English Biscuit Manufacturers are the pioneers of packaged biscuit manufacturing in Pakistan and the country's leading manufacturer of biscuits and cookies since 1967. Khawar M Butt, Chairman and Managing Director, speaks to Worldfolio.
Let’s talk about the consumer goods industry in Pakistan as EBM is part of this sector and Pakistan has been viable in the consumer goods market with an estimated 285 billion dollars consumption. So what is the potential growth of this sector?
Pakistan is a huge country with a population of over 180 million. Demographically, it is the 6th most populated country in the world and as such, a substantial consumer base where the growth potential for the consumer goods sector is very promising.
The single largest asset of Pakistan is its youth. 60% of the population is between the ages of 15 and 45 years. This multitude of human resource – if harnessed properly and provided skills and an enabling environment with technological advancement – could create an economic revolution that would place Pakistan among the strongly emerging economic giants in South East Asia.
The Pakistan consumer goods industry is growing at 18% per year, and is estimated to be over 285 billion dollars. Pakistan’s average GDP growth in the last 30 years has been around 3% whereas it could have been anything between 5–6% if our economic growth had not been impeded by a variety of factors over the last several decades. However, growth potential for this sector remains huge because, regardless of socio-economic conditions, we have a large and growing population which will continue to drive demand for consumer goods. Coupled with this is the fact that the middle class is growing rapidly in Pakistan, which effectively means many more people have disposable income to spend on consumer goods after meeting the necessities of life.
For the first time in the history of Pakistan a government finished its mandate and another, democratically elected government came into power. Do you have an optimistic view on the future now that this has happened? Does this mean that the institutions would finally be able to work with continuity? You have seen the past, the present and you probably have an idea of the future, so what do you think? We know that things won’t change overnight, but what is your personal outlook?
Democracy is an extremely responsible political system in which the rule of law is paramount. Without the fundamental values of rule of law and socioeconomic equilibrium, the government becomes institutionally corrupt with bad governance. As a result, the common man, frustrated by the state of affairs, desperately wants change. So a lot will depend on the ability of the current and future democratic governments being able to fight corruption and work towards development.
It is worth pointing out that the type of parliamentary system in place in countries such as the UK has taken centuries to mature to its present form. Pakistan’s experiment of parliamentary democracy cannot be achieved overnight. It will take time but I am hopeful that we shall prevail.
Change is inevitable, particularly when we have as strong advocates of change a large population of young people, a vibrant and dynamic media, and an independent judiciary. Any country’s economy and financial markets should not be run at the behest of a few highly influential individuals, working for their personal benefits and inflicting heavy losses to the national exchequer without any accountability. We have to root out corruption at all levels, and build a strong foundation for rule of law. These are significant challenges, but I am confident we will achieve them in time.
I also believe that since Pakistan is primarily an agrarian economy, the government must develop agriculture and infrastructure to support this and other industries, in order to give Pakistan a real chance at development. We must play to our strengths.
At the time of Pakistan’s creation, we had only one textile mill and one sugar mill in West Pakistan and a couple of jute mills in East Pakistan (now Bangladesh). Most of the businessmen in Pakistan were basically traders. In the words of the eminent futurist Alvin Toffler, Pakistan was “in the first phase of its civilizational cycle.”
We have come a long way, but we have a lot more to achieve. I personally have strong faith in the future of Pakistan and in the tremendous potential of this country. This is why I myself have invested and reinvested in the country for so many years. I believe that strategic opportunities for growth and development always exist, and if these are acted upon at the right time in the right manner, great things are possible. Pakistani success stories such as that of EBM are testaments to this fact.
EBM is an industry or would you call it a value addition industry?
EBM is definitely a value addition industry. Our main inputs are commodities such as wheat and sugar, which of course, are some of the major crops of Pakistan. Therefore, what we do at EBM – manufacturing ready-to-eat foods in the form of biscuits and cookies – is very much a value-addition in my opinion.
Pakistan is the second largest producer of wheat, rice and cotton and is the 4th largest producer of milk in the world. Agricultural produce alone could contribute over 40% of the GDP in Pakistan. The top priority of our government should be to invest in agriculture. We could increase our output of cash crops at least 4 to 6 times over. All we need is technology driven hybrid seeds, and to avoid wastage.
Today, 25–30% of our crops are wasted simply because we do not have adequate and scientific storage capacity. To achieve this we need public-private partnerships; the government cannot do it alone. A council of agricultural scientists and technocrats needs to be put in place to carry out agricultural reforms. We need to undertake proper infrastructure development in order for agricultural product to reach the market.
All the developed counties of the world have generated wealth from agriculture in the early stages of their economies and then moved on to the next stage of development, i.e., industrialization. The United States of America, China, Australia, Holland and France are the best examples.
Tell us a bit more about EBM as a company; your corporate philosophy, your goals, and how you work towards achieving them.
EBM’s corporate philosophy has simply been that the success of any business depends on the democratic process in its truest and purest form. The consumer holds the veto power in his or her hand; by buying a product, a consumer places their trust and confidence in it, and vice versa. The management must therefore channel all its efforts and energies into maintaining product quality in order to be truly deserving of a vote of confidence from the consumer.
Organizational behavior and management specialist Charles Handy has said that, “The companies that survive longest are the ones that work out what they uniquely can give to the world. Not just growth or money but their excellence, their respect for others, or their ability to make people happy. Some call those things a soul.”
I have always wanted EBM to be that kind of company – a living company – and have worked hard to make that happen. I believe that a company with a heart and soul is built on four important elements or principles: sensitivity and adaptability to change and growth; the ability to build trust and confidence around its persona – to earn respect and credibility as a corporate citizen; providing an enabling environment of tolerance to build constructive relationships within and outside the company; and the ability to govern its own growth and evolution effectively.
The management of a company is a dynamic, life-giving element. Without management leadership the “resources of production” remain mere resources and never become actual production. The quality and performance of the management determines the success or failure of a business; indeed, they determine its very survival.
In accomplishing the status of a “Living Company,” EBM pursued Corporate Social Responsibility (CSR) as its cultural ethos from the time of its inception. We are clear that CSR is not charity. It is a solemn responsibility. CSR is a way to promote harmony in diversity. We have supported causes such as health, education, community welfare and sports to give back to society. In today’s global socio-economic environment, I believe it is imperative that companies play a key role in enhancing and shaping economic and social progress. Sustainable development is inextricably linked to best practices and an egalitarian approach to alleviate the ills prevailing in a society, be they poverty, gender discrimination, women’s rights violations or lack of respect for the dignity of all human beings. Sustainability of the environment and empowerment of the people are the core societal priorities and values on which a healthy nation is built.
On the business front, we adopted a unique strategy to make Peak Freans (EBM’s umbrella brand) a household name. This was in the 1970s when biscuit consumption was not common in Pakistan, especially among children. We chose the unique positioning and communication strategy of using the famed Pied Piper (from children’s literature) as an icon. Incorporating the image of the Pied Piper with a distinctive melody and the slogan “Food between meals,” we managed to capture the attention of children and adults alike, creating a sense of permanent recognition in their minds.
EBM’s intent was not only to promote its brands but also to grow the biscuit market as a whole, convincing consumers (especially mothers) that biscuits were a genuine “ready-to-eat food.” The proof of this initiative’s success lies in the fact that from a sale of 14,000 tons per annum in the 1980s, EBM is now selling over 120,000 tons per annum; a real-life example of how “The Legend Leads.”
What is the path forward now?
Going forward, we will focus on sustaining growth and maintaining the leadership position of the company. The Center of Excellence – in which we have invested heavily to acquire state-of-the-art equipment and machines – is poised to acquire new technologies through international collaborations and joint ventures in the baking industry. We are also looking into developing value-added innovative biscuits and other related foods such as high protein cereals for children between the ages of 5–10 years. Diversification into other sectors of food is also a possibility for us.
We are also open to seeking technical collaboration with the institutes of Science and Food Technology based in Faisalabad and Karachi, and offering the facilities of our Center of Excellence to academia and the food industry, primarily to PhD students for research and product development.
It is a great honor for EBM that the World Food Programme (WFP) is collaborating with us; we manufacture high-protein biscuits for them which they then provide free of cost to undernourished children in Pakistan. Similarly, the Institute of Science and Technology, France, has indicated the desire to collaborate with EBM in its programs in Pakistan.
We have always attempted to anticipate challenges in our approach to the future. For example, EBM invested in importing turbines capable of producing 1000 K.V. of electricity, as a result of which we are no longer reliant on the national grid. This investment in self-generated electricity has already paid back in terms of massive savings and competitive edge; we are able to run our plants 24 hours a day unhindered by frequent power cuts, thereby producing greater volumes to meet demand and retain our edge as the leading manufacturer in the biscuit industry.
As for the future of EBM’s management, my aim has always been to create an institution and not just a company. Individuals come and go, but the institution must endure. We therefore have a succession plan worked out which will enable the next generation of leaders to transition into their roles by easing into their business responsibilities. The Executive BOD now constitutes two of my daughters, Dr. Zeelaf Munir, a professional psychiatrist with an MS from Johns Hopkins University, USA, and Mrs Saadia Naveed – a chartered accountant from A.F. Ferguson & Co. (Price Waterhouse Coopers), Pakistan. I have been working towards this goal for a long time and fulfilling this self-imposed commitment makes me tremendously proud.
I am fully confident that the new generation is capable of adapting to changes and will take the company forward, expanding faster and in the right direction. We have dynamic, determined and professionally committed teams in all departments of the organization.
I have heard that you were always one step ahead regarding marketing in Pakistan, with your products, brands and many other things. How would you brand Pakistan as a country, as an investment area, as a tourist destination as well? How would you personally brand Pakistan from now onwards?
Pakistan is a fabulous country with immense opportunities and challenges. As a democracy it may still be developing. But possible change is on the horizon. We have a vibrant and dynamic media supported by an independent judiciary, and most importantly, we have a 60% majority of youth in our population who clearly are determined to bring about a change and convert Pakistan into an egalitarian society with equal opportunities for all.
Geographically, Pakistan is placed at the crossroads of Central Asia and the Middle East, with the prospect of becoming one of the biggest trading partners with rest of the world. It has huge mineral resources like coal, gas, gold, copper, emerald and uranium deposits.
Our economy desperately needs huge foreign investment commitments for which plans are already in place. The GSP Plus status granted by Europe in its recent protocol signed with Pakistan should hopefully increase Pakistan’s textile and textile fabrics exports, creating resources to be deployed in building infrastructure and undertaking development projects. Similarly, there are prospects of attracting foreign investment in the energy sector i.e., coal and gas exploration from the US and Germany. If these commitments materialize, Pakistan should not only be self-sufficient in its energy requirements but also able to adequately cater to its future requirement for some time to come. This should move the country forward robustly, allowing us to enter into the third wave of technological and I.T. industries.
Pakistanis are extremely warm and hospitable people. Pakistan offers all the four seasons. In the south, it has the long belt of the Arabian Sea with beautiful beaches and vast sand deserts. In the north, it offers the immensely picturesque and scenic terrain of the Karakorum mountain range alongside the Himalayas, which spread right up to the Hindu Kush mountains. The Gilgit and Baltistan regions are covered with snow and glaciers year round, making them excellent locations for ski resorts. The Cholistan (a sea of sand) in Punjab province, is the largest car racing track which could outperform any car racing track in the world for Formula Four racing championships.
Pakistan offers remarkable diversity and convergence of cultures. From Buddhist to the 5000-year-old Indus civilization, (as exemplified by the sites at Mohenjodaro and Harappa), we possess a range of historic wonders including the majesty of the Khyber Pass which remained the gateway of all the conquerors to the subcontinent. From Alexander the Great to Halaku Khan and the Mughal Emperors, the world’s greatest armies have passed through this celebrated route. The glory of this historic region is exquisitely preserved in museums located in Peshawar, Taxila, Lahore and Mohenjodaro in the Sindh province. Pakistan thus offers a unique mix of cultures for any tourist to enjoy, not to mention the wide variety of delicious regional cuisine. From the traditional Pathan Chapli Kababs, to the famed Lahori Mughlia chicken curries, and Balochi sajji (a famous goat dish) with rice, we offer food for every taste.
The tourist industry, therefore, is another area where infrastructure development is needed. The construction of roads, hotels, and entertainment services such as golf courses, theaters and ski resorts all require huge investments in the form of private-public joint ventures in order to showcase Pakistan’s real soft face as a “brand” that is second to none.