Bangladesh’s food processing industry, valued at $8 billion, has experienced an average annual growth rate of 8 percent from 2005 to 2023, driven primarily by a burgeoning middle-class and increasing urban consumer demand for convenience, according to a recent report by the US Department of Agriculture (USDA). 

The USDA highlighted significant advancements in the processed food and beverage sector, noting its notable expansion in recent years. This growth is attributed to both domestic and export-oriented investments within the industry. Key products fueling this market include snacks, ready-to-eat meals, frozen items, drinks, beverages, and dairy products.

“An increasing percentage of upper-middle to upper-class consumers are shopping at modern retail outlets due to greater convenience,” the USDA stated. These consumers often prefer international brands, believing these products offer better safety and quality, which has driven up the popularity of imported goods.

Despite the modern retail sector constituting only about 2 to 3 percent of total retail sales in major cities like Dhaka, Chattogram, and Sylhet, its impact is significant. Currently, the sector includes approximately 40 companies operating over 750 outlets. Between 2015 and 2023, the annual turnover for members of the Bangladesh Supermarket Owners Association increased from around $200 million to $350 million.

The USDA report emphasized that modern retail chains differentiate themselves from traditional wet markets by offering a wider variety of high-quality products and enhanced shopping convenience. However, they face challenges such as limited cold chain capacity, food preservation issues, and general transportation logistics.

E-commerce is thriving within the urban food and non-food retail market, driven by the adoption of digital technologies. This trend is expected to shape the future of the sector significantly. Factors such as rising per capita income, increased urbanization, higher female labor force participation, and lifestyle changes are propelling the demand for processed dairy products, bakery goods, ready-made meals, confectionery, breakfast cereals, baby food, and non-alcoholic beverages.

Additionally, the growth of quick-service restaurants and the demand for e-commerce food delivery, catering to both Asian and Western cuisines, are driving import demand. Bangladesh’s import of consumer-oriented food products increased from $1.7 billion in 2019 to $2 billion in 2022. However, there was a slight decline in 2023, with imports recorded at $1.99 billion.