Bangladesh's biscuit industry grows fast

The local biscuit industry is growing fast riding on surging demand for diverse-packet snacks among the thriving middle-income group of consumers.

The local manufacturers now produce items worth more than Tk 70 billion (equivalent to US$ 824 million).

They meet 97-98 per cent of the domestic demand and export the remaining 2.0-3.0 per cent, according to estimates by the Bangladesh Auto Biscuit and Bread Manufacturers Association (BABBMA) and Bangladesh Bread, Biscuits O Confectionery Prostutkarok Samity (BBBCPS), an association of the traditional factories.

Industry insiders have attributed the industry's growth to changes in the food habit with the rising income and better quality of the present-day products.

They also informed that the demand for the biscuits and cookies surged during the Covid-19 pandemic to a range between 22 per cent and 25 per cent from the industry's steady growth of 10-12 per cent in the last several years.

The local per capita consumption of the items has increased to 2.8 kilogrammes (kgs) annually, making it third largest in South Asia after the Maldives and Sri Lanka.

They are ahead of Bangladesh with 4.5 kgs and 4.0 kgs of per capita annual consumption while Pakistani and Indian citizens eat 2.2 kgs and 2.5 kgs respectively on an average, available data revealed.

Apart from rising local consumption, exports also increased substantially in the fiscal year 2020-21 (FY21) to US$55 million, showing a huge potential to grab a good portion of the global market, said the insiders.

Considering the rising income of people, big conglomerates ventured into this sector with their automated factories that helped the industry grow faster, according to the associations.

Around 110 automated biscuit factories with their plenty of brands and hundreds of diverse products have started to lead the industry. They account for 65 per cent of the total market of more than 0.51 million tonnes of production.

Rising demand during the pandemic also helped the sector achieve more than 22-25 per cent growth in the last one and a half years against the average growth of 10-12 per cent earlier, said the industry insiders.

Local companies have emerged with traditional cookies, special toasts, dry cakes, sweet toasts, cream milk cookies, coconut cookies, low sugar biscuits, chocolate biscuits, buttermilk biscuits, tea-time cookies, nut biscuits, cheesy cookies and other varieties of products, said insiders.

The rising share of the automated factories and their huge investments in marketing was leading to closure of hundreds of manual factories as they hardly could survive in the highly competitive market, the insiders said.

"The biscuit market has been growing fast amid rising demand for safe packet snacks and the growth might continue for the next decade", said Kamruzzaman Kamal, Marketing Director of Pran RFL Group, the second largest biscuit manufacturer in the country.

Potata, a Pran-branded crispy biscuit, has become popular both at home and abroad recently.

Mr Kamal said the manually-run small bakeries in the country used to dominate the market a decade back with their outreach limited in the surrounding areas.

"The rising demand for diverse products has encouraged many companies to invest in the sector. It resulted in automation to facilitate large-scale production at competitive price and maintain quality," he said.

He said that Pran was now producing 8,000 tonnes of biscuit and cookies per month while exporting 30 per cent of its total production to the markets in South Asia, Europe, Middle-East, Far-East Asia, Oceania and elsewhere in the world.

Madad Ali Virani, executive director of Olympic Industries Ltd, the market leader in this segment with a share of more than 25 per cent, pointed out that the demand for hygienic biscuits was increasing due to the active lifestyle of consumers, who were looking for convenient eating options.

He said the biscuit industry was paying much attention to the recent trends and opportunities commensurate with the demand.

Olympic is now producing nearly 0.12 million tonnes of biscuit and bakery items with biscuits dominating the production line.

Its 'Energy Plus' brand was the most sold biscuit item in the country for the last five years while its other brands like 'Nutty', 'Tip' were two other most popular biscuits.

The company posted a 15 per cent increase in sales to Tk 15.89 billion in the fiscal year 2019-20 (FY'20) against Tk 13.73 billion in FY'19.

Mr Virani said they had a target to raise the production capacity further and bring timely changes in products and quality to maintain their strategic market position.

However, Nabisco, once the market leader with its most popular brand 'Nabisco Glucose Biscuit', is holding the third position in the sector now with its two and a half dozen products.

Al-Amin, Danish, Romania and Haque have 4.0-5.0 per cent of the market share each while Bangas, Dekko, Globe, Fu-Wang, Bonoful, Kishowan, Thai Food, Gold Mark, Mashafi, New Olympia, Ifad, Cocola, Pinnacle, Kakoli, Shifa and Kohinoor have also their fair share in the market.

Data available with the associations showed that the automated factories and more than 4,500 traditional ones were collectively producing more than 0.51 million tonnes of biscuits worth Tk 70 billion annually in the country.

The per capita biscuit consumption now stands at 2.8 kg per head against hardly 0.4 kg in 2001.

Md Shafiqur Rahman Bhuiyan, president of BABBMA, said the biscuit industry in Bangladesh earlier used ordinary flour, sugar, and saturated oil in the manufacturing process of molding, baking and cooling.

The local firms were able to earn the confidence of consumers by improving the food quality and keeping prices at reasonable levels, he said.

As a result, he added, the manufacturers were able to maintain their position in the market and weaken the dominance of imported products from India, Pakistan, Thailand, Malaysia and Indonesia.

Domestic manufacturers now meet 97-98 per cent of the local demand for biscuits and many of them also export the items.

He said biscuit export increased to $ 55 million in the FY'21 from a level below $10 million a decade ago.

Saudi Arabia, Oman, the Philippines, Malaysia and India were some of the leading buyers of Bangladeshi biscuits, he said.

Md Jalal Uddin, president of BBBCPS, told the FE that more than 30 per cent of manual operation factories were shut in the last 10 years amid a tough competition as the automated factories grabbed the market of roadside tea stalls.

He said the production cost of sweet biscuits stood above Tk 200 a kg for a manual operation factory while many brands of packet biscuits were being sold at prices below Tk 190 a kg, offering a tough competition in the market, especially during the Covid-19 pandemic, he said.

He said the pandemic as well as the increased prices of wheat, sugar, edible oil and other raw materials came as a blow to the manually-run factories while the automated ones' profit margin increased during the lockdown period.

He said the sector employed more than 2.0 million people.

Prof Dr Muhammad Shahadat Hossain Siddiquee of the Department of Economics at Dhaka University said the food habit of people was changing gradually thanks to the rising income of the low-and middle-income group of people.

He said the local companies would now have to focus on new formulations in view of low fat, gluten-free, low carbohydrate, organic, and high-fibre biscuits to attract more consumers both at home and abroad.

Presently, the global biscuit export market would be worth $ 8.9 billion, which is expected to increase significantly in the coming years amid a rapid change in food pattern following the pandemic while Asian countries are going to contribute a major share to the growth.

The government and the private sector should take timely policies to grab a fair share of the global market in the coming years, he said.

However, online sales of snack foods are growing at a faster rate in Bangladesh as companies like Daraz, Chaldal, Food Panda, Hungrinaki, etc. have started e-retailing and competing for a share of the online marketplace.

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