A half-trillion-dollar economy, but only a $4b FMCG market

The Philippines spends $100, India $40, and Bangladesh only $22. That is the per capita annual expenditure on fast-moving consumer goods (FMCG) in the three countries.

So why does Bangladesh – an economy racing towards the half-trillion-dollar mark – remain stuck with an FMCG market of just $4 billion, less than 1% of its GDP? India's FMCG sector makes up over 3% of its economy, while the Philippines, with nearly the same size GDP and 15% fewer people, has a market 10 times larger.

Zaved Akhtar, outgoing MD, Unilever Bangladesh. Sketch: TBS

Zaved Akhtar, who ended his term as managing director of Unilever Bangladesh on 31 August, which controls half of the country's FMCG market, has an explanation: Bangladeshis simply consume fewer hygiene and beauty products.

"Shampoo is an everyday essential in the Philippines," he said. "Here, whenever inflation rises, households cut it out of the shopping list."

The same goes for soap. Many households do not use it every day, and clothes are washed less frequently than in comparable countries. The result: Bangladeshis spend just half as much as Indians and one-fifth as much as Filipinos on FMCG.

But this is not just about income. It is also about behaviour and culture. Toothpaste sales, for instance, plummet during Ramadan as many consumers believe it breaks fasting, a seasonal dip not seen in other Muslim-majority countries.

This mismatch between GDP growth and FMCG penetration reflects deeper structural challenges: nearly 28% of the population now lives below the poverty line (recent PPRC study), forcing families to focus spending on food and essentials. Premium personal care products remain confined to urban upper-middle classes, leaving the mass market thin and underdeveloped.

The contrast is stark. India's FMCG market has crossed $150 billion. The Philippines, with a similar GDP as Bangladesh, is spending around $40 billion a year. Bangladesh, meanwhile, is struggling to break out of the $4 billion trap.

"Bangladeshis simply consume fewer hygiene and beauty products."

Zaved Akhtar, outgoing MD, Unilever Bangladesh

Yet, there are glimmers of change. Rising education, urbanisation, and social media exposure are pushing young consumers towards hygiene and personal care, said Zaved. Over the past year, Unilever has seen significant growth in premium products like Rin detergent, Dove shampoo, body wash, and moisturisers.

Unilever has even started producing Dove soap locally, making Bangladesh only the ninth country to manufacture it, a move that reduces import costs and makes the brand more affordable.

The story of Bangladesh's FMCG sector, then, is one of paradox: a fast-growing economy, but a slowly-changing consumer culture. Its untapped potential is vast – but unlocking it will depend on how quickly incomes rise, habits evolve, and awareness spreads.

How Unilever Bangladesh turned around after 2 years of negative growth

Like many other companies, Unilever Bangladesh also struggled to maintain business growth, particularly after the Russia-Ukraine war broke out in February 2022. The conflict pushed global commodity prices higher, disrupted supply chains, and left countries like Bangladesh among the hardest hit, with inflation surging into double digits.

After one and a half to two years of negative growth, Unilever Bangladesh has now returned to a steady 4-5% growth, which Managing Director Zaved described as a "normal trend".

He attributed the turnaround to a mix of operational efficiency and portfolio management. "Although inflation remains high, it is no longer rising and has become somewhat more tolerable," he noted.

To cut costs, the company focused on operational discipline – ensuring full truckloads when transporting products from the factory to depots and distributors to minimise logistics costs, and reducing wastage at factories.

In terms of portfolio management, while the company adjusted prices of some products during the inflationary period, it deliberately kept the prices of small packs priced at Tk5-10 unchanged. "Low-income consumers are extremely price-sensitive to these packs," Zaved said.

He also pointed to remittance inflows as another factor behind the recovery. With more money in people's hands, purchasing power has improved, driving demand for new product categories in rural areas and contributing to overall growth.

Also, Unilever's strong distribution network helped the company quickly come back to growth. He said Unilever supplies products to its distributors against advance payments and sells to retail shops on a cash basis. In Bangladesh, out of around 12 lakh FMCG shops, Unilever directly reaches about six lakhs.

Why is FDI so low in Bangladesh?

Bangladesh has historically struggled to attract significant levels of foreign direct investment (FDI), and business leaders say a mix of bureaucratic hurdles, policy uncertainty, and infrastructure bottlenecks continues to hold the country back.

As president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), Zaved Akhtar said that despite its strong economic growth, Bangladesh has failed to effectively present itself as an attractive investment destination.

"Bangladesh is competing globally, but we have not marketed ourselves well enough as a destination," he said.

According to him, one of the biggest challenges is bureaucratic complexity. Multiple agencies – including the Bangladesh Investment Development Authority (Bida), the Bangladesh Economic Zones Authority (Beza), and the Hi-Tech Park Authority – operate with little coordination, often frustrating investors. Empowering Bida further, he said, is essential to streamlining processes.

Securing land and utilities also remains a critical pain point. Investors frequently face long delays in accessing gas, electricity, and water connections. Setting up a factory requires as many as 40 separate approvals from different authorities, making the process "extremely complex," according to the FICCI president.

The National Board of Revenue (NBR) has also come under criticism for its unpredictable tax policies. Sudden mid-year changes create serious uncertainty for investors already navigating a challenging environment, he noted.

Despite these hurdles, opportunities remain. The global shift to diversify away from China – the so-called "China+1" strategy – has opened a window for Bangladesh to attract new investment. Zaved believes the country could replicate the success of its apparel sector in other industries if the right reforms are put in place.

Still, existing investors continue to grapple with policy uncertainty and persistent instability in the banking sector.

Looking ahead, the FICCI president believes the outlook could improve after the next national election. "If a stable government is formed, investor confidence will strengthen, and Bangladesh will be in a better position to attract foreign investment," Zaved said.