Beverage demand dries up even in scorching summer

Sales of soft drinks and dairy products have dropped nearly 90 percent although the country is experiencing another hot summer – a time for the beverage companies meant to sit back and enjoy climbing sales.

Beverage producers said they have incurred a loss of Tk6,000-Tk7,000 crore in the March-May period amid the coronavirus shutdown, and the loss will mount up if the crisis prolongs.

Demand for carbonated drinks, malted drinks, juices and dairy beverages, such as "lacchi" and "labang", usually goes up in summer for the rise of mercury. Summer sales in the March-July period contribute nearly 60 to 65 percent to the annual beverage sales in the country.

However, the coronavirus pandemic has changed the scenario dragging down the business this year. Sales of beverages surge during the two Eid festivities up to 30 percent, which also dry up this season.

According to the Bangladesh Beverage Manufacturers' Association (BBMA), more than 100 companies in Bangladesh manufacture soft drinks to meet the local demand. Investment in the sector was around Tk10,000 crore at the end of last year.

The sector witnessed an unprecedented slump in sales soon after the Covid-19 made inroads in Bangladesh early March, said BBMA President Harun Ur Rashid.

He claimed though the exact amount of losses is yet to be estimated, it would be around Tk6,000-7,000 crore as per the claims of the individual brands.

Harun Ur Rashid, also a member of the parliament, said they will sit soon to calculate the total loss and seek assistance from the government.

 However, Consumers Association of Bangladesh (CAB) President Ghulam Rahman argued about the estimated loss of the beverage manufacturers.

"Their estimation is not logical. Soft drinks or beverages are not such items which had been produced and stocked three to four months prior to the Covid-19 outbreak," Ghulam Rahman told The Business Standard.

He believes the pandemic might have prompted a slump in their sales.

"Therefore, they are producing less than what they do in normal time, in line with the demand," added the CAB president.

Globe Soft Drinks and AST Beverage Ltd manufactures energy drinks, soft drinks, juices, carbonated juices and carbonated drinks. Sales of the company in March-July and centring two Eid festivals amount to Tk800 crore a year.

But the sales in the March-May period this year plummeted to less than Tk50 crore, said Monirul Haque, head of marketing of the company.

But the company has to bear regular salaries and bonuses of its 300 employees.

Transcom Beverage Sales and Development official Riaz Uddin said their sales dropped nearly to 20 percent due to the virus outbreak.

"We lost around Tk200 crore in sales in the last two or three months. In the meantime, many stockpiled batches will cross the expired date soon. The overall situation is difficult," he added.

The shutdown on March 26 prompted the closure of shops, hotels, restaurants, movie theatres, convention and party centres, which are the topmost points of sales for beverages.

Akij Food and Beverage Ltd Head of Marketing Maidul Islam said they have only 10 percent in sales at rural areas as restrictions on movement are less rigid there.

He said shops were not placing new orders as they were in doubt over selling the remaining products.

"Shops could not sell the products we distributed earlier. We will have to take those back if they fail to clear their shelves immediately," he added.

According to Akij Food and Beverage, sales of soft drinks are rising 10 percent every year in Bangladesh.

Echoing Maidul, General Manager (Sales) of Sajeeb Group Niamul Hassan said they lost Tk800 crore in sales this year.

Beverage is the lifeblood for the group who produces five types of carbonated drinks – three flavoured drinks and four mango juice products.

According to the Bangladesh Beverage Manufacturers' Association, Akij Food and Beverage invested more than Tk800 crore in beverages in the last seven years. Coca-Cola franchise International Beverage and Abdul Monem Ltd invested Tk716 crore and Tk290 crore respectively for manufacturing drinks during the time.

In the last seven years, Transcom Beverage invested Tk756 crore, Globe Soft Drinks Tk565 crore, AST Beverage Tk384 crore, Pran beverage Tk485 crore, Partex Beverage Tk229 crore, Sajeeb Corporation Tk140 crore and Meghna Group Tk336 crore.

The country's beverage sector has employed nearly 3 lakh people at production and distribution levels.