Operators said the domestic market for spices, traditional snacks items, ready-to-cook and ready-to-eat foods, and fruit-flavoured drinks are also on the rise
Investment boomed in the agro-processing sector in recent years as business conglomerates moved into the trade to tap the growing opportunities from a steady rise in income, fast-paced lifestyles and health consciousness.
In the past decade, more than 100 firms began processing various foods, spices, snacks and confectionaries to cater to both domestic and export markets, according to the Bangladesh Agro-processors' Association (BAPA).
This year, two business houses -- Aftab Foods and Partex Group -- launched powdered spice operations to capture the growing market for spices and traditional snacks, such as chanacur and fried pulses.
“The days of mashing spices at home are set to be the soon past,” said Tajul Islam, general manager of Aftab Foods that launched spices and snacks at the end of August. "People are shifting to powdered spices. They are showing interest in brands due to their health consciousness."
Spices and snacks to ready-to-cook food -- all are attracting large investors at a time when consumers' lifestyle and preferences are changing, thanks to economic growth, rising per capita income and urbanisation.
Export opportunities have increased as production costs rose in developed nations.
Apart from market potential, government incentives for investment and export subsidies for agro-processed items also spurred investment.
Islam said the market opportunity for branded products are huge, as the sector's snacks and spice trade is still dominated by thousands of less-efficient small processors and traders.
“An individual consumes three grams of spices a day,” he said. "That means that the daily market for spices is about 400 tonnes. But the branded segment caters to only 70 tonnes a day."
“The market share of branded items still remains low compared with the non-branded segment, so there is really an opportunity,” said Islam.
He said the company has invested nearly Tk 20 crore in the food project. "We also look at the prospects of exporting. Our [Bangladesh's] spices have better aroma than our competing countries on the international market,” said the official of Aftab Foods.
Bangladesh's export earnings from processed foods, snacks and fruit flavoured drinks is growing every year. In the 2009-10 fiscal year, food processors fetched nearly $ 30 million in export earnings, up from $12 million in fiscal 2005-06.
Operators said the domestic market for spices, traditional snacks items, ready-to-cook and ready-to-eat foods, and fruit-flavoured drinks are also on the rise.
"People's consumption patterns are changing due to a rise in their incomes," said Kamruzzaman Kamal, marketing director of Pran-RFL Group, the biggest agro processor. "That's why the market for packaged foods is growing."
With large, organised processors and traders in the scene, thousands of small, and micro level spice and snack processors may find their sales dwindling amid consumers growing interest to hygiene. But establishment of agro-industries offer the scope for farmers to get better prices for their produce, operators said.
Growers will find more buyers when they have bumper crops, said Islam of Aftab Foods. Farmers' vulnerability to middlemen is likely to decline, as companies prefer to buy directly from farmers to get a competitive edge.
“Many companies are showing interest in contract farming to ensure supply,” said Islam. "Industrial use will encourage growers to increase production."
The entry of more players in the sector is likely to benefit consumers, as retail choices will increase and leading competing firms vie to improve product quality and offer competitive prices. “Its good for the consumers.”