The Frozen Food Industry of Bangladesh: Opportunities for Growth Abound both Home and Abroad

With rapid urbanisation and an expanding middle class, the market for processed frozen foods in Bangladesh has crossed USD 95 million or around BDT 800 crore. The sector generated USD 371 million in revenue in the fiscal year 2018 and is expanding at over 20 percent a year, according to research firm Financial Planning.^[1] The following table shows us the growing industry’s market offerings and other business characteristics:

Product Categories	Product Types	Freezing Techniques	Distribution Channels
Ready-to-eatReady-to-cookReady-to-drink	Frozen fruits and vegetablesFrozen meat and fish including shrimpFrozen-cooked ready mealsFrozen dessertsFrozen snacks	Individual Quick Freezing (IQF)Blast freezingBelt freezing	SupermarketsConvenience storesSpecialty storesOnline stores

Frozen Food Export Market of Bangladesh

Value of the global frozen food industry is around USD 15 to 16 billion to which Bangladesh’s contribution is USD 600 million.^[2] In 2019-20 (July-January), the frozen food sector generated USD 337.33 in export, 1.47% of the total export value, surpassing export of cotton and cotton products, leather and plastic products.^[7] The available resources of the country are utilized for frozen foods and perishables like meat, fish, fruit and vegetables being exported to international markets in the Middle East, European Union (EU) and the USA.

73.4% of the frozen food export is covered by shrimp.^[7] It has large consumer bases in Japan, EU and the USA with increasing demand in other areas as well. According to Bangladesh Frozen Food Exporters Association (BFFEA), shrimp cultivation (Galda and Bagda) across the country is 300 tons per hectare. However, owners are trying to make the production more efficient using innovation and techniques like semi-intensive culture systems to match the efficiency of countries like China, Vietnam and Thailand which produce around 2500 tons of shrimp per hectare.^[2]

Besides shrimp, processed food is also an important component in the export market. Agro-based products such as inland water fishes (dry and frozen), livestock and poultry processed meat (beef, foul and mutton), season fruits and other by products constitute the processed food category. Bangladesh still has a long way to go in ensuring abundant freezing and processing facilities to meet the international demand. Hence, foreign and local investors are trying to establish freezing and processing industries within the country. 

Increasing Demand for Frozen Food Products in Bangladesh

The Bangladeshi frozen food market is expected to reach USD 420.48 million by 2024, registering a CAGR of 6.2%.^[3] Some key factors contributing to this growing acceptance for the ‘ready to cook’ foods include the fast-paced urban life, rising disposable income, preference for nuclear families with working parents, less time and hassle required in cooking using frozen food etc. With the increasing demand, leading companies like Golden Harvest, Kazi Farms and Pran have taken new strategies to expand their market presence and reach new consumer segments by entering this frozen food category. The demand for other items besides frozen fish and meat are also experiencing growth in demand. There are vegetables and fruits that are only available during a particular season but are sought by consumers and businesses throughout the year. These products are perceived to be the healthier option by local consumers as these mostly contain Carboxymethylcellulose (CMC), a dull and scentless stabilizer, which does not debase the nature of the frozen food like the preservatives used in preserved food products do.

Growing Popularity of Online Sales and Delivery Channels 

Frozen food sold through online is expected to be among the fastest-growing segments in near future. It used to represent a small segment of the market but the urban population in the cities have slowly started preferring online channels, as it is convenient, less time-consuming, and offers a larger variety of goods to choose from without much physical effort. 

E-commerce companies, like Chaldal, Parmeeda, Priyoshop, Shwapno, Othoba, Daraz, etc., are some of the major players in the Bangladeshi online market who also offer frozen food items. These platforms are continuously modifying their value offerings through introduction of features like pre-declared delivery deadlines, bundle offers, convenient transaction options etc. Each order on one of these platforms, like Chaldal, amounts to an average of BDT 1,500.^[6] On an usual day, buyers place more than 30,000 orders daily and 65 percent of the orders are generated from Dhaka and other cities like Chattogram and Sylhet. Annually the purchases generate around BDT 700 crore in turnover.^[5] Some of the companies are taking steps to make their services available in the other cities too. With the current coronavirus situation that calls for social distancing and avoiding large gatherings, these online stores are the only viable options to people. Hence, the reliability and usage of the platforms are likely to increase manifold. 

Competitors in the Bangladesh Frozen Food Market

The Bangladeshi frozen food market is consolidated. There are a few local and international players. Some of the prominent players in the industry include Golden Harvest, Pran RFL Group, Bengal Meat, AG Foods Ltd, Kazi Farms Group, and McCain Foods. In the local market, Golden Harvest is leading with 23% market share followed by Lamisa Frozen Food,  Pran, Kazi Farm, Rich Food, CP and BRAC.^[1] Due to low switching costs, availability of the products at nearby retail shops, online platforms and department stores contributed to the growing sales of these companies. Besides the manufacturers, suppliers of raw materials in the industry chiefly include farmers and other middlemen. Their job is to transfer farm supplies to the manufacturers.

Challenges to Overcome

• Despite the convenience and ease of use, many consumers still can not fully rely on the frozen food products due to lack of monitoring and policies to ensure quality of the products. Although authorities carry out different mobile courts from time to time, both Bangladesh Standards and Testing Institution (BSTI) and Bangladesh Food Safety Authority have yet to claim it under their jurisdiction to standardize the processed and frozen food items. Under these circumstances, consumers have to solely rely on the assurance given by the frozen food producers, who declare to have their own mechanism to ensure quality. Some certifications claimed by the frozen food companies include ISO, HALAL and HACCP.  
• The variety in the food items under the frozen food category is an obstacle for which the concerned authorities can not standardize any procedure or regulation for monitoring the companies. About 45 types of processed frozen food items are being sold by a number of companies, all of which claim different quality standards.^[1] 
• A frozen food item with a 12-month shelf-life must be refrigerated at -18 degrees Celsius temperature. The retailers quite often face challenges to maintain proper temperature after receiving the goods from the company which affects the product quality. The consumers, however, end up blaming the manufacturer for the lack of quality and refuse to rely on the brands. 
• There has been a simultaneous increase in the lack of reliance on courier and delivery services with growing popularity of them. The degrading traffic situation is one of the key reasons behind the failure to ship orders in scheduled time to customers.

Like the other industries, the frozen food industry has started to be affected by the coronavirus outbreak. A total of 290 import orders of frozen fish worth BDT 4.60 billion have recently been cancelled, according to the Bangladesh Frozen Foods Exporters Association.

Currently, the sector has unsold fishes worth BDT 9.99 billion.^[4] Unavailability of exportable fish, especially shrimp, in the local market is the key reason behind this situation in the industry. The overall shipment of frozen fish also declined to USD 500.40 million in FY 2019 from USD 508.43 million in 2018, according to the Export Promotion Bureau statistics.

Saim Ahmed Shifat, Trainee Consultant at LightCastle Partners, has prepared the write-up. For further clarifications, contact here: [email protected]