EXPERT OPINION ON EXCLUSIVE FEATURE

Md. Quamrul Hassan
Business Director, ACI Consumer Brands
ACI Limited

Interviewed by
Susmita Bhatta

Mr. Quamrul Hassan is a seasoned marketing professional with over 25 years of experience in the fastmoving consumer goods market of Bangladesh, currently working as Business Director at ACI Consumer Brands. Mr. Hassan revolutionised the soft drink industry by introducing Virgin Slim Cans for the first time in Bangladesh back in 1999. At a time when the people of Bangladesh had no option but to consume impurities with their salt, Mr. Hassan launched ACI Pure Salt, which is a vacuum evaporated 100% pure salt. Mr. Hassan has the experience of working with both global and local brands in the FMCG sector. Team MBR was in a conversation with Md. Quamrul Hassan and was fortunate enough to receive his take on the FMCG sector of Bangladesh.

Susmita Bhatta: The FMCG industry experienced significant growth in recent years despite the COVID-19 pandemicinduced economic downturn. Would you please share your views regarding the factors that accelerated this growth?

Mr. Quamrul Hassan: According to the Census 2022, the rural population of Bangladesh comprises 68% of the total population. Hence, the economy’s growth would largely depend on the growth in the rural areas. We are observing that there has been consistent growth in rural areas for FMCG categories since 2017. Increased foreign remittances have increased rural purchasing power. In 2020–21, a record-breaking USD 24.78 billion in remittances flew to Bangladesh, demonstrating 36% growth over last year. Most of these remittances hit the rural or semi-urban regions of Bangladesh, enabling them to purchase quality household consumables. Improved infrastructure and transportation facilities have allowed companies to take products to deep rural areas, which is driving growth for the industry. The government stimulus fund for the COVID-19 pandemic (BDT 72,000 crore initially) as a part of the economic revival strategy also played a role in sustaining the pandemic. Hygiene awareness has also had a big impact on many other areas, such as soaps, sanitisers, cleaning products for the kitchen and home, disinfectants, female and child hygiene, and so on. Increased demand for these products has driven significant growth in non-food FMCG items in the country.

Susmita Bhatta: The global supply chain disruption caused by the war between Russia and Ukraine is affecting profitability across the industry. What are your suggestions to tackle the situation and make the growth sustainable?

Mr. Quamrul Hassan: Bangladesh is already facing the impact of the war across multiple industries. The increased cost of fuel is driving production and distribution costs higher. Prices for key food items imported from that region, such as wheat, corn, sunflower oil, and so on, have already skyrocketed. Reduced consumption and higher production costs

are a double-edged sword for the FMCG industry. To survive in such a dire situation, we must focus on source substitution, localisation, and internal operations optimisation. In such conditions, leveraging technology is a must to reduce cost and waste. With the price volatility across the world in grains and edible oils, companies need to be extra cautious and calculative to ensure purchase at an optimised cost to deliver the best benefit to our consumers.

Susmita Bhatta: Due to the increased availability of smartphones and deep penetration of the internet, consumers now prefer the convenience of shopping online and making digital payments. Keeping in mind this behavioral pattern of consumers, what steps may FMCG companies operating in Bangladesh take to keep the consumers engaged with their brands?

Mr. Quamrul Hassan: Due to the COVID-19 pandemic, there has been a massive shift in online shopping trends in Bangladesh. A large number of new buyers started using e-commerce platforms for the first time. The pandemic, the growing MFS industry, the fast adaptation of smartphones and the internet gave the e-commerce industry the adequate boost it required. According to a report by GSMA, the number of smartphone users in Bangladesh will increase to 63% by 2025 from 47% last year. I think FMCG companies should start exploring direct-to-consumer (DTC) channels by leveraging technologies to better serve the consumers. The DTC approach can drive efficient growth and better marketing ROI with less dependency on third-party e-commerce platforms and media agencies. Local FMCG companies must spot the demand spaces and trends online and optimise solutions accordingly for the best possible user experience. Companies should leverage partnerships with logistics and door-to-door delivery service providers to figure out the optimum delivery model for the DTC channel. Communication content and promotional offers should be designed based on data analytics, AI, and consumer insights to engage consumers with brands.

Susmita Bhatta: Consumer preferences towards FMCG products are constantly changing. What should FMCG companies do to anticipate and respond to the new consumer needs and preferences? Is the current level of product diversity and inclusion adequate to keep pace with changing consumer preferences?

Mr. Quamrul Hassan: Let us see some of the current socio-economic facts of Bangladesh.

  • Consumers’ spending is increasing every year by over 10%
  • Urbanisation is happening at a faster pace
  • Internet users who use it at least once a week make up close to half of the total adult population (15+ years).
  • Rise of service and greater participation of women in the workforce.

All of these indicate the growth of the aspiring consumer class in the country, and the needs and preferences of this class are different from those of our elders. To tackle their needs, FMCG companies need to focus on certain things.

  • Delivering the best products at the most affordable prices, as the Bangladeshi market is extremely price sensitive. Good products at the best prices will always win, provided with quality marketing initiatives.
  • Being in a close tie with consumers, understanding their needs and delivering the best products to meet those needs is a necessity.
  • Checking the consumer’s purchase pattern frequently and reengineering products accordingly to changing purchase behaviour.
  • Keeping up with the global trends with continuous R&D and product improvement.

Susmita Bhatta: Numerous FMCG companies in Bangladesh are using extensive distribution networks to operate on a massive scale, both locally and internationally. Do you think that the current level of technology integration in the supply chain of the FMCG industry is in line with global trends? What else can be done to make supply chain management future-proof?

Mr. Quamrul Hassan: As said earlier, more than 60% of the population in Bangladesh lives in rural areas. Reaching those areas is the primary growth driver for the FMCG industry. To get products across the corner of Bangladesh, we need a significantly streamlined distribution system. Else, it will not be financially feasible. We are not yet highly optimised in distribution technology at this time. The time and costs required to reach deep rural areas are significantly high, which can be solved through an integrated distribution system.

 Along with road transport, riverine infrastructure is required for low-cost distribution. We need to build a strong shipping line from Bangladesh to reduce import costs for global distribution. And all that has to be integrated through technology to ensure optimum cost for the industry.

Susmita Bhatta: Keeping the rising plastic pollution in mind, what sustainable business practices should FMCG companies adopt to contribute to the movement to fight the global climate crisis? Are CSR policies effective enough in addressing the growing concern about climate change?

Mr. Quamrul Hassan: Combined efforts from the government and the citizens are required to address the plastic pollution in Bangladesh. Per capita plastic consumption in Bangladesh has risen to 9 KG, tripling in the last 15 years, and only around 30% of it is being recycled. To keep plastic pollution on track, we need to raise massive awareness across the nation and enable consumers to discard the waste to be recycled in the future. On the industry front, many companies in FMCG have come up with oxo-degradable solutions and reusable.

plastic bottles. We all should focus on recycling packages and encouraging consumers to reuse packages through refill solutions. This problem cannot be solved solely through CSR activities. Government regulations and measures are required to manage plastic pollution.

 Susmita Bhatta: Amid inflationary pressures, the disposable income of consumers is likely to fall. How can this affect the business performance of FMCG companies?

Mr. Quamrul Hassan: This is a key concern across the industry right now. With current inflation across household consumables, consumers will primarily focus on ensuring the food is on the tables for their families and cut expenditures on other categories. This might result in a significant topline decline for the companies involved in non-food items. Apart from this, as most of the raw materials in the non-food category are imported, the increased dollar exchange rate is impacting the cost of production significantly. Consumers will try to cope with the current situation by using four strategies to manage their expenditures.

  • They will reduce consumption volume.
  • They will look for alternative places to buy the same product at a cheaper price. • They will look for cheaper alternative solutions.
  • They will change purchase occasions.

 In such a condition, it is expected to have a crisis in profitability for the non-food segment. With that said, to stay in the game, companies need to focus on core consumer needs with optimized values. Those delivering value for money in this economic condition will sustain in the long run.