Pandemic slows down beverage business

The demand for beverage products usually starts to rise in Bangladesh in March, when the temperature begins to jump to summer highs after the end of winter when demand is low.

However, this year, beverage companies have been going through a severe slowdown as the Covid-19 pandemic struck the country in March, the beginning of the high time for their businesses.

The two-month shutdown declared by the government to contain the spread of the virus worsened their situation.

According to the Bangladesh Beverage Manufacturers Association (BBMA), about 60-65% of the yearly beverage business is done from March-July. But this year, the business was practically halted across the country during these months and beverage sales dropped to 10%.

They said two Eids and the Bangla New Year usually bring good fortune for beverage businesses but this year that did not happen.

During the period the industry suffered a loss of Tk3,000-4,000 crore, according to BBMA.

BBMA President Harun Ur Rashid told The Business Standard, "After the general holidays, gradually business grew to 50%. But it has started to fall again. Beverage sales have fallen by at least 10% in the past month."

Beverage traders said the business will fall more in the coming days with the beginning of winter. There are also fears of a second wave of the Covid-19 pandemic.

They said they have no idea when the situation will right itself again. They are afraid that beverage sales could fall to 8-10% again.

The decline in sales also put beverage producers in a big crisis with expired products. According to BBMA, products worth more than Tk100 crore had to be withdrawn from the market due to their expiration.

Monirul Haque, head of marketing at Globe Soft Drinks and AST Beverages Ltd, said, "On average, one percent of the beverage products we produce each month expire. This is normal. But due to Covid-19, our products worth around Tk10 crore expired till June."

Monirul Haque said that they will face a crisis again with expired products. "Normally, we sell products worth Tk800 crore during March-July each year. This year it was only Tk50 crore."

Kamruzzaman Kamal, director (marketing) of Pran-RFL Group, said, "About 5-6% of our products have expired due to Covid-19."

Maidul Islam, chief marketing officer of Akij Food and Beverage Limited, gave almost the same information. "We have lost crores of taka due to expired products," he said.

The number of small and large companies producing various types of beverage products – including carbonated soft drinks, flavoured drinks, malted drinks, power drinks – is more than a hundred in the country. According to the BBMA, the amount invested in this sector is around Tk10,000 crore.

Large investment beverage companies include Abdul Monem Limited – the local producers of Coca-Cola-International Beverage, Transcom Beverage, Akij Food and Beverage, Globe Soft Drink, Pran Beverage, Partex Beverage, Meghna Group, Sajib Corporation, and AST Beverage.

The BBMA has sought the cooperation of the government to survive in this crisis situation. 

"We did not get government incentives for the various sectors affected due to Covid-19. We have written to the Ministry of Finance and the National Board of Revenue (NBR) seeking assistance. But there has been no response yet," said Harun Ur Rashid, president of BBMA.