Bangladesh Food & Beverage Industry

Wpfreeware 6:49 AM Bangladesh Food & Beverage Industry

Food Processing Industry Overview

The food processing industry in Bangladesh has seen significant growth and transformation over the past few decades, contributing substantially to the economy and employment. Here's a detailed look into the sector based on the provided information:

Industry Growth and Economic Contribution

  • Growth Rate: Between 2004 and 2010, the food processing industry in Bangladesh grew at an impressive average annual rate of 7.7%.
  • Employment: The industry employed 2.45% of the country’s total labor force, and within the industrial manufacturing workforce, it accounted for 19% of employment.
  • Economic Impact: In 2010, the food processing sector's contribution to the GDP was 2.01%. The industry was valued at approximately $4.5 billion USD, highlighting its substantial role in the national economy.

Industry Structure and Scale

  • Medium-Sized Enterprises: According to the 2006 Economic Census by the Bangladesh Bureau of Statistics, there were around 246 medium-sized food processing industries.
  • Small-Scale and Domestic Units: Numerous small-scale factories and domestic units are engaged in food processing, reflecting the sector's extensive grassroots presence.

Export Performance

  • Export Value: In 2010, Bangladesh exported over $700 million worth of processed food and beverages. Over 60% of these exports were shrimp and fish products, underscoring the country's strength in seafood processing.

Historical Development and Modernization

  • Traditional Practices: Historically, food processing in Bangladesh was predominantly small-scale and family-based, utilizing traditional methods for preserving and handling agricultural commodities.
  • Commercialization: Commercial-scale food processing began to emerge in the 1960s, focusing initially on wheat and rice milling, mustard seed crushing, and limited bread and cookie manufacturing.
  • Expansion and Diversification: Significant growth in operational scale and product quality occurred in the 1980s. The industry now processes a wide variety of products to meet the evolving demands of the population.

Major Sub-Sectors

  • Dairy: Production of milk, yogurt, cheese, and other dairy products.
  • Edible Oil: Processing of oils from various seeds.
  • Sugar: Refining of sugar from sugarcane and other sources.
  • Grains: Rice and wheat milling.
  • Fruits and Vegetables: Processing of fresh produce into various products.
  • Tea: Production and processing of tea.
  • Meat and Poultry: Processing of beef, poultry, and related products.
  • Pulses and Spices: Production and processing of lentils, beans, and spices.
  • Fish: Processing of fish and seafood, a key export segment.

Drivers of Growth

  • Middle Class Expansion: The burgeoning middle class in Bangladesh drives demand for processed and packaged foods.
  • Changing Consumption Patterns: Increasing urbanization and lifestyle changes are leading to higher demand for diverse food products.
  • Technological Advancements: Adoption of modern food processing technologies enhances product quality and operational efficiency.

Future Prospects

The food processing sector in Bangladesh is poised for further robust expansion due to:

  • Rising Domestic Demand: Continued growth in the middle class and urban population.
  • Export Opportunities: Increasing global demand for Bangladeshi food products, particularly seafood.
  • Product Diversification: Development of new and innovative products to cater to changing consumer preferences.
  • Investment in Infrastructure: Improvements in supply chain logistics and processing facilities.

The food processing industry in Bangladesh is a vital and dynamic sector with a rich history of growth and modernization. Its significant contribution to employment, GDP, and exports underscores its importance in the national economy. The sector is well-positioned for continued expansion driven by demographic trends, economic growth, and evolving consumer preferences.

List of agro-based activities and Agro-products/Food processing industries

  1. 1.Processed fruit foods (jams, jellies, juices, pickles, sherbets, syrups, sauces etc.)
  2. 2. Processing of fruits (tomato, mango, guava, sugarcane, jackfruit, litchi, pineapple, coconut etc.), vegetables, pulses
  3. 3. Processing of Bread and Biscuits, Semai, Lachcha, Chanachur, Noodles etc.
  4. 4. Preparation of rice, flour, flour, semolina
  5. 5. Automatic Rice Mill (Auto Rice Mill)
  6. 6. Mushroom and Spirulina (Spirulina) processing
  7. 7. Production of starch, glucose, dextrose and other starch products, corn processing
  8. 8. Dairy processing (milk pasteurization, milk powder, ice cream, Condensed milk, sweets, cheese, butter, ghee, chocolate, curd etc.)
  9. 9. Production of processed foods (chips, potatoes, flakes, starch etc.) from potatoes
  10. 10. Production of various powdered spices
  11. 11. Edible oil refining and hydrogenation
  12. 12. Salt processing
  13. 13. Processing and freezing of shrimp and other fish
  14. 14. Preparation of herbal and herbal cosmetics (Cosmetics).
  15. 15. Preparation of Unani Ayurvedic medicine
  16. 16. Preparation of balanced feed for poultry and livestock and fish
  17. 17. Seed production, research, processing and storage
  18. 18. Manufacture of jute products (eg rope, yarn, twine, mats, bags, carpets, jute sandals etc.)
  19. 19. Manufacture of silk textiles and textiles
  20. 20. Agricultural machinery manufacturing industry
  21. 21. Preparation of Muri, Chira, Khai etc
  22. 22. Aromatic rice production
  23. 23. Tea processing
  24. 24. Preparation of coconut oil (if copra collected from indigenous coconuts is used)
  25. 25. Rubber Tape, Lakshma Processing
  26. 26. Cold Storage (Processing and Storage of Farmers Produced Food Potatoes and Seed Potatoes, Fruits, Vegetables)
  27. 27. Manufacture/manufacture of wood, bamboo and rattan furniture (except cottage industries) and manufacture of coppersmith's tools
  28. 28. Preservation and export of flowers
  29. 29. Meat processing
  30. 30. Manufacture of organic fertilizers, mixed fertilizers, granular urea etc
  31. 31. Manufacture of bio-pesticides, neem derived pesticides etc
  32. 32. Beekeeping/honey making
  33. 33. Particle board
  34. 34. Sugar and other sweetening products
  35. 35. Soyfood Production and Soybean Processing
  36. 36. Mustard oil manufacturing industry (if domestic mustard is used)
  37. 37. Rice bran well
  38. 38. Project for manufacturing of rubber products
  39. 39. Seed Industry
  40. 40. Processing and marketing of dairy and poultry products
  41. 41. Horticulture, floriculture, floriculture, marketing of flowers and vegetables (this industry will include lemons, mushrooms, betel leaves, honey etc.)

Food Processing Industry in Bangladesh: An Industry Set to Rise

The rise of foods and beverages that are ready to eat is unquestionably one of the factors contributing to the considerable changes in the food consumption patterns of consumers. Consumers believe that processed fruits and vegetables are healthier since they contain more nutrients than preserved foods. The top processed food producers are utilising the growing demand for processed foods as a chance to increase their market shares. Given that the processed foods sector today contributes significantly to the national economy, this is one of Bangladesh’s most lucrative industries. A subcategory of this market is the market for frozen foods, which is predicted to grow at a CAGR of 9.88% in the forecast period of 2022–2027. Listed below are a few of the top frozen food companies that are succeeding in the market.

Facts, Figures, and Consumer Trends in the International Market

The global fruit and vegetable processing market reached USD 304.50 billion in 2020 and is expected to register a CAGR of 7.30% in the upcoming years. Increasing consumer dependency on processed foods due to changing lifestyles is a key factor expected to continue to drive the revenue growth of the global fruit and vegetable processing market to a significant extent. Busy work schedules and changing trends in this regard are driving a steady shift towards more consumption of processed foods, and this is expected to fuel demand for processed fruits and vegetable products and accelerate revenue growth. Changes in the dietary habits of consumers are another factor expected to propel further the revenue growth of the fruit and vegetable processing market worldwide. The COVID-19 pandemic has changed the eating habits of a significant consumer base globally. Plummeted and limited access to regular grocery shopping outlets has resulted in many individuals consuming fewer fresh foods, mainly fruits, vegetables, and seafood. These have been replaced by more processed foods, such as convenience store food items, which are expected to augment industry growth to a certain extent going ahead. Also, more automation and robotics are being used to process fruits and vegetables, which lowers operational costs and ensures growth.

The global food processing market is segmented into the fruit market and the vegetable market based on the types of products sold. The vegetable segment is expected to bring in the most revenue because the demand for processed vegetables, especially frozen vegetables, is rising around the world. This means that the CAGR forecast is also expected to grow in the future.

Major Companies and the Global Competitive Landscape

The market is reasonably fragmented, with a large number of medium-sized market players. North America stands for the largest revenue share among other regional markets. In the coming days, Asia-Pacific is expected to experience the fastest revenue growth, while Europe is expected to experience significantly more stable revenue growth.

The sub-categories in this market include the shrimp industry, where shrimp are packaged and processed for sale. In recent years, the desire for information about the sources and manufacturing procedures among consumers has increased the appeal of organic products. The worldwide organic shrimp market, which is anticipated to expand gradually at a CAGR of over 7%, has benefited from this trend as well. Manufacturers in the shrimp industry concentrating on improving packaging quality to extend shelf life are likely to see financial benefits and solidify their positions in the market. Due to growing consumer knowledge about the advantages of organic shrimp, Asia-Pacific is expected to continue to be the most attractive area for market participants.

Facts, Figures, and Consumer Trends in the Domestic Market

The food processing sector accounts for over 22% of all production, and over 20% of the labour force is employed in this industry. A total of 2% of the country’s GDP comes from the food processing industry. Cereals, pulses, oilseeds, bakeries and confectioneries, fruits and vegetables, dairy products, carbonated beverages, non-carbonated fruit juices, drinks, other beverages, and various other food items are all processed in the food processing industry of Bangladesh. As per Bangladesh Agro Processors Association (BAPA), there are now 370 members who work in this expanding industry. These products are being exported to 70 countries throughout the world. The major export markets for processed products are Asia and Africa. Most of the processed goods that are exported are pickles, drinks, juices, spices, rice, teas, party snacks (chanachur), almonds, mustard oils, chips, biscuits, rose waters, candies, puffed rice, and potato flakes. A report published by Bangladesh Investment Development Authority (BIDA) states that there are 1,000 food processors operating all over the country, of which 10% are classified as major and medium-sized businesses and the remainder as small businesses. The same report states that up to 2023, markets for edible oils, dairy products, and snacks are anticipated to rise gradually by about 6% per year. Processed fruits and vegetables, fish, and meats are among the products that are predicted to overgrow, with annual growth rates of 8%, 13%, and 13%, respectively. The demand for packaged or ready-to-cook foods is anticipated to keep proliferating, driven by factors such as rising per-capita income, increasing urban dwellers, increasing female labour force participation, and the resulting lifestyle changes. The need for healthy and secure food items is also being pushed by changing dietary habits and rising food quality and safety awareness.

Export Trends in Bangladesh

In terms of export potential, Bangladesh has achieved and will continue to achieve dramatic improvements due to a wide range of factors. Two major factors have been discussed below.

Lower Cost of Production:

Bangladesh has one of the lowest costs of production in the world because of a young, hardworking, and competitive labour force, as well as a robust incentive programme from the government that includes income tax exemptions and export subsidies. Increasing the export potential of food products made in Bangladesh will require taking advantage of the country’s low costs.

Access to Abundant Agro-Resources: Thanks to its farmers and fertile soil, Bangladesh is able to produce a variety of crops, including rice, sugarcane, jackfruits, mangoes, guavas, potatoes, eggplants, and tomatoes, as well as fisheries and livestock.

The national economy is benefiting from the drastic improvements in the performance of the industry in terms of production and export performance. There are, however, some sub-categories of the industry that are better performing than the other sub-categories.

Dairy Products: The dairy industry in Bangladesh has suffered difficulties over the years. The Department of Livestock Services states that there are 1.40 million dairy farms with an average herd size of 1-3 cows. Many of these farms lack access to official markets to meet increasing demand. A programme was introduced in 1990 to support smallholder dairy producers and advance local agricultural production. It is obvious that setting up infrastructure for milk collection and building capacity has resulted in significant improvement over time. With a 91% self-sufficiency rate, Bangladesh is currently ranked 25th in the world for milk production. Milk consumption has climbed by 13% over the past ten years, while milk production has increased by 18%. With the inclining trend in consumption of dairy products, increasing import is also prevalent with a spike in the current fiscal year.

Edible Oil:The projected market volume for packaged oil brands, which is 900,000 MT, accounts for about 35% of the estimated 2,600,000 MT of total market volume for oil. More than two-thirds (69%) of the packaged oil market volume is fortified above the minimum fortification standard, and only around 5% of the packaged oil market volume is not fortified.

Frozen and Ready-to-Cook Foods:

Bangladesh’s consumer market has been expanding quickly in recent years. This growth is thought to be caused by Bangladesh’s massive population base, which has raised the demand for processed food products. Over the past ten years, the processed food industry has seen a considerable expansion in both the market and the product lines. The market for frozen meals and ready-to-cook items is growing quickly in Bangladesh.

Challenges in the Sector

Bangladesh’s food processing sector is plagued by serious issues like lower capacity utilisation, outdated technology, and poor marketing. Due to the considerable variability in raw material quality, lack of adequate technology, and lack of skilled labour, the quality of the finished product is typically very low. The industry is struggling as a result of rising energy costs and serious power supply issues, uncertainty about the availability of sufficient quantities of raw materials, insufficient and costly cold chain facilities, and varying processing conditions from one raw material to the next. In order to maintain food safety standards and hygiene throughout the entire process, both the industry itself and government regulatory authorities should make a systematic effort. However, lately, the defining characteristics of the industry have been the processing of increasingly diversified products to meet the changing demands of consumers. It will be the start of a new beginning for the processed food market. Observing the changing trends, the industry participants hope to carve a niche for themselves with strong market shares facilitated by growing a consumer base that is already there for processed food products. In the coming years, the food processing industry is likely to grow even more. This is because the middle class in Bangladesh is growing rapidly, and a significant portion of them want processed foods.

| Source: Food Industry Market Survey Report by IDLC |

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