Despite the economic pressures, the FMCG industry still has room to grow

FMCG products sell quickly and their short shelf life is attributed to higher demand due to frequent consumption.

Despite the pressure caused by the war in Ukraine, consumption in Bangladesh still amounts to more than 66% of GDP.

According to industry insiders, the annual size of the FMCG market has already reached approximately $4 billion. They believe that the ongoing tension will not last too long and that the growth potential in the FMCG market remains intact.

The intact main room

With high GDP growth and rising income forecasts, Bangladesh is expected to be the ninth largest consumer market by 2030.

The demand for FMCG products rose steadily until the global crises after 2022.

“The ongoing economic crisis could only delay the journey by a few years,” said Syed Alamgir, managing director and CEO of Meghna Group of Industries’ FMCG unit, citing the resilience of Bangladesh’s economy.

In addition to the broader economic growth potential, he also counts on people’s increasing preference for branded goods.

According to him, FMCG brands now serve a quarter of the demand in the FMCG food segment and that indicates a large scope for brands as they have a long track record of taking market share from traditional players who operate without widely recognized brand names, he said.

However, market behavior varies from segment to segment.

People depend on brands for noodles, while traditional bakers across the country serve most of the demand for bread and cookies.

Brands have also drawn consumers to diverse, packaged food products such as packaged rice and lentils over the past decade.

“Still, that’s a long journey,” says Mustafizur Rahman, head of marketing at PRAN for rice, salt, flour, lentil and agro companies.

People prefer the big bags of rice from a trusted business group, but the premium retail packs that are more expensive are not yet a daily necessity for the masses, he said.

Packaged premium rice does not account for more than 1% of national consumption, he said, adding that major players are stepping up efforts to increase the share of the packaged segment.

The interest of both local and foreign brands in the growing market speaks to the FMCG potential as they continue to invest millions of dollars in scale, market share and expansion into new product segments in a competitive market.

Moreover, around 4 to 5 million jobs have already been created by the FMCG industry, where more people are indirectly dependent on the sector for their livelihood.

The FMCG market is broadly divided into three segments: food and beverage, personal care and various commonly consumed home care products, including cleaning products.

Food and drinks

Predictably, food and beverage have the lion’s share of the FMCG market – around two-thirds of the $4 billion – as the average consumer spends the majority of their money on food.

Urbanization and consumers’ busy daily routines influence people’s preference for branded food and beverage products. Bakery and snack foods are the most popular among the long list of FMCG food products.

PRAN, Square, Meghna Group of Industries, City Group and ACI are the major players in the food segment.

In addition, over a dozen companies also have a strong presence in various sub-segments of the market.

Multinational company Nestle has the largest share in the noodles, baby food, coffee and chocolate market.

The beverage segment includes carbonated drinks, flavored drinks, energy drinks, electrolytes and dairy drinks, and has grown to $204 million in the country, according to Statista. This share is expected to grow by more than $400 million by 2029.

Homegrown Akij, thanks to its eye-catching marketing and extensive distribution network, has emerged as the largest player in the beverage market, followed by homegrown PRAN, Meghna Group of Industries and multinationals Coca Cola and Pepsico.

Multinational brand Horlicks is the market leader in healthy nutritional drinks. Olympic is the market leader in cookies, while local Igloo and Polar dominate the ice cream market.

Personal care

According to Allied Market Research, the estimated personal care market – which includes cosmetics and toiletries – was over $1 billion in Bangladesh in 2020 and could grow to over $2 billion by 2027.

The growth is attributed to rising personal care and hygiene awareness among the middle class, which had seen rising incomes until inflationary pressures post-2022.

Unilever Bangladesh, Marico, Square Toiletries, Keya and Kohinoor are the major local manufacturers. The market is also somewhat dependent on the import of premium soaps, shampoos and skin care products.

Household FMCG products

Its household FMCG products, which include all fast-moving goods used to clean the kitchen, toilet and floor, in addition to hygiene brands such as Dettol, Savlon and Lifebuoy, had a national market of more than $100 million.

With more and more families using the products, the market has the potential to double in the next five to six years, she added.

ACI, Reckitt Benckiser and Unilever are the main players in the segment.