Coffee market sees robust growth as demand rises   

Beverage once meant taking tea mostly, but with the change in taste, coffee has become one of the most popular drinks like tea, thanks to the country’s remarkable economic growth.

Considering its health benefits and unique taste, more and more consumers are gradually leaning to sipping coffee. Some consumers are even shifting to coffee by leaving tea.

For many people, including employees and students, life would feel impossible without sipping a cup of coffee during work. Most coffee drinkers think taking a cup of coffee during work breaks boost their energy and help them get through work for a long time.

Consequently, the demand for coffee has been surging significantly in Bangladesh, and the market has been witnessing robust growth over the past several years.

According to industry insiders, the annual demand for coffee is 1,300 tonnes, and the market is growing by 10 per cent annually. The Department of Agricultural Extension (DAE) data shows the current coffee market size is Tk 600 crore.

Consumers are shifting their focus on premium-quality beverages, thanks to increasing disposable income and changing tastes. A vast variety of coffee flavours, roasts, and add-ins are available in the market while consumers can customise their drinks to match their exact preferences. They can enjoy a hot cup of coffee during cold weather and iced coffee during hot weather.

Coffee has become consumers’ top choice as it is one of the most customisable beverages. It has turned into the preferred social drink. Currently, people have beverages during business meetings, friendly catch-ups, group study sessions, and various other social events. Most people prefer coffee to other beverages.

Kaniz Fatema, a student at the University of Dhaka, said she used to start her day with tea but recently switched to coffee due to its unique taste and health benefits.

“When I can no longer concentrate, I prefer having coffee, which ultimately helps me relax and gives me the stamina to continue studying for a long time,” she said.

As the demand for coffee is increasing, many companies have cashed in on it. Besides, many that sell tea have started selling coffee considering the overall demand.

Debabrata Roy Chowdhury, director of legal and corporate affairs and also company secretary at Nestlé Bangladesh, said the middle and affluent classes were expanding as Bangladesh was growing economically.

“We found in a study around 35 million people in the country have per capita income of $4,000-5,000. As people have money, they are ready to pay for quality beverages. Consequently, the country consumes nearly 1,300 tonnes of coffee annually, and we are leading the market with more than a 75 per cent share,” he added.

As the demand is growing day by day, different coffee shops have been opened across the country, especially in metropolitan cities. It is now tough to find an area in the capital where there are no coffee shops. These shops sell more than 20 types of coffee with different flavours. Coffee is sold in roadside tea stalls as well.

Rejoan Hasan, chief commercial officer at North End Coffee Roasters, said tea is the leading beverage in the country but coffee has been witnessing robust growth over the last several years as consumers’ tastes are changing.

Besides, coffee has many health benefits and people feel relaxed after drinking a cup of coffee, he said. 

“We are one of the market leaders, selling 80-90 tonnes of more than 18 types of coffee annually. We are renowned as we roast coffee ourselves, which is the secret of the unique taste. We sell coffee in 10 outlets, and 400-500 cups of coffee are drunk in an outlet per day on average,” he added.

Many companies have come up with different business policies to brand their products in the market. Some are focusing on small and mini packs to reach the lower- and middle-income people while many are focusing on other product types. Besides, many roast coffee themselves to ensure taste and quality.

“Most of the consumers, especially the young generation, are very fond of coffee. Many prefer coffee to tea now. Considering the demand, we make it affordable and available through our ready coffee packs,” said Debabrata.

Sakib Ahamed, Dhaka divisional sales manager of Rich Café, said the country consumes 100 tonnes of coffee monthly on average.

“We are selling nearly 10 tonnes of coffee per month. We have four types of coffee – premium, regular, classic, and sugar-free.

“We are determined to supply pure coffee to consumers. That is why we are witnessing a 15-16 per cent annual growth,” he added.

Imports see tremendous growth   

Bangladesh imports coffee from at least 30 countries, including India, Myanmar, Brazil, Vietnam, Colombia, China, Italy, Malaysia, Nicaragua, the United States, Indonesia, Guatemala, Costa Rica, and Australia.

According to the DAE data, Bangladesh produces 56.25 metric tonnes of coffee annually, and 95 per cent of the local demand is met through imports.

With the increasing local demand, the volume of imports witnessed significant growth in the last several years. According to the DAE data, some 11.624 tonnes of green coffee were imported in the fiscal year 2017-18. In FY19, imports rose to 51.286 tonnes.

Bangladesh imported a significant volume of green coffee even during the Covid-19 pandemic, which was 32.517 tonnes in FY20. In FY21, the country imported 33.435 tonnes. In FY22, Bangladesh broke all the previous records, with green coffee imports reaching 76.271 tonnes till February.

Govt project to boost production

A total of 56.25 metric tonnes of coffee were produced on some 122.749 hectares of land in FY21, according to the horticulture wing of the DAE.

The government is determined to cash in on the potential market and become a coffee exporter by ending import dependency. Coffee cultivation, which started on a limited scale in the hilly districts in the 1990s, is now moving towards commercial production due to farmers’ interest.

The Robusta and Arabica variants are farmed commercially amid growing demand. Coffee cultivation has now spread beyond the hilly districts to different areas, including Nilphamari, Tangail, and Moulvibazar.

The government last year undertook a Tk 211.84 crore project titled “Cashew Nut, Coffee Research, Development and Expansion”. The DAE and the Bangladesh Agricultural Research Institute will implement the five-year project by June 2025.

Under the project, the government will develop local coffee variants, ensure innovation in new technologies, and increase the scope for training to make farmers skilled in coffee cultivation. It is also hopeful about exporting coffee in the future instead of importing it after implementing the project properly.

Shahidul Islam, director of the project, said when the project would be completed, it would meet the local demand and also open new windows of export opportunities for Bangladesh.

“We are providing the necessary policy support for farmers, including seeds, fertilisers, and pesticides. Besides, we will ensure processing facilities for 150 groups of farmers under the project within the next two years,” he added.

Potential market remains untapped

Though coffee is getting popular among the affluent class, it is yet to reach a significant portion of the population. Besides, coffee is consumed mostly by the young generation, including students and professionals.

As a result, the coffee market is not growing as fast as expected. On the other hand, there are misconceptions among the people that coffee tastes bitter and coffee drinkers have sleep problems.

Industry insiders said not all tea drinkers drink coffee. If coffee is widely promoted, the market will grow faster, and consumers will be benefited due to the drink’s health benefits.

Sakib said about 55 per cent of the market is still untapped as there are some misconceptions among consumers about the negative effects of drinking coffee.

“There is no scientific proof that coffee disrupts sleep. We have a huge untapped market due to these misconceptions. We need to promote coffee and inform people of its health benefits,” he added.

Challenges remain

With the growing demand, many coffee companies have developed over the years. There are also some unregistered companies selling cheap coffee, but that is not healthy.

According to industry insiders, there are 100 companies in the market. Of them, only 20 are renowned.

Many claimed some companies import underrated coffee violating the rules as the duty and tax are nearly 60 per cent. Many consumers are purchasing these products due to low prices.

Debabrata said some key challenges in expanding the market include building a coffee habit among tea drinkers, the presence of illegally imported products with no guarantee of quality, import dependency, and price fluctuations.