Imported Chemicals in Food and Beverage Sector in Bangladesh

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This report like to emphasis to several chemicals that is highly required in food and beverage sectors.

Executive Summary

Chapter 1:

Background of the Report

Background of the Company

ICI Plc of UK had a pharmaceutical business in Bangladesh. In 1992 the business was divested to management and the name of the Company changed to Advanced Chemical Industries (ACI) Limited. ACI inherited the rich ICI culture of product quality, customer service and social responsibility and continues to nurture.

· ACI is the first company in Bangladesh to obtain certification of ISO 9001 Quality Management System in 1995. ACI is also the first Company in Bangladesh to get certification of ISO 14001 Environmental Management System in 2000. ACI employees are proud of their work culture, business ethics and environmental consciousness.

· ACI values are embodied in its mission and vision statements. ACI quality and environmental concerns are clearly stated through declared policies.

· What was primarily a Pharmaceutical business in 1992 with a turnover of Tk.80 million with stagnant growth, the new management brought about fundamental changes in policies and has in year 2003 grown to over Tk. 2300 million in turnover through diversified business interest including personal care products, food products, animal health, agrochemicals and seeds in addition to gaining a strong position in Pharmaceuticals.

· ACI represents principals like AstraZeneca, Eli Lilly, UCB and Searle in Pharmaceuticals business; Colgate-Palmolive, Heinz & Dabur in Consumer Products sector; Aimco pesticides Ltd., Borreegaard Taicang Chemical Co. Ltd, Isagro Italy, Chimac Agriphar-Belgium, Cheminova Denmark, Hockly Int Ltd, Sundat (S) Pte Ltd, in Agrochemicals; Ranbaxy, Dabur, Wockhardt, Sanofi, Ceva and Invesa in Animal Health sector.

· The trading subsidiary of ACI represents in Bangladesh principals like ICI, Exxon-Mobile, Bayer, Stahl and ICI Uniquema.

1.1 Company Mission

ACI’s mission is to enrich the quality of life of people through responsible application of knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers.

1.2 Company Vision

To realize the mission ACI will:

· Endeavor to attain a position of leadership in each category of its businesses.

· Attain a high level of productivity in all its operations through effective and efficient use of resources, adoption of appropriate technology and alignment with our core competencies.

· Develop its employees by encouraging empowerment and rewarding innovation.

· Promote an environment for learning and personal growth of its employees

· Provide products and services of high and consistent quality, ensuring value for money to its customers.

· Encourage and assist in the qualitative improvement of the services of its suppliers and distributors.

· Establish harmonious relationship with the community and promote greater environmental responsibility within its sphere of influence.

1.3About the study

The BBA Program of department of marketing, the University of Dhaka, comprises of 8 semesters. As a part of my educational sector we have to perform three months internship. A student of BBA I have enough theoretical knowledge, and I want to put all my potentiality in the practical field. Advanced Chemical Industries Limited has given me this opportunity. I commenced my internship in Advanced Chemical Industries Limited from December 03, 2006 to March 03 2007.

During internship program, the internee has to identify and analyze the issue related to the business operation of the organization, and find out solution to that issue. In this context, my organizational supervisor Mr. Azmal Hossain, Executive Director, ACI Trading Limited assigned me to conduct an extensive survey on “Imported Chemicals in Food and Beverage Sector in Bangladesh”.

Through internship study ACI will be able to know annual market size of food and beverage chemicals market, major identified chemicals in this sector, total amount imported, value and price, name of traders, importers and source of supply and Key success factors in this business.

1.3 Objectives of the Study

The arena of chemical is vast. But as a trading company ACI has assigned me to find out the imported chemicals in food and beverage sectors. So, in finding out this problem have some objective:

1. Broad objectives

2. Specific objectives

1. Broad objectives:

Broad objective of this report is to meet the academic requirement and also gain a real knowledge from an organization like ACI Limited.

2. Specific objectives:

In specific objective I have to prepare a sound report that must be reliable and dependable. On the basis of this report ACI can take their future initiatives. As chemicals sector has a vast depth market.

The specific objectives those are discussed to help in explaining the broad objectives are as follows:

· Identify the major imported chemicals.

· Total import of the identified chemicals in Bangladesh.

· Major end user & importers.

· Major traders of those chemicals.

· The annual requirement of identified chemicals in quantity and values.

· Source of supply with approx price indication.

· Competition and others.

1.3 Methodology

From educational background learned different methodology in marketing research process. So, in this study had the opportunity to implicate educational knowledge in practical field. Collected data from many sources. Initially, The used different methodology such as:

· Primary Data

• Survey:

· Over Telephone:

The contacted lots of personnel of different knit dyeing, yarn dyeing and woven dyeing units along with Mr. Monowar Hossain, Asst. Manager, ACI Trading.

• Questionnaire:

To collect information in large scale we have developed a questionnaire which was filled by the various prospect and general people.

· Personal interview:

In order to have some effective data and some raw dependable data performed some personal visit. went several companies in tejgaoun, mirpur & gajipur. To have information about traders I went to Alu bazaar, Babu bazar, Nawabpur Road, Begom Bazaar.

• Observation:

Personal observation:

Long time waiting in Traders outlet and observe the natural flow of market price and others condition.

Secondary Data

In this case collected and gained lots of data from secondary sources. Sometimes have visited different organizations to collect data, magazine, paper and reports. By doing this think have gain altos of knowledge about chemicals.

· Annual report of Bangladesh chemicals Manufactures and Exporters Association 2004-2005.

· Customs Bond Commercial Executive Welfare Association.

· Bangladesh chemical importers and merchant Association

· National Board of Revenue (NBR).

· Bangladesh chemical & perfumery producers Association.

· Bangladesh statistical bureau.

· Export promotion bureau.

· Bangladesh export-import Association

· Printed Materials: This study mostly depended on the printed materials. These printed materials include the newspapers, magazines, journals, directories, annual reports, Bangladesh bank publications, ACI own publication etc.

· Internet: Internet was one of the major secondary sources that used to collect information to do the study. Very much grateful to all the sites that visited during the preparation of the report.

· Newspapers: have collected some information from the various dailies and articles.

· Organizations: have collected information from some organizations such as Bangladesh Chemicals & Perfumery Merchant Association, National Board of Revenue and Bangladesh Statistical Bureau.

· Sampling and data collection: While doing the study take the help of the sampling procedure. followed several procedure of sampling. For example in the depth interview with the experts go for the judgment method. And in conducting the large scale survey followed the probability sampling which included the simple random sampling.

1.4 Scope of the Study

Providing chemicals to the Food & Beverage sector represents a business to business Market. So, the marketing and distribution network is not like other consumer products. The report covers information about the major importers and traders with their annual requirements. I have discovered the key to success factors in this Import business.

The opportunities those have been provided during the period of internship program in ACI limited are as follows:

· The courses that have been done through last one year fulfill the need of getting permission to do internship program. It is a program that can not be done without completing as the academic courses.

· ACI limited has given this opportunity of doing internship with this organization. It has permitted to join the organization from the beginning of the internship program.

1.4 Limitations

There Are Many Limitation for the study, among those studies some major limitations have been mentioned bellow:

· Major Traders and Importers are not wanted to reveal their confidential import figure due to fear of custom intelligence.

· It is not easy to find out annual figure from govt. office like NBR.

· These chemicals have huge market demand and traders are dispersed all over the country. So it is difficult to collect data from all major traders within these time limitation.

· BCPMA fails to collect annual information each year. There is also limitation in availability of secondary information.

· Most of the required information is much related to GDP, so the BCPMA don’t want to disclose this information.

· Finally, political obstacle causes a huge constraint in collecting information in different steps.

Chapter 2:

Chemicals in Food & Beverage Sector

2.1About Chemicals in Food and Beverage Sector

Bangladesh is a wide populated country. Now the population is about 16 corers. So with the increase of population the demand of food and beverage is increasing (16%) at a high rate. So to fulfill this demand company in food and beverage sector are also increasing simultaneously. So as a rate about 5% new food company and beverage industries are introduced with in 3years. That means now in Bangladesh there are over 20,000 confectionaries and 1500 local and foreign beverage companies are available.

• Specialized Chemicals

Most of the company uses some specialized chemicals and some ordinary chemicals. These specialized chemicals mainly their competitive advantages. So they try to collect this chemicals by their own or partner indenters. The specialized chemicals are: Hydro generated vegetable oil, Egg powder, Flavor, Biscuit no: 01, Gum azoic methyl pare sodium (methyl sodium citrate).

• Ordinary chemicals

Other ordinary chemicals that companies use mainly depend on the local chemical market or on some indenters. These ordinary chemicals are available in the market but their demand is increasing at a high rate. This ordinary chemicals are: citric acid, Sodium bi carbonate, Sugariness, benzoic acid, sodium benzoate, mythel pare sodium, Sodium cyclamate (sugar)

In this case the producers want some reliability in chemicals. So always want to deal with a company that can produce the best quality, price, perfect quantity, on time delivery and over all a huge source to continue for long time business. So, in this sense ACI has a bright future to inter in the food & beverage chemicals sectors.

2.1Different Sectors of Chemicals

Like other countries of the world Bangladesh uses chemicals in different sectors. With the increase of the people and their demand different industries exists in different sectors. Now Bangladesh has RMG industry, leather industry, plastic industry, textile industry and food & beverage industry. In every sector chemicals is required.

From a journal, in RMG industry required 38% chemical, leather 19%, plastic 5%, textile 20%, food & beverage 6% and others 12%. So we can understand the use of chemicals is increasing day by day. In food & beverage sector we have to depend on India, China, German and Italy. So, the availability of these chemicals is much essential for the production. As production will increase it will make our GDP constant.

2.1Annual Requirements of Chemicals

Sources:

· Bangladesh Chemicals & Perfumery Merchant Association,

· CNF (Price) Information from “Lucky Chemicals & Perfumery”, March-2006

Chapter 3:

Name of Identified Chemicals

3.1 Name of Major Identified Chemicals

1) Citric acid: Citric acid is the form of vitamin C. Now in Bangladesh it is widely used. In all most all local and foreign food company use this citric acid. It is one of the most usable chemicals in Bangladesh. The use of citric acid was 2000-5500 MT in Bangladesh in the year in 2003, 2800-3200 MT in 2004, and finally 3000-3500 MT in 2005. So we can see the growth rate is about 15%. But this supply is not sufficient. On my market survey I found that food producer mainly depend on local market citric acid and the price also increase with increasing demand.

2.Sodium benzoate: In Bangladesh there are three types on preservatives are used in food and beverage sector. 1. benzoic acid 2. mythel pare sodium 3. sodium benzoate. From this three, benzoic acid and mythel pare sodium are expensive .some few producers use these chemicals. But most of the company use sodium benzoate as it is reasonable and supportive in nature. We can find that the use of Sodium benzoate was about 1200-1500 MT in 2004-05. In local market this chemicals plays a huge role and it has a great demand in market all the year round.

2) Sodium bi carbonate: In food sector sodium bi carbonate is used to make bread, biscuits, cake and different snakes. It is also known as baking powder. It is the mane or core material to produce food items. We can find that the use of Sodium benzoate was about 2000-2500 MT in 2004-05. So, to fulfill increasing demand every year Bangladesh has to import lots of sodium bi carbonate. But now in Bangladesh some institutions are producing sodium bi carbonate but the quality is very low. Some low quality company uses this local chemical. Most of the medium, large and standard company use imported sodium bi carbonate.

3.Carboxyl methyl cellulose (CMC) powder: Cmc powder is widely used in beverage sectors. Most of the users import this product from China and German. It is mainly used to give the beverage softness and clearness. Cmc powder is now widely used for multiple uses. In textile sector it is used about 10000-15000 MT & in the food sector about 800-900 MT for the year 2005.

For the Year 2005

Sources:

· Bangladesh Chemicals & Perfumery Merchant Association

· CNF (Price) Information from “Lucky Chemicals & Perfumery”, March-2006

3.2Name of Other Identified Chemicals

Sources:

· Different traders, indenters and importers.

· Different end users.

· Bangladesh Chemicals & Perfumery Merchant Association,

Chapter 4:

Major Traders of Chemicals

4.1About Traders

In Bangladesh chemical business plays an important role. Here we can see there are a few indenters and importers in the market. Most of the business men and end users mainly depend on the local traders. In this case traders mainly collect their chemicals from the several importers. On performing this survey I have found that every trader mainly carries out their business with several chemicals of several sectors (food, beverage, cosmetics and pharmaceuticals). Here the products are very much homogeneous and price is the same.

From the year report of Bangladesh Chemicals & Perfumery Merchant Association, 2005, there are about 1000-1500 traders in whole Bangladesh. These traders are the main source of different chemicals. Mostly the local end users collect their required chemicals from these traders. Armanian street, Midfort, Babu bazaar, ALu bazaar and Moulovi bazaar are the main market for these local traders. But, there are lots of problem in this chemicals market. These traders have to depend on the supply and price of the importer5s and traders. Also knew from the Year report these traders market also doing business of 2000corer taka. That also plays an important role in our GDP.

So we can see that ACI has a great chance in this market. In this case ACI can provide chemicals to these traders and also to the final users. At the time of doing this survey we got to know that most of the traders a searching to reliable & dependable sources of supply.

4.1 List of Major Traders

Sources:

· Personal visit to different markets.

· Bangladesh Chemicals & Perfumery Merchant Association,

Chapter 5:

Major Indenters or Importers of Chemicals

5.1 About Indenters or Importers

Now a day’s chemical business is guided and shaped by the indenters. In this case they are the main sources of the imported chemicals. As the traders are very much limited and they try to avoid risk to every import depend on these importers and the indenters.

In this case every large end users mainly depend and have their own indenters. So, they mainly collect the chemicals from the indenters on a regular basis. Most indenters contact with the foreign suppliers and place their orders. Padma chemicals, Agies international, Stonewall Limited, Lucky Chemicals Corporation are the main indenters in Bangladesh.

As the size of the indenters is not so huge they have to suffer from different political obstacles and social problems. Taxation, tariff, customs and shipment are the main problems in chemicals industry.

In this case ACI has a great opportunity. Mostly huge food and beverage producers (pran, square) are our client and we have long time business relationship. So as an indenter ACI can take orders and can easily solve the barriers.

5.2 List of Major Indenters or Importers

5.2Other Indenters or Importers

Sources:

· Yellow pages

· Personal visit

· Bangladesh indenters association

Chapter 6:

Major Suppliers of Chemicals

6.1Major Sources of Supply

1. Sodium bi carbonate