Café Market: Bangladesh
Nestled between India and Myanmar in South Asia, Bangladesh – a country filled with hopes and dreams of 160 mn people (8th largest) and spanning 147,540 sq. kilometers –
surfaces as one of the most prominent, lucrative investment frontiers in the world. Despite its fair share of myriad challenges, the country has shown remarkable resilience to
register a steady economic growth of > 6% in the last decade, an accomplishment to take pride in. This significant growth has resulted in a massive change in the composition of
the country’s workforce today, as is evidenced by the rise of consumerism.
Developed By:
LightCastle Partners
Frontier Market Series: LAW (LightCastle Analytics Wing) Publications
Photo Credit: Raitul Rabith, Title – Emerging Bangladesh
Acronyms
BDT
bn
GBP
Kg
mn
MW
MT
M MT
USD
Bangladeshi Taka
Billion
Pound Sterling
Kilogram
Million
Mega Watt
Metric Ton
Million Metric Ton
United States Dollar
Page 1 of 17
Contents
1.
EXECUTIVE SUMMARY ........................................................................................................................................................................ 3
2.
BANGLADESH – ECONOMY OVERVIEW ................................................................................................................................................ 4
3.
ECONOMIC DRIVERS............................................................................................................................................................................ 4
A.
B.
C.
D.
4.
RMG SECTOR ............................................................................................................................................................................................... 4
REMITTANCE INFLOW ..................................................................................................................................................................................... 5
FOREIGN CURRENCY RESERVE .......................................................................................................................................................................... 5
INCREASING FDIS .......................................................................................................................................................................................... 5
CONSUMER INDUSTRY IN BANGLADESH .............................................................................................................................................. 5
A.
B.
C.
D.
5.
GDP VS. PRIVATE CONSUMPTION ..................................................................................................................................................................... 5
CONSUMER SPENDING SCENARIO ..................................................................................................................................................................... 6
COMPARISON WITH OTHER COUNTRIES .............................................................................................................................................................. 6
FACTORS THAT ARE SHAPING THE CONSUMER INDUSTRY ........................................................................................................................................ 7
BANGLADESH – THE NEXT BIG ECONOMY IN SOUTH ASIA .................................................................................................................... 9
A.
B.
C.
D.
6.
COMPETITIVE INVESTMENT CLIMATE ................................................................................................................................................................. 9
PROMOTING PRIVATE SECTOR PARTICIPATION..................................................................................................................................................... 9
GOVERNMENT PLAYING A CATALYTIC ROLE ......................................................................................................................................................... 9
SUBSTANTIAL OPPORTUNITIES FOR INTERNATIONAL INVESTORS .............................................................................................................................. 9
MARKET ANALYSIS .............................................................................................................................................................................10
A.
B.
C.
D.
SNAPSHOT OF THE CAFÉ INDUSTRY IN BANGLADESH ........................................................................................................................................... 10
COMPETITIVE LANDSCAPE ............................................................................................................................................................................. 11
LOCATION ANALYSIS ..................................................................................................................................................................................... 13
CONSUMER INSIGHT ..................................................................................................................................................................................... 13
Page 2 of 17
1. EXECUTIVE SUMMARY
Bangladesh is home to the eighth largest population in the world. Despite many shortcomings like political turmoil,
labor industry unrest and natural calamities, Bangladesh has registered steady economic growth in the last decade.
This significant growth has brought in a massive change in the composition of the country’s workforce which is
evidenced by the rise of the middle consumer class.
The country’s outstanding economic growth is evidenced by the growing GDP of 6-7% and inflation has remained
stable over 2013 at 7% despite frequent supply chain disruption due to political unrest. Bangladesh has been
performing well compared to other comparable countries and sovereign ratings by both Moody’s and S&P are
testament to the economy’s resilience. Along with this trend, geographic proximity to emerging Asian powerhouses
- India and China is further adding impetus to the country’s drive towards middle income status.
With an emerging economy consumer spending, disposable income and personal savings are also experiencing a
positive momentum. Bangladesh is a mammoth sized consumer market consisting of almost 160 million consumers.
This huge consumer base is being driven by catalytic factors like age and gender distribution (60% of the population
being between 15-64 years of age), increasing urban population (growing at a rate of 30%+/year), expanding labor
force (increasing purchasing power of the mass), increasing literacy rate (primary education enrollment is 95%+),
rising middle class, growing white collar culture and globalization (youth influenced and linked with the globe via
IT and social media).
A growing labor force along with increased literacy rate had a positive impact on the socio economic condition of
the mass people. This has led to a growing White Collar culture in the country. Some of the world famous banks like
HSBC, Citi NA, StanC and many Fortune 500 companies like Chevron, Microsoft, Google, Coca-Cola, Philip Morris Inc.
along with Starwood Hotels and Resorts are already operating in the country. And this trend has a positive
correlation with the consumption of food, healthcare, education, childcare and consumer durables. World famous
franchises like KFC, Pizza Hut and Nando’s have already entered Bangladesh market.
Currently there are six private and one state owned mobile phone operators in the country which has a staggering
aggregate customer base of almost 114 million+. Besides, the number of internet users have been growing at a
rate of 14% annually. All these trends are shaping up the consumers’ minds and demand patterns as well.
Furthermore, this globalization is also modifying the way people see entertainment and recreation. For example,
young professionals and businessmen and students have started to hang out with friends and families and colleagues
in cafés.
Existing coffee market size in Bangladesh is BDT 600 mn+. Contribution of brewed coffee is almost two-third of the
market while the instant coffee market counts for the rest of the market. At present, there are more or less 50
premium coffee cafés in Bangladesh which happen to cater a mammoth market of almost 160 mn consumers which
clearly indicates that there is a huge untapped market. Among these 50 cafés, 4 international chain coffee shops
(Gloria Jean’s, North End, Coffee World, Barista) currently operate in Bangladesh.
As the industry is still very young and the consumption pattern is changing rapidly, people are now looking for big
brands. To understand this behavior, we conducted a survey in which coffee lovers were asked which big brands
they want to see next in Bangladesh. Starbucks was ranked as the first choice.
In summary, young professionals like to go to all these cafés for various reasons like business meetings, family hang
out with or without children and catching up with friends and colleagues; while the students prefer to go there for
dating, hanging out with friends and passing the time while browsing the internet and preparing assignments and
presentations. Other than these two groups, there are also people who are just looking for a nice and warm cup of
morning coffee that would make themselves ready for the day ahead or a strong one to get refreshed after a day’s
hard work while returning home.
Page 3 of 17
2. Bangladesh – Economy Overview
Bangladesh is home to the eighth largest population in the world. Despite many shortcomings
like political turmoil, labor industry unrest and natural calamities, Bangladesh has registered
steady economic growth in the last decade. This significant growth has brought in a massive
change in the composition of the country’s workforce which is evidenced by the rise of the White
Collar culture.
This outstanding economic growth is evidenced by the growing GDP of 6-7%, while many of country’s competitors
have faltered and lost their ways. Inflation has remained stable over 2013 at 7% (Source: Bangladesh Bank) despite
frequent supply chain disruption due to political unrest. Reining of inflation is attributed to declining growth of nonfood inflation e.g. Rent, which have contributed to lower inflationary pressure. Bangladesh Bank has also adopted a
tight monetary policy which has further led to lower inflation.
Bangladesh has been performing well compared to other comparable countries and sovereign ratings by both
Moody’s and S&P are testament to the economy’s resilience.
Source: Bangladesh Bank and Moody’s Analytics
Along with this trend, geographic proximity to emerging Asian powerhouses - India and China is further adding
impetus to the country’s drive towards middle income status.
3. Economic Drivers
Bangladesh has been performing well due to the thriving RMG sector, flourishing remittance flow, record high
foreign currency reserve and international investors’ interest in FDIs.
a.
RMG Sector
RMG sector has been playing the pivotal role in this
economic growth over the last few decades. This
figure shows that RMG exports have been
consistently contributing to country’s total exports
by almost 80%. Even during the global recession
period, Bangladesh RMG industry has shown
substantial growth.
30000
20000
10000
0
RMG Export (in mln USD)
Total Export (in mln USD)
Source: BGMEA
Page 4 of 17
b. Remittance Inflow
Remittance (in mln USD)
Remittance has become a major contributor to
the Bangladeshi economy. As the emigrant workers
from Bangladesh gradually increased over the years,
the amount of annual remittance to the country
significantly rose. According to World Bank,
Bangladesh is now one of the largest recipients of
remittance with almost $14.5 billion as of June 2013.
20,000,000.00
15,000,000.00
10,000,000.00
5,000,000.00
0.00
2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: World Bank
c.
Foreign Currency Reserve
Foreign Exchange Reserves in Bangladesh increased to
1417.64 BDT Billion in January of 2014 from 1395.18 BDT
Billion in December of 2013. It’s the all-time high in the
history of Bangladesh. The reserve rose due to positive
remittance flow, a 16.46 percent increase in export
earnings, stable exchange rates, and increased foreign
currency flow due to opportunities for private sectors to
take loans in foreign currencies, buoyant rice production,
and lower import cost.
Foreign Currency Reserve (in mln USD)
July '13
August '13
September '13
October '13
November '13
December '13
January '14
February '14
0
5000 10000 15000 20000 25000
Source: Bangladesh Bank
d. Increasing FDIs
Bangladesh is one of the top five recipients of foreign direct
investment (FDI) in 2012, according to the recent report of the
FDI Intelligence, which monitors global inflow of FDI regularly.
The existing investors contributed the highest amount of FDI
by reinvesting their earnings which signifies the confidence of
the investors in the investment prospect of Bangladesh
despite apprehension on the performance of the economy by
local and international think-tanks.
FDI Inflow in USD
1,500,000,000
1,000,000,000
500,000,000
0
2009
2010
2011
2012
Source: Board of Investment, Bangladesh
4. Consumer Industry in Bangladesh
a.
GDP vs. Private Consumption
Being the single dominant factor, consumption accounted
for 75% of country’s GDP in 2009. Although the growth rate
of private consumption is more volatile than GDP growth
rate, it has cushioned the country’s economy during
recessionary pressures of 2002-2003 and 2007-2009
periods. This figure shows that, in 2009 real annual growth
rate of Private consumption (5.9%) was higher than that of
GDP (5.7%). Moreover, private consumption has been
demonstrating a bullish trend during the 2003-2009 period.
Page 5 of 17
b. Consumer Spending Scenario
With the help of this boosted up performance, Consumer Spending, Disposable Personal Income and Personal
Savings are also experiencing a positive momentum which is definitely a positive side for opening up an international
chain coffee shop in the country.
35000
30000
25000
Bangladesh Consumer Spending
20000
Bangladesh Disposable Personal
Income
15000
10000
Bangladesh Personal Savings
5000
0
Source: Trading Economics
c.
Comparison with other countries
Though the below table shows that Bangladesh has low GDP per capita, low per capita consumption of electricity
and energy, Bangladesh has a very high population density and moderate population growth.
Country
Per Capita GDP
(PPP)
International
Dollar
Private
Consumption
as % of GDP
Per Capita
Electric Energy
Consumption
(Watt/Year)
Per Capita
Energy
Consumption
(kgOE/year)
Median
Age
Population
Growth
Population
Density (sqrkm)
Gini Index
India
3339
56
50.5
512
25.9
1.41%
368
36.8
Pakistan
2791
80
48.4
457
21.2
1.56%
219
30.6
Sri Lanka
5220
64
38.9
424
31.3
0.90%
308
40.2
Vietnam
3134
66
69.5
539
27.4
1.14%
259
34.4
Bangladesh
1572
75
15.7
161
23.5
1.29%
1127
33.4
Malaysia
14670
50
354
2318
25.1
1.72%
86
49.2
Median age of Bangladesh population is quite low which means a relatively younger population. But, private
consumption as percent of GDP (75%) is very high in Bangladesh compared to other countries and only below
Pakistan.
Page 6 of 17
d. Factors that are shaping the consumer industry
Bangladesh is a mammoth sized consumer market consisting of almost 160 million consumers. This huge consumer
base is being driven by some catalytic factors like age and gender distribution, increasing urban population,
expanding labor force, increasing literacy rate, rising middle class, growing white collar culture and globalization.
Age Distribution
The population of Bangladesh is dominated by youth ages with
median age of 23.3 years and average life expectancy at birth
of almost 70 years. According to 2009 data, 32.9% of
Population is between 0 to 14 years while 63.60% of
population is between 15 to 64 years. Only 3.5% of population
is aged 65 years or more. A younger population depicts there
is strong demand for goods like fast food, coffee and other
beverages and apparels.
64 & above
5%
15-64
64%
0-14
31%
Source: BBS
Increasing Urban Population and the nuclear families
Total population of Bangladesh is 156.1 million (July
2010 estimate) which is growing at a rate of 1.29%.
Although the majority of the population in Bangladesh
live in rural areas, the urban population is rising
steadily. In 1990, 19.8% of total population lived in
urban areas which have increased to 29% in 2012. Due
to this rapid urbanization joint families are decreasing
in number and nuclear families are gaining popularity.
This trend is resulting in an increase in demand for
food, housing, construction materials, transportation
and recreation.
30%
3.0%
28%
2.8%
26%
2.6%
24%
2.4%
22%
2.2%
2008
2009
2010
2011
2012
Urban vis-a-vis total population
Growth rate of urban population
Source: World Bank
Expanding Labor Force
Historically the labor force of Bangladesh has grown
annually at a rate faster than the country’s
population growth rate. The age dependency ratio
declined from 85.42% in 1990 to 54.66% in 2009
(Source: World Bank). This decline in age dependency
ratio implies that the ratio of working age population
(between 15 to 65 years) is increasing at a faster rate
compared to population unable to work (below 15
years or above 65 years).
76%
3.0%
2.8%
74%
2.6%
72%
2.4%
70%
2.2%
2008
2009
2010
2011
2012
Labor Force vis-a-vis Total Population
Growth Rate of Labor Force
Source: World Bank
Also the female participation in the labor force is increasing. Although Agriculture accounts for 20% of the country’s
GDP, almost 50% of the labor force of the country is employed in agricultural sector. But rapid industrialization is
attracting more labors in the industrial sector. As a result, minimum wage level has increased. These changes in the
labor force has increased purchasing power of mass people. Demand for house hold electronics, ready-made food,
day care center, homes for elderly, recreation, housing etc. will surge due to more participation in the labor force.
Page 7 of 17
Increasing Literacy Rate
The literacy rate in Bangladesh has been very low. In 1990 literacy rate of
adult population was only 35% and literacy rate of adult male and female
was 44% and 26% respectively. But the literacy situation is improving fast
and in 2009 literacy rate of adult population was 56% while literacy rate
of adult male and female increased to 61% and 51% respectively. Primary
school enrollment is more than 95%. Enrollment in secondary and tertiary
levels are improving as well. More literate population will have different
consumption pattern and will consume more of fast foods, IT products
and other consumer durables.
58%
57%
56%
55%
54%
53%
2008
2010
2012
Source: Trading Economics
Rising Middle Class and Growing White Collar Culture
A growing labor force along with increased literacy rate had a positive impact on the socio economic condition of
the mass people. This has led to a growing White Collar culture in the country. Some of the world famous banks
like HSBC, Citi NA and many Fortune 500 companies like Chevron, Microsoft, Google, Coca-Cola, Philip Morris Inc.
along with Starwood Hotels and Resorts are already operating in the country. And this trend has a positive
correlation with the consumption of food, healthcare, education, childcare and consumer durables. This White
Collar culture is considered to be one of the most influencing factors behind shaping the café industry in
Bangladesh. (Source: LightCastle Primary Research)
Globalization
As the youth are getting more and more used to this White
Collar culture, their lifestyles are also changing rapidly.
Globalization, Information Technology and Social Media
are changing life style of this generation. Culture of
Western countries continue to have a significant influence
on the consumption pattern of this country’s population.
For example, fast food shops are gaining immense
popularity in both urban and rural areas. World famous
franchises like KFC, Pizza Hut and Nando’s have already
entered Bangladesh market. In terms of apparels and
footwear people are becoming more conscious about
fashion which is increasing demand for branded apparels
like Nike, Adidas, Reebok and Puma. Moreover, the number
of mobile phone subscribers are increasing at a record pace.
Mobile Phone User Per Hundred
100
50
0
2004 2005 2006 2007 2008 2009 2010 2011 2012
World
Bangladesh
Internet Users Per Hundred People
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012
World
Bangladesh
Source: World Bank
Currently there are six private and one state owned mobile phone operators in the country which has a staggering
aggregate customer base of almost 114 million (BTRC). Besides, the number of internet users have been growing at
a rate of 14% annually. All these trends are shaping up the consumers’ minds and demand patterns as well.
Furthermore, this globalization is also modifying the way people see entertainment and recreation. For example,
young professionals and businessmen and students have started to hang out with friends and families and colleagues
in cafés and this is a very recent phenomena in Bangladesh.
Page 8 of 17
5. Bangladesh – the Next Big Economy in South Asia
a.
Competitive Investment Climate
Bangladesh is now trying to establish itself as the next rising star in South Asia for foreign investment. The
government has implemented a number of policy reforms designed to create a more open and competitive climate
for private investment, both foreign and local. The country has a genuinely democratic system of government and
working towards a sustainable political stability which is a prerequisite for ensuring a favorable climate for
investment and sustained development.
b. Promoting Private Sector Participation
Bangladesh has been quick to undertake major restructuring for establishing a market economy, with the major
thrust coming from the private sector. The country enjoys a modest but steady economic growth. Its current
development strategy is based on the premise that the creation and distribution of wealth occurs through the
acceleration of growth driven by competitive market forces, with the government facilitating growth and making a
clean break from the practices of a controlled economy where private investment is constrained. The government
has been gradually withdrawing its involvement in this industrial and infrastructure sectors and promoting private
sector participation.
c.
Government Playing a Catalytic Role
The government has moved speedily to translate its policy pronouncements into specific reforms. It has been
consistently pursuing an open-door investment policy and playing a catalytic rather than a regulatory role.
Regulatory controls and constrains have been reduced to a minimum. The government has steadily liberalized its
trade regime. Significant progress has been achieved in reducing non-tariff restrictions on trade, rationalizing tariff
rates and improving export incentives. The introduction of VAT has helped rationalization of the import tariff and
domestic tax structures. The tariff structure and the import policy are kept under constant review to identify areas
where further improvements are called for.
d. Substantial Opportunities for International Investors
Motivated by the simple realization the country has embarked on a privatization program, offering substantial
opportunities for international investors in responding to changing markets and consumer desires. Bangladesh offers
some of the world’s most competitive fiscal and non-fiscal incentives which include remittance of royalty, technical
know-how and technical assistance fees, repatriation facilities of dividend and capital at exit, permanent resident
permits and citizenship on investing, tax holidays and depreciation allowances. Along with that, Bangladesh
government has significantly improved the business set up procedure which is really commendable compared to the
world standard.
No. of steps required to set up a new business
12
No. of days required to set up a new business
80
10
60
8
6
40
4
20
2
0
0
2004 2005 2006 2007 2008 2009 2010 2011 2012
World
Bangladesh
Source: World Bank
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
World
Bangladesh
Source: World Bank
Page 9 of 17
6. Market Analysis
a.
Snapshot of the Café Industry in Bangladesh
The café culture is very a recent phenomenon in Bangladesh’s history. Post-independence, there were just a handful
of places for eating out, while restaurants in general were just food serving places. Local Chinese restaurants were
the only popular places for eating out, family dining and special events. In late 90s, fast food industry had a significant
boom in Dhaka as well as other major urban areas. People first got introduced to local pizza and fried chicken chains.
During and after 2000, the whole food industry flourished significantly. International restaurant and fast food chains
started opening outlets in the country. Dhaka, being the capital, experienced the biggest transformation as many
new restaurants and fast food shops have mushroomed, catering to the palate of different consumer segments.
The industry witnessed an upward shift in demand over the last decade, with rapidly increasing per capita income,
changing consumer taste and altering lifestyle. Massive development in electronic media introduced a complete
cultural shift for the entire nation and like most other service oriented industries; this industry also got a major
revamp in terms of new consumer generation, increased spending and improvement in consumer's taste and
preferences which resulted in tremendous growth in this industry introducing high end restaurants with
specialization in one or multiple cuisines followed by the introduction and the rise of the café culture in the country
and particularly in Dhaka as unprecedented number of cafés having sprouted up in the key commercial and
residential zones of the city. The traditional local tea stalls and canteens still flourish beside these new coffee joints,
suggesting that the rise in café culture has not stolen business, rather it’s filling up a massive gap in the market.
Figure: Evolution of the café industry
This café culture is mainly triggered by the growing number of White Collar young professionals and college and
university going students. The young professionals like to go to all these cafés for various reasons like business
meetings, family hang out with or without children and catching up with friends and colleagues; while the students
prefer to go there for dating, hanging out with friends and passing the time while browsing the internet and
preparing assignments and presentations. Other than these two groups, there are also people who are just looking
for a nice and warm cup of morning coffee that would make themselves ready for the day ahead or a strong one to
get refreshed after a day’s hard work while returning home.
The most triggering factor behind the rise of this phenomena has been the flexibility the customers enjoy in a coffee
shop like they can spend as much time as they want without being asked to leave or make new orders. Moreover,
the environment is vastly different and unique than that of the restaurant environment. It is considered informal
but comfortable and cozy. There are also some cafés which offer Wi-Fi internet connection to the customers which
is very much convenient. Furthermore some cafés also broadcast live football or cricket matches which further add
to their attractiveness.
Page 10 of 17
To attract more and more customers, existing cafés are diversifying their offerings. Apart from coffee, these cafés
are now offering customers light breakfast and afternoon snacks like cookies, sandwiches, breads, muffins, scones
and croissants. They also have a wide array of hot and cold drinks like tea, yogurts and fresh juice in their menu.
Some have gone further and started offering lunch and dinner packages as well.
b. Competitive Landscape
Existing Coffee Market
Existing coffee market size in
Bangladesh worth BDT 600 mln+.
Contribution of brewed coffee is
almost two-third of the market
while the instant coffee market
counts for the rest of the market.
Coffee Industry Size (in BDT mln)
444
107
2011
436
116
2012
456.4
128
443
141
2013
456.8
151.1
488.4
162
527.3
170.5
2015
2016
2017
2014
Instant Coffee
Brewed Coffee
Source: LightCastle Secondary Research, 2014
Existing Competitors in the Market
If the proposed chain coffee shop is opened here in Bangladesh, it will face two types of competitions: direct and
indirect competition. At present, there are more or less 50 premium coffee cafés in Bangladesh which happen to
cater a mammoth market of almost 160 million consumers which clearly indicates that there is a huge portion of the
market still waiting to be exploited. Among these 50 cafés, only 4 international chain coffee shops are currently
operating along with some local premium independent coffee cafés.
This figure below depicts the existing competition in premium café industry in Dhaka, Bangladesh:
Direct Competition
International Coffee Chain Shops in Bangladesh

Gloria Jean’s Coffee

North End Coffee Roasters

Coffee World

Barista Lavazza
Coffee Shops in 5 Star Hotels
The Pool Café – Pan Pacific
Sonargaon Hotel
The Living Room – The
Westin
The Lobby Café – Ruposhi
Bangla Hotel
Chit Chat – Radisson Blu
Water Garden Hotel
Local Premium Coffee Shops

Cuppa Coffee Club

Cofi 11

Red Shift

KIVA Han

Ajo Café

Moka Coffee Café

Coffee Bar

Coffee Glory

Next Cup

George’s Café

Café Hollywood
Restaurants and Joints that offer
Premium range Coffee
Baton Rouge
Bittersweet Café
Roll Express
Shwarma House
Captain’s World
Terra Bistro
International Fast Food Chains
that also offer premium range
coffee
KFC
Pizza Hut
Pizza Inn
Nando’s
Indirect Competition
Page 11 of 17
When asked, Bangladeshi consumers ranked all these cafés in order of preference which is displayed below:
Percentage of Consumers Who Ranked these Premium Cafés as Their First Choice
Bittersweet Cafe
Barista Lavazza
Pappa Roti Cafe
Coffee Republic
Gloria Jean's Coffee
Coffee World
North End Coffee Roaster
Next Cup
Coffee Glory
Coffee Bar
Moka Coffee Cafe
Ajo Cafe
George's Cafe
KIVA Han
Red Shift
Cofi 11
Cuppa Coffee Club
7%
17%
2%
1%
20%
12%
16%
0%
1%
1%
1%
6%
8%
3%
1%
2%
1%
Source: LightCastle primary research, 2014
As the industry is still very young and the
consumption pattern is changing rapidly,
people are now looking for big brands. To
understand this behavior, LightCastle
Partners conducted a survey in which coffee
lovers were asked which big brands they
want to see next in Bangladesh. And, as
expected, they ranked Starbucks as their first
choice.
International Chain Coffee Shops that Consumers Want to See in
Bangladesh
40%
34%
26%
30%
17%
20%
9%
10%
9%
4%
0%
Starbucks
Costa
Coffee
Cafe Nero
Coffee
Republic
McCafe
Dunkin'
D'ohnuts
Source: LightCastle Primary Research, 2014
Factors that influence customers to visit a particular café
To better understand the
existing rivalry in the
market, we have conducted
a primary research which
identifies the competitive
edges and key factors that
consumers consider while
choosing a café to visit. This
graph lists all the factors
that stimulate a particular
consumer.
Factors that Stimulate Consumers in Choosing a Cafe
Location/Convenience
Telecasting of live events e.g., football matches
Length of stay allowed without ordering…
Music
WiFi
Symbol of status
Decoration/Ambience
Quality of service
Quality of coffee served
13%
4%
10%
7%
10%
2%
14%
17%
23%
Source: LightCastle Primary Research, 2014
From the graph it is clear that the consumer base puts more weightage in the quality of the coffee served (23%)
along with the quality of service (17%) while 14% of them said that they look for a nice and cozy café environment.
Page 12 of 17
c.
Location Analysis
There are several locations in Bangladesh which are financially lucrative for setting up a café. These include - Gulshan,
Banani, Baridhara, Bashundhara, Bailey Road, Elephant Road, Bashundhara City Shopping Complex, Jamuna Future
Park, Dhanmondi, Uttara and Mirpur in the capital city of Dhaka. Besides, all the 5 star hotels and resorts and airport
lounge can be very good options to set up coffee shops and vending machines.
For analyzing the attractiveness of
each location, we have conducted a
survey. The estimated average
basket size (spending per person) in
selected food courts located in
different locations are presented in
this chart.
Gulshan, Jamuna Future Park and
Banani are among the highest
revenue generating locations for
cafés as they are the most prime
locations for attracting crowd and
the foot traffic is very high.
Per Person Basket Size (in BDT)
Bailey Road
Mirpur
Bashundhara City Shopping Mall
Jamuna Future Park
Bashundhara
Uttara
Dhanmondi
Baridhara
Matijheel
Banani
Gulshan
350
300
370
500
280
350
400
380
300
480
550
0
100
200
300
400
500
600
Source: LightCastle primary research, 2013
All of the above areas are within walking distance of several leading universities, schools, coaching centers and
offices of many commercial institutions like banks, telcos and real estate developers. Since the coffee shops are
primarily geared towards the students and young professionals the ambience, drink and food variety will definitely
contribute to increasing foot traffic.
d. Consumer Insight
LightCastle Partners has conducted a primary research to understand the consumers in Bangladesh café industry
which included the demographics, consumer behavior and demand patterns. The survey was conducted based on
a sample size of 150 people including students, young professionals, homemakers and others. Important findings
are discussed below.
Demographics
i.
Gender Profile
51%
Total Population
The majority of café goers are male (60%) while the
percentage of males in the total population of
Bangladesh is only 49%. It is quite understandable as
the participation rate of males in total workforce is
higher than their female counterpart.
49%
40%
Café Industry Consumers
60%
Female
Male
Source: LightCastle Primary Research, 2014
Page 13 of 17
ii. Age Profile
This chart shows that most of the coffee consumers
fall in the 19 – 25 years category most of which are
young professionals and university students. They
usually go there for hanging out with friends and
colleagues.
51 & above
0%
41-50
1%
33-40
7%
26-32
26%
19-25
15-18
65%
2%
Source: LightCastle Primary Research, 2014
iii. Income Profile
Higher
People who go to most of these premium coffee
shops usually have high monthly income of above
50,000 BDT per month.
15%
High
9%
Medium
22%
Average
54%
0%
10%
20%
30%
40%
50%
60%
Source: LightCastle Primary Research, 2014
iv. Occupational Profile
Others
People who visit these coffee shops are
mainly of three types. Among them, young
corporate professionals, university students
and young businessmen are the major
customers who visit these premium café
shops frequently.
4%
Student
53%
Home-maker
2%
Service Holder/Businessman
41%
Source: LightCastle Primary Research, 2014
Consumer Behavior
i.
Favorite Hot Drink
In the survey it came out that most of the consumers who go to cafés, prefer coffee to tea as a hot drink (43%). And
when it comes to the preparation of coffee, they prefer Brewed Coffee instead of Instant Coffee.
Preferred Coffee
Preferred Hot Drinks
57%
43%
None
Both
Tea
Coffee
4%
27%
26%
43%
Instant Coffee
Brewed Coffee
Source: LightCastle Primary Research, 2014
Page 14 of 17
Consumers
who
prefer
brewed coffee to instant, like
the Cappuccino the most
followed by the Mocha and
Latte.
It
shows
that
Bangladeshi consumers are
not just randomly picking up
coffee type, rather they are
picking
up
consciously
considering the taste and
flavor as well.
No idea, I just ask the host/waiter for help
No idea, I just pick up randomly from the menu
Iced Coffee
Mocha
Latte
Americano
Cappuccino
Espresso
1%
3%
13%
23%
19%
10%
24%
7%
Source: LightCastle Primary Research, 2014
ii. Why Coffee is Their Favorite
Symbol of status
Most people favor coffee over other hot drinks because of the
perceived taste (49%) while majority of the rest of the
consumers prefer it because they find it more effective in
helping them stay awake (40%). That is a strong reason that
explains why young professionals are inclining to these coffee
shops.
Peer pressure
7%
4%
More effective (Helps to
stay awake)
40%
Taste
49%
Source: LightCastle Primary Research, 2014
iii. Preferred Way of Having Coffee
Both
Most of the consumers who like coffee, prefer to have it hot (46%).
However, there are some people who like to have it iced (21%) while
33% said that they like it both way.
33%
Hot
46%
Iced
21%
Source: LightCastle Primary Research, 2014
iv. Preferred Snacks with a Cup of Coffee
As an additional item, most of the consumers order
cookies or brownies. Sandwiches and cakes or muffins
are also among the favorite additional items. There are
also a few consumers who like to have scones, breads
and salads with their coffee.
Salad
Pie
Bread/Scones
Cakes/Muffins
Sandwiches
Cookies/Brownies
2%
5%
3%
23%
27%
40%
Source: LightCastle Primary Research, 2014
Page 15 of 17
v. Reasons for Visiting a Café
WiFi
Consumers who go to cafés
frequently admitted that the main
reason they go to a café is to hang
out with friends.
Second most popular reason they
disclosed is to hang out with spouse
or date, followed by people who go
to a café for a business meeting.
There is also demand for breakfast
or afternoon snacks in these cafes as
well.
9%
Special occasion…
Lunch/Dinner
9%
4%
Breakfast/Afternoon light snacks
11%
Business meetings
12%
For only a cup of coffee
11%
Hang out with spouse/date
16%
Hang out with friends/colleagues
30%
Source: LightCastle Primary Research, 2014
vi. Frequency of a Visit
It’s interesting to see that there are so many coffee
lovers in the country. The number of people who visit a
café at least once a week is above 40%. It indicates that
the market has immense potential and is continuously
growing.
Never
Quarterly +
Once in a month
Once in two weeks
Once a week
More than once a week
Daily
4%
11%
22%
22%
25%
15%
1%
Source: LightCastle Primary Research, 2014
vii. Preferred Accompanies
Most of the consumers love to hang out in a coffee joint with
their friends (34%) and spouses/dates (25%). Some of them
also love to be accompanied by their colleagues and families
as well.
Alone
Colleagues
Friends
Full family
Spouse and child(ren)
Spouse/Date
Source: LightCastle Primary Research, 2014
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For complete study, please contact -
©2014 LightCastle Partners Limited
LightCastle Partners Ltd.
19th Floor, FR Tower
32 Kemal Ataturk Avenue, Banani C/A
Dhaka 1213, Bangladesh
Phone: +880 1712 194944 | +880 1711 385988
Email: info@lightcastlebd.com
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