Despite economic pressure, FMCG industry still has room to grow

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

Consumption in Bangladesh, despite the Ukraine War-induced strain, still remains over 66% of the GDP.

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

The intact headroom

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 was on a steady rise until the post-2022 global crises.

"The ongoing economic crisis might only defer the journey by a few years," said Syed Alamgir, managing director and CEO Meghna Group of Industries' FMCG wing, citing the resilience of the Bangladesh economy.

Alongside the broader economic growth potential, he also counts on people's increasing preference for branded goods.

According to him, FMCG brands now serve one-fourth of the FMCG food segment demand and that indicates a big headroom for brands as they have a long track record of taking away market share from traditional players operating without widely recognised brand names, he said.

However, the market behaviour varies from segment to segment.

For noodles, people rely on brands, while traditional bakers across the country are serving most of the demand for bread and biscuits.  

Brands have also been dragging consumers to the assorted, packaged, stapled food products like packaged rice and lentils over the past decade.

"Still that is a long journey," said Md Mustafizur Rahman, head of marketing at PRAN for rice, salt, flour, lentils and agro businesses.

People are preferring trusted corporate group's bulk sacks of rice, but the premium retail packs that cost higher are yet to be a daily need for the masses, he said.

Packaged premium rice is not more than 1% of the national consumption, he said, adding that major players are increasing efforts to raise the packaged segment's share.

Both the local and foreign brands' interest in the growing market speak for the FMCG potential as they continue investing millions of dollars for scale, market share and expansion into new product segments in a competitive market.

Furthermore, some 4-5 lakh jobs have already been created by the FMCG industry where more people indirectly depend on the sector for a living.

The FMCG market is broadly divided into three segments: food and beverage, personal care and various frequently consumed household care products including those for cleansing.

Food and beverage

Predictably, food and beverage has the lion's share in the FMCG market — around two-thirds of the $4 billion — as average consumers spend most of their money on food.

Urbanisation and the busy daily routine of consumers influence peoples' preference for branded food and beverage products. Bakery and snack items are the most popular among the long list of FMCG food products.  

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

Besides, over a dozen companies have strong presence in various sub segments in the market as well.

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

The beverage segment includes carbonated beverages, flavoured drinks, energy drinks, electrolytes and dairy based beverages, having grown to $204 million in the country, according to Statista. This share is projected to grow over $400 million by 2029.

Homegrown Akij, through its striking marketing and a vast distribution network, has emerged to be the largest player in the beverage market, followed by homegrown PRAN, Meghna Group of Industries, and multinationals Coca Cola and Pepsico.

Multinational brand Horlicks leads the health food drink market. Olympic is the biscuit market leader, while local Igloo and Polar dominate the ice cream market.

Personal care

According to Allied Market Research, the size of the estimated personal care market — which includes cosmetics and toiletries — reached over $1 billion in 2020 in Bangladesh, and may grow to over $2 billion by 2027.

The growth is attributed to the increasing personal grooming and hygiene awareness among the middle class, who had been seeing rising incomes until the inflationary pressure after 2022.

Unilever Bangladesh, Marico, Square Toiletries, Keya, and Kohinoor are the major local manufacturers. The market also has some import dependencies for premium soap, shampoo, and skincare products.

Household FMCG products

The household FMCG products that include all fast moving goods used to clean kitchen, toilet, floor, alongside hygiene brands like Dettol, Savlon, and Lifebuoy had a national market of over $100 million in 2023, according to industry insiders.

With an increasing number of families using the products, the market has the potential to double in the coming five-six years, they added.

ACI, Reckitt Benckiser, Unilever are the major players in the segment.