshan-e-Iqbal and Bahadurabad will be targeted. The marketing efforts and sales coordination required in managing distribution at retail level will be very difficult and expensive.
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Marketing Budget Marketing Budget Cost ATL Activities One month sponsorship campaign morning show on GEO 1600000 Commercial Production advertisement 6000000 Two weeks Chef Zakir episodes (100000 per episode) 600000 Advertisement on Geo and ARY 4500000 Radio on FM89 and FM91 150000 Banner and hoardings (Clifton and Defence) 1500000 BTL Activities Mall Activation Millennium Mall (2 staff each 18000 per month, rent 500 per day) 14 days 43000 Forum (2 staff each 18000 per month, Rent 900 per day) 14 days 48600 Store Intercept Activities with Sampling Dolmen Mall (40,000 per day, 18000 for each 2 staff) 120000 Ocean Mall (15,000 per day, 18000 for each 2 staff) 500000 Imtiaz-KPT (300 per day + 18000 monthly salary of staff) 27000 Imtiaz-Bahadurabad 60000 Naheed-Bahadurabad 60000 Chase-Seaview 60000 Chase-Bahadurabad 60000 Expo Participation Dawn Lifestyle (3 days) 300000 KCCI-Apna Karachi (3 days) 300000 Total Amount 15928600
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Locations for Billboards
Size : 60ftx20ft Location : Shafiq Mor Size : 45ft x 15ft Location : KPT Flyover Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 19
Size : 45ftx15ft Location : Site Area
Size : 60ftx20ft Location : Sohrab Goth Name:Gulrukh Hina Submitted To: Brukflied Rice MBA-2014 20