Processed food sales poised to grow
Demand for processed foods is picking up thanks to rising incomes and busy lifestyles.
Overall sales of processed foods are anticipated to grow at a compounded annual growth rate (CAGR) of 17 percent a year over 2013-2018, reaching a value of $21.2 billion in 2018, according to Euromonitor International, an independent market researcher.
The market for processed food was valued at $9.8 billion in 2013.
Dairy, poultry, baby food, noodles and pasta and confectionery performed extremely well, while sales of sauces, jams and juices also grew significantly.
Euromonitor valued the soft drinks market at $235 million in 2013, registering a CAGR of 18 percent between 2009 and 2013. Soft drinks are forecasted to see a CAGR of 15 percent over 2013-2018.
“Increasing disposable incomes and a growing urban middleclass are contributing to the growth of processed food sales,” said Kamruzzaman Kamal, director of marketing at Pran-RFL Group.
Pran is the market leader in the juice segment, while it is also a major player in dairy and sauce products.
At present, domestic producers such as Pran, Brac, Golden Harvest, Aftab and Kazi Farms are dominating the processed foods market. Akij, Shezan, Danish and Acme are strong in the juice segment as well.
Ahmed Foods and Square Group are strong players in the sauce segment. Nestle is the market leader in baby food.
The growing number of restaurants, hotels and supermarkets are also driving the demand for processed foods, said market players.
These companies have invested heavily -- from setting up new plants to enhancing capacity of existing ones, and cold chains to deliver quality products to the customers.
Some producers also took out low-cost loans from multilateral lenders and foreign sources to expand their capacities.
Pran Foods received a $25 million loan from the Asian Development Bank to build three food production plants in 2012. Golden Harvest is setting up a cold chain with assistance from USAID.
Multinational companies are also seeing the untapped potential in Bangladesh's soft drinks and processed food markets.
Coca-Cola opened its first bottling plant in Tongi in September 2013, with an investment of $50 million. Other multinationals, such as Nestlé SA, Unilever Group and Perfetti Van Melle are already operating in the Bangladesh market, with plans to further strengthen their positions in the future.
Taufiqur Rahman, director of dairy and food industries of Brac, is upbeat about growth of the processed food industries, including ready-to-cook items.
“This sector is growing at a CAGR of 30 percent in the last 5 years. Demand will rise further with the growing incomes of consumers and busy urban lifestyles,” said Rahman.
At present, Brac produces 28 lines of dairy and chicken products. Some of its major vendors include Westin Hotel, Radisson Hotel, Best Fried Chicken and Nando's.
“We expanded our capacity recently and we will continue it in future,” Rahman said. He anticipates the processed food industry to grow at a CAGR of 30 to 35 percent a year in the next five years.
However, industry insiders said the sector faces some challenges like establishing backward linkages and cold chains, uninterrupted power supplies and a lack of skilled manpower.