A New York-based hedge fund acquires a 12% stake in National Foods, one of Pakistan’s most recognized consumer foods brands and a company widely regarded as having corporate governance standards that most foreign investors believe they can trust.
If this story were published in the latter half of the Musharraf era, or even in until about 2018, one would have chalked it up to a desire from a sophisticated global investor to profit from the rapidly expanding Pakistani middle class. But this is 2024, and that Pakistani middle class has seen its purchasing power absolutely battered. So why is Millville Opportunities Management, a $200 million hedge fund (small by American standards), investing in National Foods now?
It is because National Foods has figured out a way to profit from the expansion of purchasing power of dual-income Pakistani households, regardless of whether that Pakistani household lives inside or outside Pakistan. In other words, Pakistanis inside Pakistan are struggling under the weight of skyrocketing inflation, and many are leaving in droves, but National Foods has decided it will not give up its share of their wallet even as they leave Pakistan and will continue to serve them abroad, particularly Pakistanis who migrate to Canada.
Here is what is going on.
 The origins of National Foods
National Foods began in 1970, founded by a former Pakistani cricketer and a textile technologist. The company started to take off when it was taken over by Waqar Hasan and Abdul Majeed and entered the packaged spice business.
Up until the 1970s, Pakistani cities were not materially different from Pakistani villages in terms of the cooking habits of people. You could not buy flour, you bought raw weight, and then went to a small flour mill in the neighbourhood market to get it ground into floor. You did not buy spices that were ground. You bought them raw and went to a mill to have them ground. Life moved much more slowly, and it could afford to because every household had very few people who worked outside the home, and many more people who were home all day.
Life started picking up pace, at least for a small segment of the urban middle class, in the Zia era, and companies like National Foods realized that there was a market for the spices to be sold in ground form rather than whole form. It was part of the vanguard of the convenience food movement in Pakistan, and has been in this business line ever since.
By the 1980s, it had become a small supplier to McCormick, the American spice giant, and by the 1990s, it expanded into pickles and sauces, hitting the Rs 1 billion sales mark by the 2000s. But as recently as 2017, less than 15% of the gross sales of the company were exports. National Foods lived up to its name and largely sold to Pakistani households living inside Pakistan.
It is not as though National Foods products were not available outside the country. Walk into any grocery store in Dera in Dubai or even a Patel Brothers (Indian grocery chain in the United States) in Chicago, and one would find virtually the whole line up of National Foods products well stocked. But these were a relatively small part of the company’s sales.
That changed with an acquisition made it late 2017 that transformed the company from being a mostly domestic company to one that started taking its export market quite seriously.
 Emigration and exports
The educated middle class of Pakistan has been emigrating from the country in substantial numbers for decades, but the trend truly picked up in the mid-2010s, particularly as Canada made immigration for educated young people from all over the world to be able to directly apply for Canadian permanent residency. National Foods spotted an opportunity and decided to capitalize on it.
In 2017, they bought a 60% stake in A1 Cash and Carry, a Canadian wholesale chain. A1 Cash & Carry is a restaurant wholesaler and distributor specializing in B2B wholesale of commercial kitchen supplies, food packaging, cleaning supplies, meat, seafood supplier, takeout containers wholesale, fruits, vegetables, spices, frozen foods, beverages. It is headquartered in Mississauga, Ontario, a suburb of Toronto well known for its large concentration of Pakistani immigrants.
A1 is not just a place from where Pakistani households can buy their spice supplies. It is the place from where Pakistani – and Indian and Bangladeshi – restaurants in the Toronto metropolitan area and the wider Ontario region can buy their supplies from. National Foods quite literally moved up the value chain and bought out one of their biggest distributors and used that ownership to ensure that they are able to distribute much more of their product in the North American market than before.
This is not just a new business line that happens to be doing well for National Foods. This is a fundamental transformation of what National Foods is as a company, and therefore changes the investment thesis of what it means to own National Foods stock.
Until 2017, no more than 15% of National Foods’ gross revenue in any given year was exports. In the financial year ending June 302, 2024, that proportion had risen to 52.3%. National Foods is now an export business with a local side hustle, rather than a domestic brand that exports a bit to nostalgic overseas Pakistanis.
This is a story not just of the success of its export business, which has grown its revenues by an average of 41.3% per year in Pakistani rupees (20.2% per year in US dollars) in the six years between 2018 and 2024 to $191 million in gross revenues in 2024, more than three times the $63 million it generated in 2018.
It is also a story of the fact that its domestic business has stalled out when measured in USD terms. In Pakistani rupees, Nationals Foods’ domestic revenue grew by an average of 15% per year between 2018 and 2024, which sounds reasonable until one realizes that the rupee depreciated by an average of 17.6% per year during that period, meaning that National Foods’ domestic revenue line shrank by an average of 2.1% per year during that period, shrinking from $198 million in gross revenue in 2018 to $174 million in 2024.
 Why North America?
What makes this story interesting is not the fact that the Pakistani diaspora has a hankering for food from home. It is the fact that the diaspora in the United States and Canada is so much more willing to spend money on National Foods products than the much larger diaspora in the Middle East or even the United Kingdom. And the difference has to do with which Pakistanis end up in North America versus which ones end up in the Middle East and Europe.
The vast majority of Pakistanis who move to North America are college educated professionals. Convenience food is a much more important need for them than it is for Pakistanis in the Middle East who may be less well educated and skew heavily male, which means they likely do not even cook their own food and thus have no need for spices and other cooking supplies.
Pakistanis in North America are much more likely to be dual income, which means that women are much more likely to be working outside the home, and thus these households have much more of a need to economise on the amount of time they can spend on cooking at home.
 The new investor
Millville is not a stranger to the region—it has experience investing in South Asia, from funding tech startups like GrocerApp in Pakistan to Chaldal and iFarmer in Bangladesh. But this venture into spices and condiments marks a shift into the consumer goods sector, signalling perhaps a long-term bet on the rise of middle-class consumption in emerging markets.
The fund’s stake in National Foods crept up last year, when it bought 4.5 million shares, pushing its ownership past the 10% mark to become a substantial shareholder. And it is not just about biryani mixes and pickles; National’s growth story is what seems to have caught the eye.
Millville’s bet likely hinges on National’s ability to expand further into international markets, particularly in North America, where it’s already making inroads via Amazon, Walmart, and brick-and-mortar stores. With global demand for ethnic foods growing and National’s proven track record of scaling its business, it seems the hedge fund sees room for National to spice up its revenue streams even more.
The fund is run by Alejandro Montealegre, a 38-year-old investment manager who graduated from Princeton University in 2008, worked at Goldman Sachs, followed by a stint at a small investment fund in New York before starting Millville in 2011.
