With out reference to a minimal enlarge in manufacturing costs, one of the most country’s main bottled water producers inflated their profits by up to 420% by raising the worth of half of-litre bottles, in conserving with the Bangladesh Opponents Rate (BCC).
An investigation by the Rate revealed that these companies colluded to build of residing “unreasonably high costs”. Moreover, they dominated the market by increasing profit margins for distributors and stores.
In consequence, a lawsuit has been filed against seven companies, confirmed Hafizur Rahman, member of the Rate. They are Coca-Cola Bangladesh Beverage, Transcom Beverage, Meghna Beverage, Partex Beverage, Rupshi Meals (Metropolis Team), Akij Food & Beverage, and Pran Beverage Restricted, acknowledged Hafizur.
The Rate’s investigation file on “Unparalleled Tag Will enhance in Bottled Water” finds that these companies raised the worth of 500ml bottles from Tk15 to Tk20 between January and September 2023, citing increased import costs attributable to bigger buck and raw subject cloth costs.
Then all over again, the reviews acknowledged that while manufacturing costs preferrred a bit increased, the worth hikes have led to benefit margins rising by 71.23% to 420%. The increased profit margins also extended to distributors and stores.
The Rate also stumbled on that these companies tried to manipulate the market by guaranteeing low profits at every level of distribution, including distributors, wholesalers, and stores.
The investigation lined eight companies, including Dhaka WASA, which used to be no longer incorporated within the lawsuit.
TBS reached out to all seven companies implicated within the case. Representatives from Transcom and Metropolis Team did no longer answer to calls.
The final companies confirmed that a case used to be filed against them and acknowledged a listening to is scheduled for the 18th of this month.
Md Nahid Yusuf, assistant current supervisor of Partex Team, talked about that they’ll contemporary their arguments on the listening to.
Akij Food & Beverage made 420% profit
The BCC investigation stumbled on that Akij Food & Beverage seen the preferrred profit enlarge by raising the worth of its Spa branded 500ml bottled water by Tk5.
With out reference to an 18.33% upward thrust in manufacturing costs and a 31.78% enlarge in VAT and taxes, the firm’s profit surged by 420%. Retailer earnings per bottle rose from Tk5.62 to Tk9.
Equally, Coca-Cola’s Kinley tag seen manufacturing costs for a 500 ml bottle enlarge by Tk1.624, or 27.67%, with VAT, taxes, and supplementary duties rising by 34%.
The Tk5 impress enlarge resulted in a 212% boost in firm profits, a 30% enlarge in distributor profits, and a 26.98% upward thrust in retail profits. Retailer profit per bottle increased from Tk6.67 to Tk8.47.
The investigation also revealed that Transcom’s Aquafina seen a 71.23% profit enlarge, while Meghna’s Contemporary bottles skilled a 177.78% upward thrust in profits.
The Rate’s file acknowledged Metropolis Team’s profits would possibly maybe well well no longer be analysed attributable to insufficient records, and Pran supplied no records the least bit.
Handiest one firm, Partex Beverage, increased costs and raised distributor and retailer commissions without boosting its possess profits, it acknowledged.
Moreover, Dhaka WASA’s manufacturing costs for its Shanti tag remained unchanged, and to boot they did no longer enlarge commissions for distributors and stores.
In consequence, the firm is struggling, with stores reportedly reluctant to stock their water attributable to low profits from promoting it at Tk15 per bottle, acknowledged the file.
The companies violated the Opponents Act, 2012, specifically sections 15(1), 15(2)(a), and 15(2)(b), by taking part in collusion to build of residing costs unreasonably high in build of residing of competing on impress, added the Rate.
How the investigation began
In mid-final twelve months, criticism of bottled water impress hikes emerged within the media, highlighting that stores were making Tk8-Tk9 profit per 500ml bottle.
Humayun Kabir Bhuiyan, current secretary of the User Association of Bangladesh (CAB), petitioned the Rate to take circulation against collusion among companies within the water market.
In response, the Rate held consultations with the enthusiastic companies, analysed their impress sheets, and urged further review by the Bangladesh Tariff Rate.
The Rate also initiated its possess investigation. At some level of this time, companies increased costs for bottled water of a gargantuan preference of sizes.
Bottled water market
Basically based on the Rate, bottled water sales in FY22 exceeded 552.Forty five million litres. For the 2022-23 fiscal twelve months (up to 31 January), roughly 400 million litres were sold.
The Contemporary tag had the preferrred market portion at 24.17%, adopted by Pran with a 17.76% portion, and Aquafina with 16.88%.
Mum held the fourth build of residing with a 16.44% market portion, while Spa ranked fifth with 13.81%. Kinley had a 4.16% portion, Jibon 4%, and Mukta, Sena, Muskan, and Shanti brands each and each had decrease than 1% market portion.
Basically based on Bangladesh Standards and Testing Establishment (BSTI), there are 232 registered companies producing and marketing bottled ingesting water unless FY23. The market is predominantly controlled by 11 brands.
