Guess who won be very happy about the imposition of RGST, besides many industrialists and members of the MQM, JUI-F, PML-N? Its the children, dear readers.
Imposition of the said levy will pump up prices of the main ingredients of a favourite indulgence of children -ice cream. Industry sources claim that the price of milk will rise by as much as 40 percent after the imposition of RGST, and the dairy product is a core ingredient of the palatable dessert.
Similarly, the sugar price saga is not an old tale for many. While the prices, which blew up above Rs100 per kg earlier this month, calmed slightly as the government attempted to balance the supply of the commodity, the imposition of the 15 percent RGST will increase prices further.
Adding to the band of expensive ingredients is palm oil, an important raw material for making vegetable oil, which spiked to a 27-month high to $1,058 per ton earlier this month. Many ice cream manufacturers, including the very popular Walls, use vegetable oil as a key ingredient for making their frozen desserts.
Despite that, with a per capita consumption of 0.4 litres per annum as per the last available data, and an average rate of growth of 6 percent during 2001-06, the potential for growth of the ice cream industry in Pakistan is quite favourable.
And this has managed to buoy up the interest of many new entrants in the industry, such as Omore of Engro Foods. While the ice cream has been launched expansively in Punjab, it is yet to be seen in the deep freezers in Karachi, but the prospects appear promising.
CEO Engro Foods, Sarfaraz Rehman, says the company is expanding slowly but steadily. "We have not introduced the product yet in Karachi because of logistics issues. Cold chain management is tricky, even if the smallest thing is out of sync, it will be a disaster", he said.
Contrary to what one would expect, players in the industry are looking forward to the arrival of Omore to other areas, including Karachi.
"We expect it to be here by the first quarter of 2011, and Omores launch in Pakistan and resultant marketing and advertising has been beneficial for us since it helps increase the size of the demand pie," said a representative of one of the ice cream manufacturing companies.
Despite the predictions of a price rise, ice cream lovers are likely to keep industry prognoses quite sweet. The parents may not be very pleased with any increase in prices, but a scrumptious scoop of ice cream will cheer the children up any given moment.
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