Pakistan Sugar Market - Forecasts from 2022 to 2027

The Pakistan sugar market was valued at US$1,812.717 million in 2020 and is expected to grow at a CAGR of 3.93% over the forecast period to reach a market size of US$2,374.593 million in 2027.

Due to people consuming more food and beverages with added sugar these days the usage and demand for sugar have increased which is will play a role in the growth of the market. Also, many people consume a lot of sweet dishes and desserts so the demand for sugar is more which will augment the market growth. Further, the growing population of Pakistan is also expected to drive production, leading to growth in the market. Although some people are shifting to artificial sweeteners or low-calorie sugar which can restrain the market, Additionally, increasing investment and product innovation by major players coupled with new product launches may further bolster the growth of the market.

Market Overview and trends

As per a report by the Foreign Agricultural Services of the USDA, the province of Punjab dominates the sugarcane production in the country, producing 67% of the total sugarcane in the region. The harvest generally runs from October to May in the country, with the bulk completed by December. Further, according to the same report, bulk sugar consumers such as bakeries, candy, ice cream, and soft drink manufacturers account for about 60% of the total sugar demand in Pakistan. The beverage industry annually consumes about 1.2 MMT of sugar and is an important end-user industry for the regional market. the industry is taxed heavily, with 13% FED (Federal Excise Duty), 7% General Sales Tax on finished beverage products; and an additional 1.5% FED for carbonated beverages.

Government Policies

Furthermore, the government subsidizes sugar sales at State-controlled Utility Stores. Prices at the stores are USD 483 per ton. Industry end-users and other members of the general public without access to a Utility Store must pay significantly more, amounting to USD 511 per ton at prevailing open market prices. Prices After a long period of continuously rising prices, sugar prices went down moderately in 2022, due to the high level of domestic stocks. The fundamental domestic supply and demand factors are further expected to bring prices down to international levels, allowing for Pakistan to export without subsidy. Further, according to the USDA, the provincial governments support R&D, training of farmers, and technology transfer to raise cane yields and sugar recovery rates. Agricultural universities and a few sugar mills also support R&D activities. However, the public sector spending on R&D for sugarcane remains low in the country.

Distribution channels in the country

The offline channels of distribution are expected to hold a dominant share in the country. This is because Pakistan is still largely a cash-based, informal economy. According to the ITA (International Trade Association), the majority of transactions are conducted in cash, except for large ones requiring a bank draft or a pay order. Further, according to the ITA, 60% of the country’s economy is informal, with the majority of local companies, particularly SMEs, undocumented and outside the tax net.

However, with the growing internet population in the country, online channels of distribution are expected to grow gradually. According to data by DataReportal, there were around 82.9 million internet users in Pakistan as of January 2022 which was a tremendous increase of 35.9% from the internet population of the country in 2021. Thus, the growing number of internet users is expected to widen the customer demographic, hence, providing growth to the online channels of distribution.

COVID-19 Insights

The outbreak of the COVID-19 pandemic affected the market negatively. The pandemic resulted in the implementation of nationwide lockdowns and social distancing measures in the country, which affected the production, as well as the distribution of the crops to obtain sugar. Further, the lockdowns also mandated the shutdown of offline retail stores in the country, which are still a major source of distribution, thus making the market dip even further.

Market Segmentation:

By Form

• Granulated
• Powdered
• Syrup

By Source

• Cane Sugar
• Beet Sugar

By Use

• Food and Beverage
• Pharmaceuticals

By Distribution Channel

• Online
• Offline