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Bangladesh’s Fast Moving Consumer Goods (FMCG) industry has been one of the largest industry serving domestic consumer needs. The country’s middle-class population combined with rising per capita income has been a strong propagator for the growth of the industry. According to a study by BCG, the middle and affluent class (MAC) population of Bangladesh is expected to reach a total of 34 million within the next 5 years.
Compared to luxury products and other commodities, FMCG industry has remained considerably stable, with food and beverages, personal care and household care anchoring the industry in its growth trajectory. Similarly, with greater investment from the government on roads-highways infrastructure, the industry has managed to swiftly grow its last mile logistics and have established intricate distribution networks throughout the country serving SME level mom-and-pop shops. Globally, the market size of this industry is expected to reach $1.54 trillion within 2025. Consequently, the FMCG sector of Bangladesh grew 9 percent to $3.4 billion as of 2017. With the advent of e-commerce and a fast growing modern trade industry, the industry has some new mediums of growth laid out. Currently, Unilever, PRAN, Square are among the top players in the FMCG industry with BATB leading the tobacco segment.
Given the coronavirus lockdown and imminent economic recession of consumer demand, the FMCG industry has been hit hard on these major grounds:
In order to tackle these challenges, the government needs to regulate the industry through strict supervision because a spiraling FMCG industry will have a detrimental impact in the long-term. First, the govt needs to limit the number of SR operating in the field level distribution and ensure that distribution houses or FMCG companies are following specific healthcare mandates, i.e. providing masks, gloves, etc. Secondly, the government needs to step in with pricing control through engaging local law enforcement authorities. Without ensuring sale price control, the industry will spiral and consumers will suffer.
In the long run, until global supply chain stabilizes, the industry will remain turbulent but not dead if certain interventions are taken as preventive measures. The major FMCG companies also need to start planning for the long-term forgoing short-term gains in order to survive. If the global lock down subsides in a few months and the spread of the virus flattens, the industry will be able to pick up given the right remedial initiatives taken now.
Author: Rageeb Kibria, Principal Consultant, LightCastle Partners
The LightCastle team has been analyzing the macro and industry level picture and possible impacts wrought about by the Covid-19 crisis. Over the following days, we’ll be covering the major sectors shedding light on the possible short and long term ramifications of the global pandemic. Read all the articles in the series.
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