Bangladesh's toiletries market is growing and there is a significant potential for further expansion as incomes rise alongside increasing awareness and lifestyle changes.

Per capita toiletries consumption in Bangladesh is $20, compared to $40 in India and $100 in Indonesia. 

"So, you understand there's a huge opportunity in toiletries to catch up. It will be bigger," said Malik Mohammed Sayeed, chief executive officer of Square Toiletries Ltd, in an interview with The Daily Star. 

Having worked at Square Toiletries for 23 years, Sayeed said that Bangladesh's fast-moving consumer goods (FMCG) market is worth Tk 50,000 crore annually, with toiletries and cosmetics accounting for around Tk 25,000 crore. 

To capture this market, many companies are entering the sector. However, winning consumers requires patience, particularly in the cosmetics sector. Success depends on bringing the right products to market and maintaining consistent communication. 

"Brand matters. So, you need to invest in brands, you need to invest in quality," he said. "It doesn't happen overnight." 

A short-term, profit-driven approach will not work. Companies must be prepared to launch new products strategically. 

Sayeed said innovation is vital and must occur across all aspects of the business. "I call it innovation in all formats. You need to keep improving product quality and packaging, and you also need to ensure product availability. That's very important." 

Square has been implementing these strategies and has made its mark in the toiletries segment. As part of the local conglomerate Square Group, the company has captured a double-digit market share in the highly competitive soap market, increasing its share by 2 percent in a single year. 

"If you have the right product, right pricing, right communication, and right placement, success follows," he added. 

The company's presence in the hair care segment is also expanding. With the well-established Jui hair oil, Square has recently launched Maya, a natural wellness brand offering a range of scalp and hair oils made from natural ingredients. 

Besides, Square is expanding its skincare lineup with moisturising cream, oil and acne control cream, face wash, fixed oils, and aloe vera gel to meet growing market demand. 

Sayeed pointed out that three-quarters of Bangladesh's consumers live in rural areas, where remittances sent by Bangladeshi migrants abroad boost overall demand. 

In 2024, the toiletries market recorded higher growth in rural areas, as much as 14 percent. Nationally, overall sales grew by 12-13 percent compared to the previous year. 

Urban areas, which account for one-quarter of the total market, saw comparatively lower growth than rural areas. 

"The purchasing power in rural areas is increasing. The cost of living is relatively lower there, which helps," he said. 

"In urban areas, households have to account for expenses such as rent, transportation costs, and many more. This is an interesting dimension. We have observed this trend and, accordingly, have focused on rural markets as well." 

Square Toiletries has benefited from the efforts of its passionate and dynamic team. 

With inflation remaining above 9 percent for two years, the company adjusted employee benefits to prevent a decline in their purchasing power and living standards -- an approach that paid off. 

Square Toiletries recorded around 15 percent growth in 2024, higher than the sector's overall growth of 13 percent. This success was driven by strong sales and marketing efforts, as well as increasing consumer awareness. 

Sayeed highlighted the importance of employee welfare, saying that if employees are not sufficiently compensated, companies cannot expect them to put in extra effort to sustain sales. 

"When a company directly employs people and adjusts their salaries in line with inflation, employees give their best, even during challenging times." 

"Whenever profits shrink, you don't simply stop providing the benefits you used to offer employees, it pays off in the long run," Sayeed said. 

He added that inflation and the appreciation of the US dollar had eroded the value of the taka. Budget-conscious families prioritise food, rent, and essential expenses over non-essential items. 

"These are the things you cannot skip. Technically, we anticipated an even worse scenario in the cosmetics category. But I believe increased awareness helped cushion the impact." 

The industry has also faced higher import costs. Over the past three years, the taka has lost more than 40 percent of its value against the US dollar, reaching Tk 122 per dollar. 

This has driven up import costs, with toiletries and cosmetics manufacturers among the hardest hit, as they rely on imported raw materials for nearly 90 percent of production. 

Square Toiletries has also felt the pressure of rising production costs. Despite this, the company chose not to raise product prices, even though the decision affected its profits. 

In response, Square has been exploring opportunities to source raw materials locally. As part of this effort, the company began sourcing aloe vera from Natore, a northwest district, through contract farming to obtain certain extracts. 

"We don't have minerals in Bangladesh. We don't produce palm oil, which is a significant component in toiletries. However, we do have salt." 

To manage costs, Square is using locally produced sodium chloride instead of importing sodium sulfate. Currently, its local value addition stands at 7 percent. 

"You need to be smart in your own way to survive and save these costly dollars for essentials we can't produce locally," he said. 

Discussing future plans, Sayeed said Square Toiletries is expanding its product portfolio beyond hair oils, detergent powder, and soap. As part of this strategy, the company recently launched natural hair and scalp oil and is introducing sunscreen and other skincare products. 

"We are launching face washes and a range of products for all segments of society." 

The CEO emphasised that innovation is key to attracting consumers in the FMCG sector, as they seek value for money. 

The company is also prioritising health and hygiene products. "We have just imported multiple machines for sanitary napkins, diapers, and soaps." 

Currently, the penetration rate for sanitary napkins in Bangladesh is 20 percent, while for diapers, it is only 3 percent. 

"So, a huge market remains untapped," he said. 

Sayeed said that local brands are gaining popularity, which is a positive development. 

"Consumers are accepting and purchasing local brands because they provide value." 

He also discussed the illegal entry of cosmetics and toiletries through various channels, including the luggage of international passengers arriving in Bangladesh. 

"You know, there are a lot of gray market products. It's a problem." 

But, he said the only way to compete with foreign products is to develop products of similar quality, citing the international quality of drugs made in Bangladesh. 

"So, what we're doing is setting standards comparable to foreign products, and we believe this is the only option. You can't simply complain and ask for protection measures every time. Instead, produce products like foreign ones, and people will buy them. Because, ultimately, even products coming from Turkey or Europe will have higher prices."