The annual market of refrigerators has grown by $131 million in just two years from a $549 million one in 2018, a Dhaka University research reveals.
A rapid rise of a middle-income class, increasing numbers of small families and working women amid countrywide electrification and urbanisation, and the localisation of manufacturing have together helped the Bangladesh refrigerator market grow at a double-digit rate over the past decade.
And now the Marketing Watch Bangladesh (MWB), a research initiative of the Dhaka University marketing department, forecasts that the market will reach $900 million in 2022.
Professor Mizanur Rahman, co-founder of MWB and the chairman of the renowned Marketing School, said, "In the next two-three years Bangladesh is going to be a billion-dollar refrigerator market."
The MWB conducted a market survey over July-August last year. At a press briefing yesterday, it said a majority of customers believe that local companies have already succeeded in providing high quality refrigerators at affordable prices.
And, that was a game changer in the industry.
Before 2010, foreign brands had around 80% share of the refrigerator market with the remaining 20% market being the contribution of aspiring local brands.
As the government came up with supportive policies incentivising local manufacturing and technology transfer, homegrown company Walton Group significantly invested in refrigerator manufacturing. Some other brands such as Jamuna, Vision and Minister followed.
Foreign brands including Singer, LG, Sharp, and Hitachi began to lose market share to the local ones and a number of them finally followed localisation strategy to cope and catch up.
But, it was already late for them as the market share of local and foreign brands simply changed their position in the pie chart.
As of 2020, local brands already occupy around 80% of the home market and the remaining 20% belong to foreign brands, Marketing Watch Bangladesh said citing industry insiders' data.
In fact, the demand for refrigerators began to rise two decades ago but the real takeoff took place in the beginning of last decade as soon as the rural families started to use refrigerators and subdued urban families also opted for one, said Marketing Watch.
Md Nazmul Hossain, co-founder of Marketing Watch Bangladesh and an associate professor of marketing, told The Business Standard localisation significantly brought the unit prices down over the last decade which went well with the booming demand mainly across rural and suburban Bangladesh as people there have seen improvement in income, their families got divided, more women began to work outside homes, and most importantly, all of their homes got electricity connection.
However, the market is not the same everywhere.
Regular refrigerators, which tend to accumulate ice in the deep freezer section, are the most affordable ones and make over 80% of the sales. Its market is growing at an annual rate of around 10%.
No-frost refrigerators, which do not accumulate ice deposit inside, are costlier. In 2019, less than three lakh no-frost refrigerators were sold in the country, while total units sold in the year was 30 lakh.
Keeping pace with the customers' increasing purchasing power and appetite for better products, this segment is growing at a staggering rate of 40% now, according to MWB study.
Chest freezers, which people tend to use as a second refrigerator unit at home, are understandably the most underselling segment. Its sales growth is in the double-digit rate.
The Marketing Watch study suggests customers have already loved the fact that local refrigerator brands are rapidly introducing advanced technologies, including automatic temperature control, energy saving inverter technology, real time temperature display, holiday mode, turbo mode, and supercool mode.
Also the service life offered by some local brands impresses customers, while most customers cited easy purchase, installment facilities, warranty and after sale services as positive points for local brands too, finds the survey.
Some consumers of local refrigerator brands, however, complained of poor cooling, leakage, abnormal sound from the compressor, too much ice deposit, and weakening of the compressor over time.
Nonetheless, technology does not seem a concern anymore, as local manufacturing experts have learned things well. They are chasing the dreams for innovation as they have already achieved excellence in the manufacturing of many sophisticated refrigerator parts.
Walton, the unbeaten leader of the refrigerator market with 66% market share of Walton brand and over 5% market share for the group's sister brand Marcel, is manufacturing compressors as the eighth company in Asia.
"The local market is growing well and it will keep growing. Alongside the home market, we are also exploring the global market for our products demonstrating our technological excellence," said Engineer Golam Murshed, managing director of Walton Hitech Industries Ltd – the country's leading electronics and home appliances manufacturer.
Walton is currently exporting its refrigerators to 40 countries, including some in Eastern and Western Europe, Asia and Africa, mostly under its own brand name.
The company has already announced its mission 2030 which includes the target to be in the list of the world's top five electronics and home appliances brands.