Opportunity in Nepal’s Food and Beverages (F&B) Industry

Nepal is a landlocked country with nearly 30 million populations and is strategically bordered between two most populous countries in the world namely China and India. Based on the report produced by CEIC Data, the country has a gross domestic product (GDP) valued at USD 32.4 billion as of July 2020 and is heavily dependent on imports for basic materials as well as agricultural products.

Opportunity 

In general, Nepal is an agro-based country with 66% of its people directly involved in farming activities. The country is richly endowed with agro-biodiversity consisting of commodities such as rice, maize, millet, wheat, barley and buckwheat being the major staple food crops. Although known as an agriculture driven economy, the country has only around 20% of the total land available for cultivation. The remaining 80% of the land area are covered with shrubs, pasture land, forest and mountain terrain which are not suitable for agriculture activities.

By looking at wider perspective, Nepal faces huge challenge in producing sufficient food supply in the market. This was not only due to insufficient cultivable soil but also include low productivity growth driven back due to lack of technology and uncertain weather conditions. To overcome the unfavorable agronomic conditions, most local farmers tend to grow various types of crops. At the same time, foreign supplies of agro products are very much demanded as it supplements the limited domestic food production in Nepal. 

Besides that, meat has a high consumption tendency among Nepalese with buffalo meat being the most popular choice. As of July 2020, the local meat production is reported around 318,000 tons with buffalo meat accounting for  58% of the total production. This was followed by chevon and mutton (20%), chicken (13%) and others such as duck, pork and other meat (9%). Most of the meats were imported from India and is increasing due to demands from hotels and restaurants available throughout the country. 

Over the years, Nepal has a progressive beverage industry with popular drinks includes plain water, tea, coffee, aerated drinks, juices and milk based drinks. Tea is the second largest beverage consumed in Nepal after water. The tea cultivation are mostly for commercial purposes with orthodox tea receiving enormous opportunity both in domestic and international markets. Imports however were relatively low compared to exports. Despite this, there is still opportunity for businesses to explore by having joint ventures and technology transfers for greater production.

The country also has increasing demand for coffee in the recent years. The cultivation however has not been tapped well and very much under developed. Based on data by 

National Tea and Coffee Development Board (NTCDB), Nepal produced a total of 513 metric tons of coffee in the fiscal year 2017 to 2018, against the domestic demand of 7,000 metric tons per year. This can only be supported by imports from other countries.

On average basis, Nepalese household spends significant budget in food categories like cereals, dairy, meat, fruits, vegetables, alcoholic and non-alcoholic beverages, cooking oil and spices. It is also reported that urban parts of Nepal witnessed significant food consumption trends where fast food gains huge popularity. This was due to younger generations that prefer simple and quick meal that fit modern lifestyle. Despite this, there has also been increase awareness on healthy foods where Nepalese are willing to spend more including on imports.

The Way Forward

The F&B industry in Nepal opens an opportunity for Malaysia to penetrate in order to mitigate some of the unfulfilled demands. The country reportedly has few F&B supermarket chain present in major cities like Kathmandu and Pokhra where it is dominated by only local players or family owned businesses. Despite the low distribution channels, Malaysian companies are encouraged to strategise marketing approach and partner with potential importers to further venture the Nepalese market.  

For further information and enquiries, please contact MATRADE Mumbai  at mumbai@matrade.gov.my 

Note 1:  
This article is based on Market Alert (MA) prepared by MATRADE Mumbai and the information is correct at the time of the writing (30 September 2020).

Note 2: 
The MA is available in MyExport which can be accessed at www.matrade.gov.my

Disclaimer

While every effort has been taken to ensure that the contents of the article (MATRADE’S Insight) are accurate and current, MATRADE cannot be held responsible for any inclusion, omission or error and is not liable for any loss or dispute arising from the use of the information provided.