Bottled water is now the trust of billions of people in the country. Apart from household use at home, bottled water is used everywhere—hotels, restaurants, festivals, public and private events. Day by day this water has become an essential part of daily life. Consumer advocacy groups have complained that companies have taken advantage of this dependence to raise prices unreasonably compared to the increase in production costs. Findings suggest that high prices are a major reason for high prices given to wholesalers and retailers in order to capture the market.
In the nineties of the last century, the use of bottled water started in the country. In the beginning, buying this water seemed almost a luxury, but in the last three and a half decades, it has become an almost common part of life. The market has gradually increased. According to the review of the Competition Commission, in the financial year 2021-22, this water was sold in the country more than 55 crore 24 lakh 59 thousand liters. And till January 31 of FY 2022-23 (for which data is available) about 40 crore liters have been sold.
Big price hike at once
The leading companies have decided to raise the price of a half-litre bottle of water from Tk 15 to Tk 20 at a time from January to September 2023. The information is contained in the 'Finding Report on Abnormal Price Increase of Bottled Water' prepared by the Competition Commission last September. In this, the company's profit increased from 71.23 to 420 percent. The profit share of distributors and retailers also increases a lot. As a result, the production cost of a bottle of 500 ml water is 6-7 taka, but the buyer has to buy it for 20 taka. Many complained that 7-8 companies inflated the profits of retailers and wholesalers at abnormal rates to maintain control over the market. Companies attributed the rise in prices to the rising dollar and rising import costs of raw materials. However, after analyzing the competition commission of the government, the overall cost of production has increased nominally.
In their investigation, the Competition Commission analyzed the cost of production of a total of 8 companies including Dhaka Wasa (brand name Shanti). This provides prima facie evidence of collusion in price gouging. A case has been filed against the remaining 7 companies except Wasa. These are Coca-Cola Bangladesh Beverages Limited (Kinley), Transcom Beverages (Aquafina), Meghna Beverages (Super Fresh), Pertex Beverages (MAM), Citigroup (Jivan), Akiz Food and Beverages (SPA) and Pran Beverages Limited (Pran). ).
Analyzing the report, it can be seen that 13-14 rupees between the cost of production and the retail price is shared between manufacturers, distributors and wholesalers and retailers. Retailers have the highest profit share. According to the data, the profit of distributors and wholesalers increased by 1.35 times compared to the increase in production cost. In the case of retailers, it has increased up to 4.34 times.
The progress of the case stopped
Competition Commission has filed a case against 7 companies but the hearing has been suspended due to lack of quorum of members of the Commission. Hafizur Rahman, a member of the commission, told Ajker newspaper, 'There are usually four members in this commission. Five members including the chairman took the hearing. However, a minimum quorum of three members is required for a hearing. But currently we are only two members. I have also been appointed administrator for FBCCI elections again.'
The investigation of the Bangladesh Trade and Tariff Commission has also proven this illegal profit. Some of these companies have reduced the price of water slightly, but some have increased it again due to the flexibility of the government.
The burden on the buyer is increasing
While buying bottled water in Segunbagicha market, this reporter spoke with an official of a private company. Requesting anonymity, he said, 'The price of bottled water is beyond the reach of most common people. The abnormal increase in prices is proof of the government's lack of control over the market.
Akib Siddiqui, a worker of an information technology company, resident of East Rayerbazar area, said that the children of their joint family do not want to drink the supply water. The family now drinks only bottled water due to problems with the filter. Thinking about the health aspect, they spend this extra on water. He is under a lot of stress due to the increase in the price.
Cost of production and selling price
According to the report, the production cost of one half liter (500 ml) bottle of Jeevan brand water is Tk 6.59, Kinl Tk 6.92, Aquafina around Tk 6, Super Fresh Tk 5.92, Spar Tk 6.30 and Wasser Shanti Tk 6.29. . An exception to this is Pertex's mum. According to the information of the company, their production cost of 500 ml bottle of water is 9.53 taka. Last Wednesday, after visiting several markets in the capital, the retail price of all brands of water except Pran, Shanti and Jeeban was seen at Tk 20. Meanwhile, the employees of the big shops in the market say that if they buy a whole case (24 bottles) of top brands of water, they can sell it up to Tk 350-360. Accordingly, even if each 500 ml bottle is sold at Tk 14.60 to Tk 15, the retailers have some profit.
What is the status of any brand in the market?
Government agency BSTI says that as of the fiscal year 2022-23, the number of registered establishments producing and marketing bottled water in the country is 232. Among these, the top 7 companies hold 97 percent of the market. As of January 31, 2022-23, the top 7 brands were Fresh (24.17 percent), Pran (17.76 percent), Aquafina (16.88 percent), Mum (16.44 percent), Spa (13.81 percent). , buy (4.16 percent) and life (4 percent). Mukta, Sena, Muskan and Shanti—these four have a business share of a little less than 1 percent.
Market insiders say that the top companies have increased the profits of the retailers at an abnormal rate mainly to maintain their dominance. Before the price hike, the retailer used to get a profit of Tk 5.62 by selling half a liter of Akiz water. After increasing the price, it became 9 rupees. Retailer used to make a profit of 6.67 taka by selling the same quantity of water bottle at 15 taka, but after increasing the price, he is making a profit of 8.47 taka.
What the companies are saying
Partex Group Assistant General Manager. Nahid Yusuf told Ajkar newspaper, 'Two other companies have increased the price before us. So following the market, we have also increased the price of water.'
Touhiduzzaman, deputy manager of Pran-RFL group's public relations department, said, 'When everyone increased the prices, we also increased them. But thinking about the common people and following the instructions of the government, I reduced it again. Now we are selling the previous price of half a liter at 15 taka and 1 liter at 25 taka. However, because of this, I have fallen into competition in the market. Because, the retailer will get more profit by selling, that will be kept in the store.'
Meghna Group Assistant General Manager Muntasir Mamun said, 'Everyone has increased the price. If everyone increases, we also have to increase.'
Urge to reconstitute Competition Commission
Palash Mahmud, executive director of Consus Consumers Society, an organization that works with consumer interests, told Ajker newspaper, 'Competition Commission has the full responsibility of looking into these matters. Due to the inaction and failure of this commission, the companies have the courage to increase the prices unreasonably. Therefore, the commission needs to be strengthened. For this, the commission needs to be reconstituted with competent people.'
