Dan Cake: Story of how a newcomer broke into the market
Dan Cake Bangladesh has surprised everyone by taking over the ready-to-eat food products market in Dhaka in just over seven years. We delve deep into its unique business model
In 2015, when Dan Cake first arrived in the Bangladesh market, not many people would have predicted it would take off to the degree it did.
After all, swiss rolls, muffins and layer cakes are items you found in boutique bakeries. Why would the mass market be interested in it?
Turns out, the mass market was hugely interested. From roadside tea-stalls, grocery shops to high-end supermarkets, Dan Cake products have become omnipresent, at least in the urban areas.
Keep updated, follow The Business Standard's Google news channel
According to Nazim Uddin Ahmed, the chairman and managing director of Dan Foods Limited, the availability of good quality ready-to-eat food products has always been a big concern in Bangladesh, and this is what drove him to establish Dan Foods in Bangladesh.
"A European brand such as Dan Cake, with its expertise in manufacturing international standard food products, and an uncompromising focus on hygiene and quality, would have been able to solve the problems in Bangladesh's ready-to-eat food market to a great extent."
"I believe the success of Dan Cake will inspire many to come up with other high-quality food choices for the consumers of Bangladesh," he said.
Dan Foods Limited is a 50-50 joint venture between the Danish company Dan Cake A/S and the Bangladeshi company Pandughar Limited. The former is also a market leader in swiss rolls and cakes in the Scandinavian market, which also holds ownership of multiple other brands. Pandughar Group, on the other hand, began its journey with real estate company Urban Design and Development Limited (UDDL), and is currently associated with brands like Polar Ice-cream.
Klaus Eskildsen, the managing director of Dan Cake A/S said the company was looking for a scope to enter the expanding Asian market. They chose Bangladesh in Asia due to its rapid economic development, rising consumer spending power, and sizable market.
He added Bangladesh is in a strategically advantageous geographic position, from where it is easy to reach other major Asian countries like the Maldives, Nepal and India.
Building a brand in Bangladesh
There was a strong presence of homegrown products in the market for similar products when Dan Cake first arrived. So how did Dan Cake overcome the challenges?
"Of course there were challenges, but we had a strong belief that we were unique and persistent. When we started distribution, shops were naturally not willing to take our products. Our products would expire and we would take them back. But we never compromised with quality," Shaheed Bin Sarowar, head of marketing at Dan Foods Limited, replied, adding, "Now shop owners say, 'Oh Dan Cake products? We would love to have them!"
Sarowar believes one of Dan Cake's biggest achievements to date was when one of the country's largest super shop chains reached out to them for their products.
Not wishing to reveal any numbers or figures about revenue or growth, he said, "We can say now we are experiencing 100% growth from when we started. Say if we were doing business worth Tk100 in the beginning, we are now doing business worth Tk200. Every year we are growing."
At present, around 450 workers are working in the company, including the sales force.
According to Sarowar, the few times they received complaints, they traced down the batch and removed it from the market. As for expired products, Dan Cake takes them back from shops with full liability.
The brand pursues a unique marketing strategy. For instance, despite their popularity, they do not advertise on television or billboards.
Sarowar said due to Covid-19, they refrained from advertisements for a while and currently, their focus is more on increasing reach on social media or digital media. "Television requires a huge budget, it is not a feasible or efficient media for us. But we will always remain active through events, competitions etc."
In fact, he said the name Dan Cake became familiar to people in the country when the brand sponsored a cricket tournament around 2016-2017, where Bangladesh won against Pakistan. In 2020, they were part of the fifth season of the Spelling Bee competition.
An array of products
Initially, Dan Cake offered five to seven premium products in ready-to-eat packaging to its customers. The swiss rolls especially stood out with their cream filling and soft outer layer.
As operations spread all over Bangladesh and the brand started to gain popularity, other products such as pound cakes, brownies, cookies etc were introduced.
Today, their single-slice cakes in chocolate and vanilla flavours are perhaps the most popular. Compared to regular chocolate cakes, which can taste dry at times, the ones by Dan Cake's cakes are softer, with a more pronounced dark chocolate flavour.
Coming in colours like green, brown, dark blue and yellow with mostly white backgrounds, consumers also like the products' smart packaging. Other cake flavours include lemon, orange, strawberry, butter, tiramisu, cappuccino etc.
In October 2022, they brought new items under the category of breakfast solutions. These include croissants, milk bread, tortilla ruti etc and immediately became popular.
"We even tried to bring ethnic products on an experimental basis, such as lachcha shemai. But we saw the price became a bit high because of our strong hygiene control. This product is usually prepared under unsanitary conditions, using hands, as we regularly see in media reports. But we used machines," said Sarowar.
Currently, under 37 products, they have 67 running SKUs (stock-keeping units or numbers assigned to product variations) which are distributed all over Bangladesh, and also exported to countries like India and Nepal.
The company is planning on bringing wholegrain and low-sugar items in near future.
"As the people of Bangladesh are becoming more conscious about health, we observed there is a rising demand for wholegrain or brown bread options."
The current price of Dan Cake products varies between Tk10 and Tk150. There are other brands in the market such as All-Time, Wonder and Kishwan, which sell similar products under similar price ranges, but consumers seem to prefer Dan Cake.
Although you will find Dan Cake products nearly in every shop in Dhaka, market penetration is not very high outside the capital. Rural consumers tend to be price sensitive and compared to local products in the district towns, Dan Cake still seems a bit pricey.
When asked about Dan Cake's market share, the company said that to date, there has been no conclusive study on the market share of the cake segment in Bangladesh's bakery industry. So, it is quite difficult for them to comment on their exact market share.
As for the brand's target consumers, Sarowar said Dan Cake is a brand mainly for families. "Our products are liked and consumed by people of all ages. Our primary target consumers are people who are conscious about the quality, food safety and hygiene of the products that they are consuming," he added.
'We maintain both European and Bangladeshi health guidelines'
Head of Plant Operations at Dan Food Limited, Mohammad Toufique Habib guided us around their factory in Savar. Before entering it, one has to undergo multiple steps such as disinfecting hands and legs, and changing into safety gear, to ensure there is no contamination.
Everything is fully automated inside the factory. Only after the products came out in sealed plastic packets did workers put them in paper cartons.
Inside the factory were giant ovens and cooling racks. Machines were taking out hundreds of small muffins from moulds and putting them neatly on cooling trays. Faulty products were disposed of immediately. A noticeable sight at the factory was the number of female workers; at present, there are 25 of them there.
While some ingredients are brought from Denmark, most are sourced locally. But these also have to pass a certain standard, for example, the eggs have to be of the same size and fresh, otherwise, the machine which breaks them open will not work.
Toufique Habib told us that every year, a Danish team comes to visit the factory. Moreover, monthly reports on the factory production etc are sent to Denmark. "The Danish team guides us and we maintain both European and Bangladeshi health guidelines and standards in our factory," he said.
He said from day one, the production system was maintained the same way, and there have been no deviations. A team from Bangladesh was sent to Denmark for a month to learn more about production and quality maintenance.
