FOOD & BEVERAGE SECTOR
Daminda Gamlath
FOOD FOR THOUGHT AMID CRISIS
The ongoing economic crisis is affecting consumer demand and tightening spending
Overview of the consumer food category
The consumer food and beverage sector accounts for 75 percent of the fast-moving consumer goods (FMCG) market in Sri Lanka. Milk powder is the largest contributing category, followed by biscuits.
The present context
Due to existing inflationary pressures, the food and beverage sector is witnessing an increase in value although there is a decline in volumes.
Sector distribution
Fifty-seven percent of the consumption of food and beverages takes place in the rural sector.
Its importance
It is the largest category in FMCG and plays a vital role in driving consumption.
Constitution of the sector
There are many stakeholders such as suppliers of raw materials, wholesalers and retailers.
Supply chain ramifications
An impact, whether it is positive or negative, will have a ripple effect on the livelihoods of external supply chain workers.
Latest trends or innovations
Sustainable and eco-friendly packaging, introduction of a healthy convenience range and low unit pack introductions.
These are based on…
Consumer spending patterns and localising international flavours.
Core strengths
Strong brands, state-of-the-art manufacturing facilities, solid distribution networks and innovation.
Barriers to the sector’s growth
Increasing input costs and reducing consumer spending are the main barriers to growth.
How to overcome this hurdle
Ensure that businesses operate cost-effectively by considering new and innovative business models, and offering consumers the best value for money.
Opportunities for the local consumer food sector
Introduce entry-level product categories at low-cost or affordable price points, and consider developing international brands and driving export revenue.
Scope of consumer foods
Covers the entire landscape of food and beverages – such as fresh vegetables, meat, fish and poultry.
Extension to the range
To dairy, confectionery items, rice, pulses, cereals, and nonalcoholic and alcoholic beverages.
Evolving consumer trends or behaviours
Healthy and active lifestyles, a digitally savvy population, increase in online purchasing, and environmentally and socially conscious customers.
Influence of digitalisation
While the lifestyles and behaviours of some have remained the same, digitalisation has narrowed the gap between urban and rural consumers.
This is in terms of…
Exposure to trends, and local and foreign brands.
An example of this
Digital gaming – contrary to popular belief, it takes place in both urban and rural areas of the country.
What’s notable about the above
It’s used by both men and women, and isn’t restricted to younger audiences. This provides a platform for advertising and interaction with consumers.
Impact of Sri Lanka’s economic crisis
The economic crisis is affecting consumer demand and tightening spending – and declining margins are due to supply chain cost increases.
Role of the food sector in economic recovery
Building strong capabilities in local supply chains for import substitution will contribute to national economic productivity.
Benefits of building capabilities
This will ensure job security and help businesses embark on sustainable projects in the communities they serve.
Initiatives in this respect amid challenging times
Developing local farmers, and small and medium-size enterprises (SMEs), to strengthen local supply chain capabilities.
Corporate contribution
Investing at a corporate level in employee wellness programmes.
Competition in the marketplace
Very intense, given the decline of consumer purchasing power.
Focus areas for food sector improvements
Product innovation to improve nutrition for convenience and innovations in the process.
Noteworthy fact about this sector
Food is the largest category in the FMCG sector
The uptick
It deals with what’s essential for the nutritional needs of consumers by delivering quality, value and variety.
Qualities needed to pursue a career such as yours
Resilience, a positive mindset and working with the team.
Vision for Sri Lanka’s consumer food sector
Affordable good quality nutrition for all consumer needs.
Mantra for success
‘Excellence is never an accident’ – Aristotle.
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