Bangladesh cosmetics, toiletries replacing imported ones

The country's cosmetics and toiletries products are gradually substituting the imported ones - following intensified efforts of local manufacturers on research and innovation to launch new items.

Industry sources said a good number of consumers of personal and homecare products have switched to using the locally manufactured ones, as a bunch of new and advanced quality products are now available in market.

With imposition of high import tariff on imported personal care items, prices of foreign brands went beyond the reach of vast majority, while industry insiders found influx of counterfeit products as a major challenge.

Import of personal care items dropped by nearly 50 per cent until February 2023, after the government imposed up to 20 per cent regulatory duty (RD) on the items on May 24, 2022.

According to the National Board of Revenue (NBR) data, the country imported 11,529.45 tonnes of personal care items worth Tk 9.37 billion from May 2022 to February 2023 period, which was Tk 14.23 billion in the corresponding period of the previous year.

Total domestic market size of consumer products in Bangladesh is approximately Tk 500 billion. Toiletries and cosmetic products contribute Tk 250 billion, whereas food and beverage items contribute the rest.

In a sample survey, the FE correspondent has compiled data of three major market operators of cosmetics and toiletries items - Unilever Bangladesh Ltd (UBL), Square Toiletries Ltd (STL), and Kohinoor Chemicals Company Bangladesh Limited (KCCL).

Now more than 95 per cent of the portfolio of Unilever, the major market player of home and personal care products, is locally produced, said Shamima Akhter, UBL director - corporate affairs, partnerships and communications.

Over the years, the company has seen many of its products becoming import substitutes.

Many Unilever products, including Dove Shampoo, were imported to Bangladesh before 2013. Over the last 10 years, the company has been producing it locally. UBL also launched TREsemme Shampoo, a famous international brand, in 2015, which is now locally produced. Another product, Pond's Bright Beauty, a moisturizer, is also gradually being replaced with the locally produced ones.

In the last few years, the company has launched 48 innovations, including Mosquito Defence Lotion, the first in the world.

"We continue to have a strong innovation pipeline, and we have 15-20 innovations in a year in our pipeline," said Ms Akhter.

In the last couple of years, Square, Kohinoor, Keya and other companies have also introduced a significant number of products under different categories.

Bangladeshi toiletries and cosmetics products are contributing approximately 35 per cent of the total market, which was 32 per cent two years back, said STL head of operations Malik Mohammed Syeed.

In natural wellness category, Square has launched Maya Marula Oil, Maya All Natural Scalp and Hair Oil, Xpel Natural Mosquito Repellent, etc.

In hygiene category, it has introduced Sepnil Face Mask, Sepnil Antiseptic Swab, Supermom Baby Wipes, Senora Confidence Teen Sanitary Napkin, etc.

In personal care category, the company has launched Rain Shower Bath and Shower Gel, Meril Tangerine Orange Shampoo, and few more products.

Some new products are also in the pipeline under different categories like baby care, men's grooming, personal care, and health and hygiene. Three years back, Kohinoor Chemical has launched a new brand - Beautina.

Under the brand, three products - Beautina Body Lotion, Beautina Face Wash, and Beautina Hair Care Oil - have gained popularity. It has also launched Tyfoon Fabric Care, and planning to introduce some new products like shaving foam, liquid detergent, etc.

Golam Kibria Sarkar, KCCL senior vice president - brand, said significant changes are visible in the behavioural patterns of the users during the global price hike of consumer products.

"Most people are now spending on daily commodities rather than luxurious products. Shift in preferred segments, growing interest in purchasing low-value products, and being habituated in reduced quantity usage are very much common among the consumers."

All the players in this sector are being bound to increase their product prices or offer lesser quantity in the same price margin due to hike in raw material prices along with scarcity of resources, he added.

Malik Mohammed Sayeed said risk of using counterfeit imported products, and accountability of local manufacturers even after sales are also important factors for consideration while selecting local products against their imported substitutes.

A favourable government policy on sanitary napkin helped Square Toiletries to offer the item at different prices, making it affordable to consumers.

Except a few categories like "colour cosmetics", the locally owned companies and MNC manufacturing units are quite capable to meet the demand of consumer products, especially for toiletries and cosmetics segment, Mr Sayeed further said, adding that price hike has influenced behavioural changes of local consumers.

"They are shifting from premium segment to basic segment. Consumers are also switching from larger pack sizes to smaller pack sizes. Frequency of purchase and volume of consumption have also changed," he added.

However, industry insiders said high duty and taxes on import of raw materials is hindering growth of the sector.

Ms Shamima Akhter said the government has significantly eased duty to facilitate the local industry. But still there are a lot of challenges where duties of raw materials are equivalent to those of finished products.

Keeping the import duty on finished detergent powder same, the government has revised upward the import duty of disodium sulphate, a fabric solution raw material, in the fiscal year 2021-22.

"Customs duty on import of industrial fragrances, used in soaps, shampoos, creams, and lotions, is 25 per cent in Bangladesh, which is the highest among 40 countries, including the South Asian nations," she noted.

Vegetable oil-generated materials and by-products (like - crude palm kernel oil and RBD palm stearin) are the most basic materials to make soaps, and are used at the initial stage of production.

Currently, these materials are classified as intermediary products and their customs duty is at 10 per cent slab, although these should be classified as basic raw materials under 5.0 per cent duty slab.

"There is a significant opportunity to increase consumption of hair care and skin care products here, as Bangladesh has one of the lowest consumptions of these products among the comparable Asian countries," she added.

Zaved Akhtar, Chief Executive Officer (CEO) and Managing Director of Unilever Bangladesh, said the country is still a very high-tariff one with multitude of direct and indirect tariffs.

"The government can simplify the duty structure for raw materials, so that local industries can develop well and cater to the domestic market. The reforms over the last few years are a clear example."

As Bangladesh will become a middle-income country, it will need to rationalise many of these to ensure market access, while at the same time protecting internal revenue collection and promoting local industries, he opined.

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