Interloop Holdings Expands into Dairy: A New Chapter for Pakistani Exports

Introduction

Interloop Holdings, a prominent Pakistani conglomerate renowned for supplying textiles to major global sportswear brands, is set to broaden its horizons by venturing into the dairy sector. The company’s ambition is to export premium mozzarella cheese to the Gulf region through a strategic joint venture in Turkiye, marking a significant diversification in its business portfolio.

The Textile Leader’s New Direction

Interloop Holdings is well-recognized primarily for its production of socks and leggings for leading brands like Nike, Adidas, and H&M. With manufacturing operations spanning across Pakistan, China, Sri Lanka, and Bangladesh, the company has built a formidable presence in the textile and apparel industry. However, realizing the need for diversification to enhance non-textile exports, Interloop is launching IRC Dairy Products Ltd., its new dairy division.

Daily Dairy Production Capacity

In collaboration with its Turkish partner Rella Gida, IRC Dairy is currently processing an impressive 120,000 liters of milk daily. This significant output is directed towards producing Turkish mozzarella cheese and butter, aimed not only at the domestic market in Pakistan but also at clients in Eurasia and the Far East.

Strategic Expansion Plans

Musadaq Zulqarnain, Chairman of Interloop Holdings, has disclosed plans to explore export opportunities in the Gulf Cooperation Council (GCC) markets. With the GCC nations spending over $2 billion annually on cheese and butter imports, this venture represents a promising opportunity for growth. Zulqarnain plans to travel to Turkiye this month to discuss potential export strategies with Rella Gida.

In 2024 alone, the GCC countries imported approximately $2.3 billion worth of cheese and butter, with Saudi Arabia accounting for nearly $980 million of that total. Currently, IRC Dairy generates about 10% of its revenue from exports, with intentions to significantly increase that figure in the coming years. Zulqarnain mentioned that the company could potentially fulfill 7-8% of the entire cheese import needs of the GCC countries.

Financial Projections and Production Goals

IRC Dairy’s sales projections for the ongoing fiscal year are expected to reach around Rs10 billion (approximately $36 million). However, with the planned expansion, revenues could soar to Rs40 billion (about $142 million). The company aims to triple its production capacity within the next three years, intending to dramatically increase output of cheese, butter, and whey powder.

Currently, IRC Daily produces 6,000 tons of cheese, 1,000 tons of butter, and 2,400 tons of whey powder each year. By 2028, these figures are expected to rise to 21,000 tons of cheese, 3,500 tons of butter, and 8,400 tons of whey powder.

Exploring Further Opportunities

Zulqarnain expressed interest in possibly setting up a manufacturing plant in Saudi Arabia through a local joint venture, drawing attention to the increasing demand within the Kingdom.

This move aligns with the broader government initiative to enhance exports and invigorate the economy. Recently, Pakistan secured a tariff reduction from the US, with rates decreasing from 29% to 19%, aiming to bolster its export competitiveness.

Logistical Advantages

IRC Dairy CEO Matloob Hussain highlighted that Pakistan’s geographical proximity to the Gulf region offers a logistical edge, allowing quicker shipping times compared to Western countries. This factor will play a crucial role in the company’s ability to penetrate the Middle Eastern market effectively.

Tech and Logistics Diversification

In addition to its foray into dairy, Interloop Holdings is also diversifying into logistics and IT services. A tech subsidiary is already operational in the UAE, with discussions underway for partnerships in Saudi Arabia to provide advanced IT solutions, including AI and cloud services.

Economic Challenges Ahead

Despite the optimistic expansion plans, Pakistan is grappling with a widening trade deficit and sluggish export performance. The latest statistics indicate that the country’s exports declined by 12% year-on-year, exacerbating the trade gap significantly.

Zulqarnain pinpointed ongoing structural issues in the economy, which hinder competitive pricing due to high energy and labor costs. He also mentioned the impact of high taxation rates, suggesting that improvements are necessary to align with international competitors.

Looking Forward

Zulqarnain remains hopeful about tapping into the Gulf market provided the right partnerships are formed. He expressed confidence that with improved diplomatic relations between Pakistan and Saudi Arabia, opportunities for growth and economic collaboration will flourish. As both nations look toward signing a comprehensive economic pact, the future holds promising potential for Interloop Holdings in its ambitious venture into the dairy business and beyond.