Coffee market brews strong in Bangladesh

Morning doesn’t seem to start without a cup of tea for many. But now coffee cups have also started steaming strongly. That means coffee's popularity is brewing fast. And its market is expanding.

Major industrial groups have entered the league to capitalise on this change of food habit. Apart from importing, some of them are also investing on growing coffee locally.

A review of the tea and coffee production and import data showed that the demand for tea in the country has been rising by five per cent every year for a decade. Meanwhile the coffee market has been expanding at a rate of 56 per cent. That means the demand of coffee is growing 11 times more than that of tea. However the tea market is still 53 times bigger than the market of coffee.

The steady coffee market in Bangladesh began holding hands with Swiss multinational food processing company Nestle, who marketed coffee here for the first time back in 1998. Coffee used to be imported randomly before that.

There was a small demand towards the beginning when coffee had just started being marketed here. For example, 139 tonnes of coffee was imported in 2003. As much as 67 per cent of the market was dominated by Nestle at that time and coffee meant instant coffee only.

The coffee market didn’t grow that much even in the first decade of this century. And the annual economic growth was around eight per cent. The demand of coffee basically skyrocketed from the next decade. Different varieties of coffee alongside the ins tant coffee added a new dimension to the market.

Industrial entrepreneurs also invested in setting up newer outlets at different places. North End, Gloria Jean’s, Crimson Cup, Barista, Bateel and Segafredo are notable among them. Even smaller entrepreneurs opened cafes around the corners. Cafes everywhere seems to be crowded.

Meanwhile, alongside major conglomerates general entrepreneurs are also coming forward in coffee farming. For the import, farming and establishment of selling outlets being paced up simultaneously, there seems to be an upsurge going on in the coffee market.

Import data shows that Bangladesh had imported 264 tonnes of coffee in 2012. Within the difference of a decade, the import rose up to 1,745 tonnes last year. As per that calculation, it can be said that the coffee market has been expanding at an annual rate of 56 per cent on average.

Bangladesh right now imports coffee from about 40 countries around the world. And, eight of the top ten coffee producing countries are on that list. However, 88 per cent of the coffee is coming from India, Indonesia, Malaysia, Brazil and Vietnam, these five countries.

Following in Nestle’s footsteps, more than 250 companies including three major conglomerates are now importing and marketing coffee. Those three major conglomerates are PRAN-RFL, Abul Khair and BEXIMCO.

Of them, PRAN-RFL Group came in this business back in 2013. But they started importing and marketing coffee in large scale from 2017. They marketed six per cent of the total coffee marketed in the country last year.

When asked, PRAN-RFL Group director (marketing) Kamruzzaman Kamal told Prothom Alo that people of this country, historically habituated to tea are now turning towards coffee. This change is the result of a change in peoples’ socio-economic condition.

Drinking coffee is becoming popular especially among the young generation. PRAN-RFL is planning to market different varieties of coffee for the rapid growth of the market, he added.

Abul Khair Group has been marketing instant coffee of AMA brand. Associate company of the group, Abul Khair Consumer Products started marketing coffee about three years ago. The group ranked seventh in coffee import last year. The group has however risen up to the second position in the first five months of this year.

BEXIMCO Group is the latest addition to the coffee market. Sister concern of the group BEXIMCO Foods has been marketing coffee of the brand named ‘Bateel’.  This coffee is being sold at Bateel’s outlets in the capital.

Apart from that SMB Distribution and Supply has been marketing McCoffee coffee while Omega Distribution is marketing KoffeeCo and ToraBika brands of coffee.

Commercial coffee farming began at a limited scale in the hill tract region a decade earlier. According to agricultural extension department data, 2,000 farmers are now involved with coffee farming in seven different districts of the country. In fact, Arabica and Robusta types of coffee have also started being grown on high altitude areas of the country for the production rate being high. 

The government took up a project of Tk 2.11 billion (211 crore) in 2021 to accelerate the production of coffee and cashew nuts. Various programmes including distribution of plants among farmers for free are being implemented under the coverage of that project titled ‘Research, development and extension of cashew nut and coffee’. As many as 700,000 coffee plants will be distributed this year. Coffee plants bear fruits after three years of plantation.

Officials of the department of agricultural extension have said that Abul Khair Group of the major conglomerates has been farming coffee commercially in the hill tract. The North End company has also been helping farmers in the Hill Tracts with coffee farming for about a decade.

They are branding coffee from the Hill Tracts in their own cafes. In fact North End has already started marketing coffee produced in the hilly region of Bangladesh. They are packaging the coffee and marketing it in the name ‘Hill Tract Blend’.

When asked, director of the ‘Research, development and extension of cashew nut and coffee’ Shahidul Islam told Prothom Alo, “It’s the importers who want to collect locally produced coffee. Since the market is good, farmers are becoming interested in farming this as well. As a result, just as the coverage of farming is growing every year, so is the number of coffee growing farmers.”

Apart from the three Hill Tract districts, coffee is now being grown commercially in different parts of the country including Tangail, Rangpur and Nilphamari districts. One such coffee farmer from Rangpur is Mokhlesur Rahman.

He told Prothom Alo that coffee farming costs less but maximises the profit. However the steps that follows harvesting, need to be improved. As many as 62 orchards have been created after collecting plants from his orchard, he said.

Currently, the duty rate on importing roasted and non-roasted coffee is 89 per cent on packets weighing up to 2.5 kilograms, while on bulk or lose import it is about 59 per cent. However in case of instant coffee, the duty is 89 per cent on both packaged and bulk import.

Companies that have set up coffee processing factories are not being benefited because of these reasons. So, instead of allowing direct import of retail packages, giving facilities to those who are adding value by processing and packaging them inside the country will bring in newer investment, say investors.

When asked to know about this, Nestle Bangladesh Limited’s director and company secretary Debabrata Roy Chowdhury told Prothom Alo that Nestle Bangladesh has added value by processing and packaging coffee inside the country following import. Nestle has set up a factory spending around Tk 250 million (25 crore) for that.

But the same duty rate goes for packaged and bulk import for retail sales. This has left investments of those with processing factories like Nestle, in risk. Exemption of supplementary and regulatory duties on importing instant coffee for processing industries will bring new investments in this sector.

History has it that coffee first originated in the ninth century Ethiopia. It travelled from Ethiopia to different Arab countries later. Then it spread throughout the world including Europe-America. But in Bangladesh, commercial coffee farming started hundreds of years after its invention, that too in this century.   

Shahidul Islam, director of the ‘Research, development and extension of cashew nut and coffee’ under the department of agricultural extension told Prothom Alo that private entrepreneurs of Bangladesh have come forward in farming coffee within the past couple of years.

If this trend continues, coffee will not have to be imported anymore after a decade. In fact, it would also be possible to export the coffee produced here, after meeting the local demand, he added.