Milk Vita eyes a bigger share in ice-cream market

Milk Vita, a milk and dairy products company owned by the Bangladesh Milk Producers Cooperative Union Limited, now plans to expand its ice-cream business, with a view to getting a bigger piece of the pie.  

For this, the company has sought Tk52.5 crore to set up an ice-cream factory in Madaripur.

The planning ministry greenlighted the proposal but instructed Milk Vita to look into how much profit can be made by manufacturing this item that has demand only in summer.

The fund was sought under an ongoing project titled "Establishment of diversified milk product plant and cattle development in greater Faridpur chars and adjacent areas".

The project, which has been running since January 2018, is scheduled to end in 2021, but Milk Vita wants its time extension to 2024 with a cost escalation of Tk60 crore to Tk389 crore.

Infographic: TBS

The demand for dairy products is high among all classes of people, but so is not for ice cream. That is why the Planning Commission's Project Evaluation Committee (PEC) asked Milk Vita to reconsider setting up the factory, according to a PEC meeting that discussed the issue in detail. 

The evaluation committee also instructed the company to include the last 10 years' financial analysis of the ice-cream sector into the revised development project proposal prior to building the ice-cream factory.

Contacted, Md Mustafizur Rahman, additional general manager (planning and development) and deputy project director at Milk Vita, told The Business Standard, "We are preparing a 10-year financial analysis of the ice cream sector and will attach it with the RDPP and quickly re-submit to the planning ministry."

"We want to expand our ice-cream business as there is a good demand for our Chocobar and other types," he said.

According to Milk Vita's financial report-2021, the company's ice-cream sales amounted to Tk20 lakh, while its total sales were Tk313.58 crore.

Bangladesh's ice-cream market size stands at more than Tk1,200 crore with 12%-15% annual growth, according to industry insiders and a study by LankaBangla Investment Limited. 

The industry, which suffered more than a 50% slump in sales in 2020 owing to the pandemic onslaughts, has now made a turnaround.

Milk Vita's business mainly is centred on pasteurised liquid milk. Other products include full cream powdered milk, non-fat powdered milk, sweet yoghurt, sour yoghurt, rasmalai, labang, matha, para sandesh, chhana sandesh, rasgolla, and ice-cream.

The ice-cream factory was initially supposed to be built in Faridpur under the project. Now, the plan has changed and it will be set up on Milk Vita's own land in Madaripur.

But, if the factory is built in Faridpur Sadar through land acquisition, money will be saved as discussed in the PEC meeting. 

So, the PEC also directed attaching a report with the revised proposal on advantages and disadvantages of decision-making in this regard. 

Milk Vita in its revised proposal also wants to set up a high-capacity dairy factory. The PEC asked it to review whether setting up the factory next to the existing one in Madaripur would create a crisis in milk supply.

Milk Vita's representative told the PEC meeting that there would be no problem in milk supply for processing, adding that steps have been taken to increase milk production in the proposed project area by providing loans for cows and developing breeds.

Mamun-Al-Rashid, member of the Planning Commission, who presided over the PEC meeting, said they have no objection to extending the project's duration. But they asked Milk Vita to review its advantages and disadvantages.

Besides, the PEC suggested reducing allocation for foreign tours of project officials, specifying plans for constructing quarters for officers and staff and reconsidering the cost of setting up the new dairy factory.