Locally produced condensed milk, which was once a popular complement to a cup of tea, is now struggling to stay afloat as consumers shift to more cost-effective and healthy alternatives.

With consumption declining, the market for condensed milk is not growing at the same rate as it did a few years ago. In fact, the annual growth rate has decreased, and sales have fallen by roughly 15 per cent in the last two years.

Furthermore, the Covid pandemic accelerated the downward trend in consumption, since people stopped drinking tea at roadside stalls.

In the last two years, condensed milk prices doubled, hence consumers have been shifting to other alternatives.

Besides, other reasons such as rising health awareness, availability of alternative products, increase in price, and limited use are contributing to the suffering of the industry, say sources.

Because of its longer shelf life, cost-effectiveness, and ability to add additional sugar to make it a ready-to-use beverage, condensed milk had gained popularity with the growing drinking tea culture.

Condensed milk of local brands is only used in tea stalls while in homes people tend to use foreign brands as milk substitutes for a variety of uses, including preparing sweets and beverages.

In the meantime, diversified alternative products arrived in the market to meet health-conscious consumers’ demands including coffee, green tea, ginger or turmeric tea.

Ahasan Ullah, senior deputy general manager (sales & marketing) of Meghna Group said the entire condensed milk market has been strongly impacted by rising health consciousness among the public, reduced consumption of tea at roadside stalls, and rising prices of tea-producing ingredients in the post-Covid-19 period.

There are four local manufacturers of condensed milk namely No.1 of Meghna Group of Industries, Star Ship of Abul Khair Condensed Milk Industries Ltd, Danish of Danish Condensed Milk Bangladesh Ltd, a subsidiary of Partex Group, and Goalini of SA Condensed Milk Ltd.

According to industry insiders, 40 per cent of the country’s population consumes condensed milk on a regular or irregular basis. The enterprises’ annual demand is five million cartons, and their annual turnover is Tk 150 crore.

Musharaf Hossain Bhuiyan, Danish’s head of marketing, said the condensed milk market is declining as consumers migrate to alternatives as a result of rising health consciousness.

During the pandemic, the industry experienced a 15 per cent drop in revenue, he added.

He further stated that they have a 35 per cent market share and that approximately two crore individuals were regular or irregular clients because they placed a premium on quality.

Prices double in just two years

Bangladesh is highly dependent on the global market for the import of essential ingredients to produce condensed milk.

The country has to import most of the ingredients including vegetable fat and oil from New Zealand, Australia, China and India.

According to industry insiders, the price of condensed milk doubled as the production cost rose by 40 per cent in the last two years owing to the increase in the price of essential ingredients including sugar, palm fat, soybean fat, and milk cream over the years, which is feared to continue.

Companies suffer loss, sales decline

Most companies are witnessing sales decline while some of them are facing continuous losses. Over the years, many companies failed to survive in the market.

Incorporated in 1999, Meghna Condensed Milk Industries was listed on the stock exchange in 2001. The company has been at a perpetual loss for the past several years.

According to their financial statement of June 30, 2020, the company’s revenue was Tk3.61 crore and its net loss was Tk12.27 crore. As such, the auditor highlighted concerns about the companies’ future prospects.

Recently, the stock market regulator Bangladesh Securities and Exchange Commission (BSEC) formed a four-member committee to look into two listed concerns of Meghna Group of Industries-KA (MGOLD) Limited to protect the interest of the investors.

BSEC had already written to Meghna Condensed Milk Industries and Meghna PET Industries in May of last year, requesting an explanation for their ongoing losses.

What can the industry do to survive?

Despite the fact that the sector is in a downturn, some businesses are profiting from it. Some dairy companies are largely involved in the business as there is less competition compared to other industries. Furthermore, some businesses are working to diversify their product lines in response to changing market conditions.

According to experts, if local enterprises can produce high-quality condensed milk that can be used as a milk alternative, the industry will not suffer and will instead open up a new export market for Bangladesh.

Ensuring quality main challenge

The government in 2003 cancelled licences of four local condensed milk companies’ production for being potentially hazardous to health. The Bangladesh Standards and Testing Institution (BSTI) chemists analysed samples from the companies and found traces of vegetable fat, which might cause stomach disorders, instead of milk fat.

The companies then demanded a new standard for them so that they could produce with vegetable fat, arguing that such production is seen in Malaysia. Considering the health consequences, the BSTI rejected the appeal.

In 2007, the military-led interim administration ordered the BSTI to set a new standard allowing palm or soya bean fat in the condensed milk. The conditions forced the companies to prepare condensed milk using at least 20 per cent power milk.

But there are questions among the researchers and even among the business insiders about whether the companies are strictly following the rules.

Md. Harun-ur-Rashid, professor in the department of dairy science at Bangladesh Agricultural University said: “Condensed milk needs to have milk components which is not the case here. Local brands are using vegetable fat instead. In foreign countries, condensed milk is used as a substitute for milk as they are made from milk. But in Bangladesh, the use of condensed milk is limited to tea and coffee only.”

When asked whether condensed milk was harmful for human health, the professor said it wasn’t, adding that focus should be put more on healthy and nutritious food to boost the export market.