Industry Analysis

Food industry is a rapidly growing sector in Bangladesh, employing a significant portion of the
labor force in the country. Between 2004 and 2010, the food processing industry in
Bangladesh grew at an average 7.7 percent per annum. Bangladesh Bureau of Statistics, in
its 25006 Economic Census, reported that there were approximately 246 medium-sized food
processing industries employing 19 percent of the industrial manufacturing workforce in
Bangladesh or 8 percent of the total manufacturing labor force. The food industry employs
2.45 percent of the country's total labor force and its share in the GDP was 2.01 percent in
2010. There are also numerous small scale factories and domestic units engaged in food
processing throughout the country. According to some industry analysts, the food processing
sector in Bangladesh is a 4.5 billion US Dollar industry. In 2010, Bangladesh exported over
$700 million worth of processed food and beverages, over 60 percent of them were shrimp
and fish products.

Food processing in Bangladesh has traditionally been small scale, with domestic or family
business using common processing knowledge for the conservation and handling of raw
agricultural commodities to make them usable as food and feed. Although commercial scale
food processing using modern technology especially for wheat and rice milling, mustard
seed crushing and very limited bread and cookie manufacturing appeared during the 1960s,
the growth of this sector did not gain momentum in terms of operational scale and quality
until the 1980s. Recently the defining characteristics of the industry has been the processing
of increasingly diverse products to meet the changing demands of the Bangladesh
population. The major food processing sub-sectors in Bangladesh include dairy, edible oil,
sugar, rice, wheat, fruit and vegetable, tea, poultry/beaf, pulses and spices and fish
processing industries. Induced by the vigorous growth of the diverse middle class population
of Bangladesh and the growing demands for additional consumption, the food processing
sector is set to witness further hefty expansion in the coming years.
1. Economic Growth of the country:
Bangladesh has achieved GDP growth rate of 7.11% and 7.28% in the year 2015-16 and 2016-17
respectively (Source: Bangladesh Bureau of Statistics). The Government of Bangladesh has
targeted 7.40% growth in 2017-18. But World Bank estimated that Bangladesh has achieved a
GDP growth rate of 7.11% in 2016-17 and predicts that Bangladesh will earn GDP growth rate of
6.4%, 6.7% and 7.0% for the year 2017-18, 2018-19 and 2019-2020.
Figure: Projection of GDP Growth for FY2018-FY2022

Bangladesh has entered the socio-economic classification of Lower Middle Income Group. It is
targeted that Bangladesh will become higher Middle Income Group and Higher Income Group
by 2021 and 2041 respectively. As GDP growth is higher than population growth, per capita
income is likely to rise. This will lead to higher health care expenditure by both individual and
government.

Bangladesh has a rapidly growing consumer market and due to a large population base, the
demand for food products is always on the rise. The market and the product range have evolved
significantly over the last decade and many companies have entered the food business which
was otherwise not into this level of diversification in the past.

Bangladesh is considered as a developing economy. Yet, almost one-third of Bangladesh’s 150m

people live in extreme poverty. In the last decade, the country has recorded GDP growth rates
above 5 percent due to development of microcredit and garment industry. Although three fifths
of Bangladeshis are employed in the agriculture sector, three quarters of exports revenues
come from producing ready-made garments. The biggest obstacles to sustainable development
in Bangladesh are overpopulation, poor infrastructure, corruption, political instability and a slow
implementation of economic reforms.

2. Population Growth rate:

The total population in Bangladesh was estimated at 161.8 million people in 2017, according to
the latest census figures. Looking back, in the year of 1960, Bangladesh had a population of 50.1
million people. This drives the growth of food sector of Bangladesh. As a result the labour cost is
significantly low in the Asia Pacific region.
Bangladesh Labor Last Previous Highest Lowest Unit

Unemployment Rate 4.20 4.20 5.10 2.20 percent

Employed Persons 60.00 60.10 60.10 35.90 Million

Wages 13258.00 12897.00 13258.00 11493.00 BDT/Month

Population 161.80 159.90 161.80 50.10 Million

Living Wage Family 11800.00 11800.00 11800.00 11800.00 BDT/Month

Living Wage Individual 7360.00 7360.00 7360.00 7360.00 BDT/Month

Minimum Wages 5300.00 5300.00 5300.00 5300.00 BDT/Month

Retirement Age Men 59.00 59.00 59.00 57.00

Retirement Age Women 59.00 59.00 59.00 57.00

Wages High Skilled 8900.00 8900.00 8900.00 8900.00 BDT/Month

Wages Low Skilled 4650.00 4650.00 4650.00 4650.00 BDT/Month

3. Growing Income level of people:

Average income level of people of Bangladesh has increased. According to BBS provisional
estimation, the per capita Gross National Income (GNI) rose to $1,610 in the 2016-17 fiscal year
which was $1,465 in the 2015-16 financial year. Average income has grown by 9.4% from 2015-
16 to 2016-17. Thus, people have more money to allocate for medical expenditure.

4. Inflation rate
Although there is no regular trend in the inflation rate of Bangladesh, it is seen that over the last
4 years the general inflation rate has been decreasing. Inflation rates during the period was
7.35% in 2013-14, 6.41% in 2014-15, 5.92% in 2015-16 and 5.44% in 2016-17. If this trend
continues the inflation rate may be further reduced to below 5.44% though the targeted
inflation for 2017-18 is 6%.

Rate of Inflation May, 2018 April, 2018 May, 2017

(as measured by CPI, base 2005-06)
Point to point 5.57% 5.63% 5.76%
Monthly Average(Twelve Month) 5.82% 5.83% 5.41%

Source: BBS (Bangladesh Bureau of Statistics)

5. Consumer Confidence Index

Bangladesh is the third most optimistic market in the Asia Pacific thanks to consumers' positive
outlook on stock market, jobs and income, according to the Mastercard Index of Consumer
Confidence. In the first half of 2017, the country's score in the index rose 6.6 points to 89.4
compared to the second half of 2016.
The index is calculated on a scale of 0 to 100, with zero being the most pessimistic, 100 the
most optimistic and between 40 and 60 being neutral. With the increase, Bangladesh moved
further into the 'very optimistic' territory, with improvement in all five components that made
up the index. Cambodia leads the region as the most optimistic market with 93.1 points.
Vietnam (90.8), the Philippines (88.8) and China (88.2) rounded off the top five. This is the most
comprehensive and longest running survey of its kind in the region.

Between April and June, 9,153 respondents, aged 18 to 64 in 18 Asia Pacific markets, were
asked to give a six-month outlook on the economy, employment prospects, the local stock
market, their regular income prospects and their quality of life. Bangladesh saw the biggest
jump in the stock market sub-index, as its point rose to 74.9 in the first half of 2017 from 59.9 in
the second half of 2016.

The country witnessed a 7.2-point increase to 93.7 on the outlook on employment prospects
while the points rose by 6.8 to 95.7 on the regular income prospects. The outlook on the quality
of life improved by 3.9 points to 91.4 while outlook on the economy rose 0.1 points to 91.3 in
the first half of 2017 compared to the second half last year.

Overall consumer confidence in Asia Pacific has shown marginal change with some economies
facing headwinds. But the region's emerging markets such as Cambodia, Bangladesh, Vietnam,
and the Philippines increased resilience with consumers expressing optimism about economic
prospects over the next six months.