Problem and Prospect of Infant Nutrition Market in Bangladesh - Assignment Point
Problem and Prospect of Infant Nutrition Market in Bangladesh
Subject: Health | Topics:

Executive Summery

Bangladesh is a country of large population. There is about 150 million population in our country. Mothers getting more involved in wage earning. They often lack enough infant mutrition market. Moreover, some mothers are becoming health conscious. Majority of parents do not know about their baby’s nutrition need, even in the current market. Many parents can not afford. A number of local and multinational companies are working profitably in this industry. The market is growing very fast and need more companies to participate.

AKG is one of the leading company in Bangladesh with the policy to ensure consumer’s satisfaction by importing intrinsic quality baby food products with authentic taste through the joint collaboration with renowned company like Murray Goulburn, Australia and Omani Euro Food Industries of Oman.

In baby food industry, Abul Khair Group (AKG) has entered in July 2005. Continuously searching for extreme quality and innovation for infant nutrition need inhering this responsibility on shoulder Abul Khair Group (AKG) is operating locally as a leading company with its excellent development capabilities, regulatory expertise, and financial strengths. The augmentation of AKG’s pipeline through in-licensing, co-marketing and co-promotion agreements ensures balance in its portfolio, and provides the basis for sustainable growth in a highly sensitive business like baby food products infant nutrition. AKG has an extensive history of successful collaborations, and it brings a “can do attitude”, rapid response times, and a relentless focus on achieving mutual goals.

Primary data for this study has been collected through a well-prepared questionnaire, which is combined of both open and close-ended questions. Several ways of collecting data have been used like, face-to-face interviews with the respondents, questionnaire survey, etc. Secondary data has been collected through Corporate Office, PDOs (Product Detailing Officer) and from its initial business plan, business reports etc.

Brief introduction on Abul Khair Group (AKG):-

Abul Khair Group (AKG) is a private limited company. It started in 1953. The corporate head office of AKG is located in Chittagong. This is also one of the most successful company in recent time in Bangladesh.

1.1 Nature of business:

• Trading
– Importation of agro-based commodities
• Manufacturing
– Domestic product
– Export product
• Shipping
• Sales & Distribution (Marketing)
– Own production
– Imported products

Sister concerns of AKG:

• AK Corporation
• Abul Khair Condensed Milk & Beverage Ltd.
• Abul Khair Vegetable Oil Industries Ltd.
• Smark Coconut Oil Products Ltd.
• Abul Khair Steel (Cow Brand)
• Shah Cement Industries Ltd.
• Pahartoli Bricks Works
• Abul Khair Factory Ltd.
• Abul Khair Shipping Lines Ltd.
• Abul Khair Consumer Products Ltd.
– CPT Division
– Beverage & Snacks Division
– Baby Food Division

Brands Owned by the Group:

• Cow Brand- Steel
• Shah- Cement
• Starship- Condensed Milk
• Starship- Juice and Chocolate Milk
• Starship- Full Cream Milk Powder
• Starship- Vegetable Oil
• Saad- Chanachur/ Badam/ Dal
• Marks- Full Cream Milk Powder
• Marine- Cigarette
• Sun Moon- Cigarette
• Abul Biri- Biri
• Seylon- Tea
• Sunflower- Vegetable Oil
• Butterfly- Mustard Oil

Baby Food Division (AKG):-

It is a sales and distribution company. The head office of the Baby Food Division is located at 167,Green Road, Dhaka. All products are imported from high quality source. They have set up own sales/distribution infrastructure. They have also an experienced Product Detailing team. They launched a range of milk based baby cereals in the market on 3rd July, 2005 with the brand name- “Mother’s Smile”

“Mother Smile”: “Mother’s Smile” presents to the consumers in Bangladesh an assortment of baby foods sourced renowned manufacturers in Australia and Oman. All Mother’s Smile products are from natural food resources and fortified with essential vitamins and minerals infant nutrition, crucial for baby’s physical and intellectual growth. Also, these are entirely processed without preservatives, MSG, food coloring or artificial seweeteners.”

Current Market-
• Infant milk- Infant formula/Follow on formula/Growing up formula/
• Weaning foods- Milk cereals (Rice/Wheat/Fruits)
– Non milk cereals (Nestum)

Future Market-

• Weaning foods- Milk cereals (Vegetables/Dal/Chic Rice)
• Non milk cereals (Nestum)
• Infant formula (LBW formula/Anti Diarrhea/ Pregnant & Lactating Mother)
• Creamy Noodles (Beef/Chicken)
• Instant Porridge (Beef, Chicken, Vegetable, Anchovy)
• Rusks (Finger foods)

Mother’s Smile- Brand Origin:

Infant milk-
• An Australian Brand
– Licensing contract with AKG
• AKG got right for Bangladesh market
• Product quality and formula set and controlled by Australia

• Omani Euro Food Industries of Oman
• Established in 1997
• Factory set up and still run by German Engineers.
• The biggest and most advanced factory in Asia and Mid-East.
• Ingredients from high quality source-
– Vitamins & Minerals from Europe
– Milk from New Zeeland Dairy Board
• Product export to Mid-east and Europe
• Factory has EFSIS certificate
• Factory also has HACCP/HALAL certificate
• All product ingredients comply WHO guidelines


Product Portfolio:

• Mother’s Smile- Prima (0-6 months, IF in 400 gm can)
• Mother’s Smile- Regular (6-12 months, FF in 400 gm can)
• Mother’s Smile- Complete 3 (12-36 months, in 400 gm)

Milk cereal (wheat based)-

• Mother’s Smile baby cereal- rice ( 6 months+, 300gm B&B)
• Mother’s Smile baby cereal- wheat (6 months+, 300gm B&B)
• Mother’s Smile baby cereal- Fruits+wheat (6 months+, 300 gm, B&B)
• Mother’s Smile baby cereal- Wheat+Honey (6 months+, 300 gm, B&B)
• Mother’s Smile baby cereal- Wheat+Apple (6 months+, 300gm, B&B)


Baby cereals-

 Omani Euro food industries, Oman
 Specification/formula as per their existing brand ‘Mother’s Choice’.

Infant milk-

 Murray Goulburn, Australia
 Specification/formula provided by MGN & agreed by AKG.

Brand Vision and Role:

• Become the most prestigious & trusted baby food brand within 5 years
• Offer consumers more product choices with optimum quality and price
• Increase corporate image of the company
• Become a future “source of business” brand for the company

Brand objectives:

• Achieve 100% distribution reach in targeted outlets for all products by end 2008
• Gain 30% share in cereal market by end of year 2008
• Gain 15% share in infant milk market by the end 2008

Key Challenges:

• Establish brand identity
• Ensuring product quality-key concern
• Effective distribution
• Brand communication in dark market
• Support from health professionals

Legal Framework of Marketing:-
As per BMS ordinance (Regulation of marketing), 1984

1. Definitions:
– “BMS” means any food represented as a partial or total substitute of BMS and includes a complimentary food.

– “Complimentary food” means any food represented as complement to breast milk or infant formula

– “Infant formula” means BMS formulated to satisfy the normal nutritional requirements of infants up to 12 months of age.

– “Protected person” means mother or father of a baby not more than 24 months of age.

2. Rules relating to advertisements (Dark market):
– No person shall make, exhibit, distribute, circulate, display or publish any advertisement
• Promoting the use of BMS
• Implying or deigned to circulate the belief or impression that BMS feeding is equal or superior to breast milk

– No person shall promote any BMS either by advertisement or by giving gift, prize, discount coupons or other free items or by any other means.

3. Rules relating product registration:
– No BMS of any kind shall be imported, distributed, marketed, stored, sold, offered for sale or be locally manufactured for sale unless it is registered under the ordinance (we call it IPHN registration)

4. Rules relating to container and labeling:
– “Nothing is substitute … to breast milk” has to be printed on Bangla
– Method of preparation and information regarding composition has to be printed on the container in Bangla
– Neither container nor any literature kept inside shall have any picture of infants or any such picture.

Current market scenario of infant nutrition market in Bangladesh:-

Critical situation:

It is a time- honored and universally acknowledged fact that there is no alternative to mother’s milk. For the first two years of an infant, mother’s milk is the best food. Hence, a healthy mother is provide the full guarantee to an infant’s mother’s milk. Owing to nature’s erratic behavior, it is sometimes found that all mothers do not maintain good health all along. The insufficiency of mother’s milk in the world over the ages and having no other easy way to get adequate mother’s milk to keep the baby alive, the “Infant Formula” which has been invented through continuous research for the purpose is much nearer to mother’s milk in term of quality. In today’s world, the importance of such formula can not be denied for its huge infant mutrition market value. Although, it is in no way an alternative to mother’s milk, it is accepted as an important alternative food all over the world.

If we take a look at our neighboring countries, it would be evident that in the scientific age of 21st century in many countries of Asia such as China, Thailand, Malaysia, Philippines, India, Sri Lanka, Pakistan, Vietnam and also in many other developed countries many projects have been taken up to manufacture “Infant Formula” and along with packaging and it is now acknowledged as an industry. Presently, it’s universal utilization is being followed by the prescribed rules of day-to-day life; so that it remains within the purchasing capacity of common man. In no way, it has not been considered as “luxury item”.

However, regrettable, it is true that the advancement of this industry is put to many obstacles although this country is generally much more backward than the above mentioned countries. By imposing new taxes each year, and treating them as “luxury item”, there is a continuous effort to keep the item beyond the purchasing capacity of the average consumers. Surprisingly, such formula has all along been considered in the way like cow-milk; An adverse reaction is now evident following the imposition of 85% import and other taxes by categorizing them as full-cream milk powder. Side by side, the unbridled price hike of dollar, has gradually pushed lakhs of people associated with the industry to much uncertainty.

The reasons for reducing duty and tax:

1. Increase in number of working mother– In this 21st century, the number of working mothers are increasing daily in each sectors of the state. Along with it, the use of infant formula is naturally increasing in infant nutrition. Bangladesh is also not lagging behind in this arena. For this valid reason “Infant Formula” is considered as an essential item by the working mothers of Bangladesh.

2. Physical inability of mothers– The cow-milk or full cream milk powder is not at all allowed for the first one year of the infant on health and infant nutrition ground. In case of mother’s death, malnutrition, serious illness, infectious ailments and while traveling one has to depend on “Infant Formula”

3. World standard nutrition level– As the nutrition level of the “Infant Formula” is as per to the approved nutrition level set by the American Academy of Pediatrics, its consumption is accepted world-wide to meet the special need of infants. In such case, the “Infant Formula” of infants could be used only with the advice of specialist doctors.

4. Post delivery complicacy– In this age of highly developed science when 50% babies are born through the ceasarean method instead of natural delivery. In such cases, it becomes imperative to depend on “Infant Formula” as per specialist doctor’s advice to tackle post delivery physical problems. Aside this, the urgency of taking “Infant Formula” becomes more pronounced resulting from inadequacy of mother’s milk or lack of adequate infant nutrition caused due to inadequate calories in-take everyday and not taking normal food to reduce their physical fatness.

5. Acceptability to specialists– In this age, when all remain busy in daily life, our child specialists doctors, health workers directly or indirectly recommend “Infant Formula” for infants on special grounds.

6. “Infant Formula” is not a “luxury item”, rather a daily necessity – If statistics are considered, it would be found that many meritorious students and established people might have taken “Infant Formula” for certain reasons during their infancy. Therefore, it can not be treated as “luxury item,” and should be treated as an essential item.

H.R. Strategies:

• “Quality First” policy while recruitment
• Develop and implement an standard induction program
• Discourage lateral entry, prefer in-house staffing
• More female employees- “ break the pattern”
• Periodic “Organization Climate Survey”
• Formal performance appraisal- 6 month & 1 year
• Ensure performance based career progression
• Provide need based training


• Phased distribution- Launch selected market first and roll out gradually.
• Direct & indirect distribution- Direct Sales Centre (DSC) in Dhaka and Chittagong. Distributors not viable at the beginning. Appointed distributor in other markets.
• New approach- Order take at day 1, deliver at day 2, Pharmaceutical style.

Mode of operation (Distributor):

• Exclusive to Mother’s Smile
• Goods purchased by distributors in cash.
• Goods delivered from Dhaka to Chittagong.
• Van and driver- by distributors
• Asst. Sales officer- by AKG
• Product detailing- by AKG
• Commission 3% to 4%

Pricing & Promotion:-

Pricing Strategies:

• Maintain price premium over those of competitors- Price indicates value. Here products are imported. Whereas, other brands are locally manufactured with local ingredients.
• Higher margin for intermediaries- 3% trade margin is recommended.
• Quarterly sales commission for trade- 2% additional, depend upon achieving minimum target. It is effective on total sales (off-take) value.


Promotional strategies:

• Strictly adhering to legal restriction
• Product communication through health professionals- Pharmaceutical style
• Trade mark diversification- a probable option- risk involved
• Brand extension to exploit gaps in BMS ordinance
– introduce creamy noodles (for babies 2+ years old)
– introduce GF ( for babies 2+ years old)
• Heavy spent on getting support from doctors/nurses
– Nestle and others spending on variety of activities
– Gifts, seminars, literatures, sponsorships etc.

Part Two-The Project


For every essential consumer goods company needs to acquire thorough knowledge on the current market situation regarding it’s performance as well as of it’s competitors. The performance of different brands are measured separately by considering different indicators. Considering this many companies carry out different research to gain insights into their performance as well as of the competitors and also tries to understand the perspectives of the overall infant mutrition market senario.

Abul Khair Group(AKG) is the most prominent company of the country. They have a Baby Food Division which imports baby foods from the renowned company of Oman and Australia. As being an intern of AKG (Baby Food Division), I carry out a research-survey at the retail level of Dhaka city (July-September, 2007). It is focused on the infant nutrition market of Bangladesh and its problems and prospects on the perspective of AKG (Baby Food Division).

Objectives of the Report:

Broad Objective:

The broad objective of the study was to compare the sales and distribution situation of infant mutrition market among the different competitor brands of Bangladesh and at the same time overall satisfaction level and recommendations of the baby food products of AKG at the retailers level by considering the different indicators of brand health.

Specific Objectives:
The specific objectives of the report are:
1. To compare the overall brands share among the large baby food distributor companies of the country
2. To compare the distribution, delivery system of different brands on the perspective of retailers point of view
3. To find out the problem of overstock situation, doctors preference, trade margin of those competitor companies
4. To find out the present situation of the baby food products of AKG
5. To acquire some recommendations at the retailers level to increase the overall sales of the baby food products of AKG

The outlined sampling plan is given as below-

• Target population: The target population for the study has been taken from the areas, where AKG provides delivery. The population includes all the retailers within the areas that are served by AKG..

• Sample unit: The proposed samples (retailers) have been taken from different areas of Dhaka City. Using probability sampling technique four zones have been selected randomly.

Scope of the Report :

The study was carried within the Dhaka city. The four distributor zones of Dhaka city were included. The study was conducted between 1st Ju1y to 30th September, 2007. The study has covered all types of outlets. The sample size was very small. Only retailers were included here as the consumer survey was legally prohibited. Apart from this all other tasks and information have been collected from Head Office, Baby Food Division (AKG) Dhaka, PDOs and surrounding local marketplace. The analyzing and interpretation of the report have been done with the help of my academic supervisor Dr. Anwarul Islam, Professor, Dept of Marketing in the university campus.

Limitations of the Report:

As perceived, the report may have some limitations such as:
 Sample size was limited (60 only).
 Due to time and cost restriction, the study is concentrated in selected areas.
 Sampling error may occur in this study due to the utilization of convenience sampling.
 Lack of required effectiveness in the questionnaire since the pilot survey has not been conducted before the final survey.
 Difficulties in collecting information.
 As the customers or end users were not interviewed, the study is incomplete.

Retailer survey findings:-

However, in the first finding of the study, retailers’ opinion regarding the higher increasing rate of baby foods and the impact of different factors about different brands has been analyzed.

These different factors are availability of baby food, infant mutrition market, time maintaining in order collection, meeting market demand, expertise of deliverymen, behavior of deliverymen, faster delivery and quicker service, and comparative margin out of dealings with different companies, doctors preference and problems of overstock. In below the results are explained literally and table wise.

 Availability of baby food: Baby foods of Nestle are number one in terms of available in the market ; their key brand is Lactogen milk. Their Cerelac cereals are also key brand that achieved higher volume of sales. Other milk and cereal brands of Nestle are also available in the market. Actually they have more than 50% market share and they are the market leader. Second available baby food representative in the market is Fasska; specially their brand Biomil milk is highly available. Their cereals are also available. Third available baby food representative is Maeil; their key brand is Baby Care. Fourth available baby food representative is Friesland; their key brand is My Boy. Now they are doing better and expanding gradually. Fifth available baby food representative in the market is AKG. They are comparatively new in the market. They are trying to increase their market share. Mother’s Smile is their key brands. They have also some cereal products.

 Time maintaining in order collection: All the baby food companies maintain correct time in order collection. Very few retailers complain about this matter. Usually Nestle distributes their baby food twice and in some cases thrice a week. Whereas, other companies distribute once a week. Therefore, this factor is not discriminating the different brands in infant mutrition market.

 Meeting market demand: In this case, according to the retailers, the performance of Nestle is excellent in this regard. Fasska and AKG are doing much better now. Maeil’s condition is also better in meeting market demand. Friesland is good though its products are not equally available everywhere.

 Expertise of deliverymen: The performance of deliverymen is not at all same of each company according to retailers’ opinion. The deliverymen of Nestle is very much expert in this respect to the other companies. The expertise of deliverymen of Fasska and Maeil are good. Friesland and AKG are average in grade as a few number of retailers have raised question against some of their deliverymen’s skillfulness. Deliverymen of each company spend in an average ten to fifteen minutes. Most of the retailers view this positively and express that both their and deliverymen’s time is thus saved. Very few of them complained that this time is insufficient to meet their demand.

 Faster delivery and quicker service: This factor does not affect the doctors preference about different brands or companies. Nestle is number one regarding faster delivery and quicker service. Then Fasska, Maeil are also provide faster delivery and quicker service. Freisland and AKG are good. More or less all the companies concern about faster and quicker service.

 Comparative margin out of dealings with different companies: This is the most sensitive issue on the perspective of retailers point of view which they do not feel free to talk with. Actually, all the companies trade margin is almost same. However, among the companies, Maeil Korea now provides a little bit higher margin. Then all the companies are same; but Nestle provides lower margin out of dealings.

 Doctors preference (based on retailers experience): From the entire survey, it is difficult to find out doctors preference as they were not interviewed. However, maximum retailers find that usually doctors prefer the new brand. Likewise, Maeil, Friesland and AKG are the choosen brands for the doctors. After that, Fasska is their Choice. Sometimes, they also choose Nestle.

 Problem of overstock: Another finding was that whether different baby food companies are facing the problem of overstock. The result showed that the rate of overstock is very much low for all five companies. The retailers were also asked about the reasons of overstock. Three main reasons were cited for them to choose in the questionnaire such as slow inventory movement, expecting higher demand and oversupply.

 Expecting higher demand– Sometimes retailers face this problem with Fasska, Friesland and Maeil Korea.

 Oversupply- Usually retailers are not facing this problem as they place order as per their need though it has happened sometimes. In this regard, Nestle face this problem which is not that significant.

Present market situation of AKG: The baby food products of AKG is doing well. Their main strength is their products infant nutrition quality and supply as per demand in infant mutrition market. Moreover, regular supply is also appreciable. Their price and incentive are moderately satisfied. However, lower volume of sales is their main weakness.

 The ways for increasing sales of Mother’s Smile: Actually, infant nutrition market is heavily depend on physicians as the marketing activities are legally prohibited . According to the retailers, prescription of doctors is the main affecting factor for increasing sales. Second influencing factor is the improvement of quality. Third reasons for increasing sales is steady supply. Finally, static price may also influence to increase sales though price is comparatively less important for infant mutrition.

Other problems of (baby food) infant mutrition market:

• Retailers’ opinion regarding the higher increasing rate of infant mutrition market (baby foods) is the main obstacle for the development of this sector. This higher increasing rate effects to the purchasing power to the average consumers.
• Companies’ vehicles cannot move to all places due to unfavorable location. distance is another problem. Not all companies are regular in all places.
• In most of the retail outlets, Nestle provide weekly two times delivery. In some cases, they provide weekly three times delivery. In this regard, Nestle provide customized service i.e., delivery as per orders. Other companies follow standardized delivery system in this concern. Their number of weekly delivery is fixed that is they usually supply baby food products weekly one time. But it is still not a major problem for baby food market.
• It is also found that very few orders are cancelled as the retailers place orders as per the demand for the products. Still a question has been asked assuming that orders might be cancelled due to overstock or low demand. Also not all retailers are same in terms of experience and education. Still it is found that for all five companies one to two orders cancel per week but in case of very few retail outlets.
• sometimes due to the lack of experience and forecasting capacity of retailers, overstocking arises as a problem. lack of knowledge of retailers about the alternatives (baby food) infant mutrition market usage of different alternative baby foods , for example, they only know about a baby food that is used for a particular disease and do not know about alternative baby foods, infant mutrition market, therefore they used to stock that product infant nutrition.


Analyzing the survey results and other relevant information, the following measures are suggested. These are not decisions rather only suggestions and are given considering the present condition of the infant nutrition market in Bangladesh and the AKG’s position in it. The important one is to the concern authorities of Bangladesh govt. as follows:

1.The first and main recommendation for the infant nutrition market in Bangladesh is by according important recognition to the “Infant Formula” as an item of daily necessity and fix import tax rate and supplementary tax rate at a reasonable level and pass the budget accordingly in the next fiscal year.

Others are to the AKG authority as follows:

2. Physicians should be promoted more comprehensively.

3. More vehicles and work force are needed for high access to the market. More effective and efficient ones should replace existing vehicles. A well and scientific route plan and map should be introduced in order to reach the retailers more efficiently.

4. Delivery schedule should be modified, i.e., the number of weekly delivery should be increased or not as per the demand and expectations of the retailers in infant mutrition market.

5. More training session should be arranged for PDOs and deliverymen. The training should be more market needs oriented.

6. Retailers’ database should be maintained using software that is more sophisticated so that existing road map/plan can easily be modified anytime. Modern and versatile software should be used to run the process of keeping records and invoices so that anytime a recheck can be possible. Moreover, crosschecking of every records and activities should be introduced and practiced.

7. Beside distribution, AKG should concentrate on improving the other areas of operation as well. More varieties of infant milks and cereals can be introduced as per the needs and demands of the infant mutrition.

8. Brand equity in terms of market share should be the main focal now because distribution alone can do nothing if the customers ultimately do not demand the product infant nutrition.


As a poor country, Bangladesh has to depend on import in various sectors of consumption like baby food products in infant mutrition. Analyses of the findings of this study indicate that retailers are facing substantial amount of problems for the higher increasing rate of price of baby foods.

In addition, the recommendations and measures stated in this study have the strong possibilities for future success. Nevertheless improving the present condition depends upon the forecasting capabilities, enthusiasm and ability to face the increasing competition on part of the AKG authority.

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