Bangladesh is predominantly a rice-consuming country but with the rise in health consciousness, price hike of rice and industrial use to make biscuits, bread and other snacks, flour consumption is going up in Bangladesh. At present flour is the second most important food staple in Bangladesh and accounts for around 12 percent of cereal food consumption. This article gives you a holistic view of Flour Industry in Bangladesh.

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Market Insight: Flour Industry in Bangladesh
Bangladesh is predominantly a rice-consuming country but with the rise in health
consciousness, price hike of rice and industrial use to make biscuits, bread and other snacks,
flour consumption is going up in Bangladesh. At present flour is the second most important
food staple in Bangladesh and accounts for around 12 percent of cereal food consumption.
(Source: Global Agricultural Information Network, Sayed Sarwer Hussain, May 2013)
Wheat consumption generally continues to grow steadily, driven by demand from mid to higher
income urban consumers. Bangladesh wheat millers are seeing growing opportunities to
market branded quality packaged wheat flour, replacing coarse wheat “Atta” flour typically sold
in loose bulk form. An emerging bakery and biscuit sector, as well a growing hotel, restaurant
and institutional (HRI) sector, is also contributing to a growth in quality wheat consumption
(now estimated at around 100,000 tons a year). Domestic wheat production has currently
stabilized at around 1.25 million metric tons a year, but with an annual demand of flour
exceeding 4 million tons, there is a supply-demand gap prevailing in the market. (Global
Agricultural Information Network, Sayed Sarwer Hussain, May 2013)
The table below portrays the historic import trend for wheat since independence.
Source: USDA Foreign Agriculture Service Grain and Feed Update

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According to Bureau of Statistics (BBS), Bangladesh’s wheat production has increased by 26
percent to 1.254 million tons in FY2012-13. Lower production cost and higher profit margin are
attributable for better performance. Additionally, large scale government procurement has
further spurred production. For 2013-14, government is planning to import 8.5 lakh tons of
wheat and buy 1.5 lakh tons from the domestic market.
Consumer Insight
In order to understand consumer buying trend, a study was conducted on 100+ consumers in
Dhaka city from urban and semi urban classes of the population. The survey has revealed
interesting insights on the market situation along with cost and revenue factors driving the
flour industry. A questionnaire was designed in order to reflect the factors influencing them to
buy a particular brand, the quantity that they prefer to buy, and other information, some of
which has been shared in this industry watch.
Quantity Purchased
According to a survey, most respondents prefer to buy the product in bulk quantity. It’s mostly
because of two reasons, firstly most consumers conduct their monthly grocery shopping at one
time so they prefer bulk purchase and the fact that they want to take price advantage of bulk
purchase. Most consumers (57%) consume more than 2Kg of flour per week.
Quantity purchased per week
Source: LightCastle Partners Primary Research
2%
6%
28%
57%
7%
0.5 KG 1 KG 2 KG More than 2 KG Other
Quantity Purchased

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Over the last year, the retail price of coarse wheat flour has been steadily increasing, reaching
Taka 35 ($0.44) per kilogram in February, 2013, a 9.4 percent increase from the previous year
(Figure 3). During this same period, the average wholesale price of wheat flour increased by
about 7 percent reaching Taka 32,000 Taka (US $400) per ton. The huge gap in demand and
supply of wheat and the trend at which price is gradually hiking, it is quite safe to presume that
prices are going to go up in the future.
Market Share
Respondents were asked which brands of flour they use and the data obtained could be used as
a proxy for the market share of different brands in Flour Industry. Teer (44%) is the most
popular brand, followed by Fresh (22%) and ACI (18%). All other brands have less than 5%
market share.
Market share of the different brands
Source: LightCastle Partners Primary Research
An in depth interview with some dealers and retailers have shed light on some key information.
Commission is the most attractive incentive for pushing a particular brand. For some retailers,
credit term play a role but mostly retailers can enjoy better credit terms if they maintain good
relationship with dealers or the company, so retailers mostly focus on brands that give them
most revenue. There were certain brands which were once market leaders for example Yusuf,
Noorani etc. but they lost the market due to poor distribution network. At present there is no
distinctive market leader since consumer buying patterns vary depending on availability of
product, mostly consumers tend to choose Teer, ACI or Fresh since they have better availability.
Even though it is difficult to estimate the total demand of flour across country but according to
retailers approximate demand in Naryangang is around 3000 ton/Day and in Dhaka city is
around 2500ton/day.

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Factors Affecting Choice of Brands
Consumers’ choice of brands mostly depends on brand quality. In this case, the main deciding
factor is the perceived quality; consumers tend to develop a perception about a brand by
judging the whiteness of the product or through advice from retailers. In addition to quality,
promotion and availability of products play a major role in influencing consumers to choose a
product. Consumers tend to choose the brand they can recall but if they don’t find the familiar
product it is likely that they choose the brand which is present at the store.
Influencing Factors of decision making of buyers
Source: LightCastle Partners Primary Research
Overall, since flour is a basic essential with growing demand, spurred by increasing population
base, the sector has strong growth prospects. Since the product is low involvement, players
must constantly engage in brand building activities e.g. TVCs, to retain consumer mind share.
Robust Supply chain for industry players remains of paramount importance since product
availability at remote corners of the country is critical to success. Many existing market players
have taken expansion projects for gaining economies of scale. With such growth prospects, the
sector can accommodate more players.
Please contact us for further queries and research needs: info@lightcastlebd.com,
zahedul.amin@lightcastlebd.com
35%
11%
7%
45%
0% 1%
Availabilty Word of
Mouth
Promotion Quality Packaging Others
Factors Influencing the Choice