Processed food industry grew 8% annually since 2005

Bangladesh's $8 billion food processing industry has annually grown by 8 percent on an average between 2005 and 2023, powered by rising middle-class and urban consumer demand for convenience, said the US Department of Agriculture (USDA).

"The processed food and beverage industry has seen notable growth in recent years," said the agency in a July 1 report prepared as a guide for US exporters on Bangladesh's market.

"The processed food market is highly competitive as the domestic food industry is expanding investments to export to the world. Popular processed foods include snacks, ready-to-eat meals, frozen items, drinks and beverages, and dairy products," it said.

And the expansion of modern retail is also a reason behind the increased demand for processed foods, it said.

The report said an increasing percentage of upper-middle to upper-class consumers are shopping at modern retail outlets due to greater convenience.

"Consumers in higher income brackets prefer international brands, including products from a specific country of origin which, they believe, indicates safety and quality," it said.

It said the modern retail sector currently constitutes about 2 to 3 percent of total retail sales in Dhaka, Chattogram, and Sylhet.

Bangladesh's modern food retail industry has approximately 40 companies with over 750 outlets.

From 2015 to 2023, the annual turnover for members of the Bangladesh Supermarket Owners Association grew from around $200 million to $350 million, according to the report.

"Modern retailing, including supermarkets and convenience stores, is growing in Bangladesh as consumers attach more importance to appearance, ambience, comfort; and the availability of a vast range of products," it said.

The USDA report said modern retail chains are striving to differentiate themselves from wet markets by offering more varied, high-quality products and convenience.

"However, they also have challenges, such as cold chain capacity, food preservation and packaging, and general transportation logistics," it said.

The growth of e-commerce is thriving in the urban food and non-food retail market. The adoption of digital technologies and e-commerce is expected to play a crucial role in shaping the future of the sector, it said.

It said rising per capita income, increased urbanisation, higher female labour force participation and the resulting lifestyle changes are fuelling demand for processed dairy products, bakery products, readymade meals, confectionery, breakfast cereals, baby food and non-alcoholic beverages.

"A growing number of quick-service restaurants, and e-commerce food delivery to meet the demand for Asian and Western cuisines are driving import demand," it added.

The USDA report said Bangladesh's import of consumer-oriented food products increased from $1.7 billion in 2019 to $2 billion in 2022.

However, import of consumer-oriented foods declined slightly to $1.99 billion in 2023, it said.

The report said the US was Bangladesh's 17th largest supplier in 2022, but in 2023, its position rose two spots to 15th.

This represents an 80 percent increase in its exports year-on-year to $17.1 million in 2023, it said.

However, the value of consumer-oriented product exports from the US makes up less than one percent of its total agricultural exports to Bangladesh, it said.

Shipment of agricultural products from America fell 17 percent year-on-year to $781 million in 2023, according to the report.