Booming FMCG sector in North, East

Indunil HEWAGE

C W Mackie is a diversified group of companies with a history of over 100 years. Today it is listed in the Colombo Stock Exchange and involved in different areas of business with seven operating units.

The Scan Products Division of C W Mackie is mainly engaged in manufacturing, importing, distribution of FMCG products, specializing in the food and beverage. It includes well-known local and international brands such as Sunquick fruit juice, Ovaltine, Star brand essences and colouring, Scan brand bottled water, Scan jumbo peanuts, Ocean fresh tuna and Scan jack mackerel.

We have two factories located in Horana to bottle Sunquick fruit juice and bottled water which are fully automated with no human touch in the processing line. The company is also maintaining EU standards and certified in SLS accredited with ISO 9001:2008, ISO 22000:2005,HACP,GMP, Halal, to maintain high quality standards.

Daily News Business interviewed C W Mackie PLC Scan Products Division Chief Operating Officer, K T A Mangala Perera.

Excerpts of the interview.

Q: How has the overall business performance been so far?

A: This year we are growing at a rate of 23 percent sales compared to the corresponding period of last year and are meeting and beating all our budget to achieve the set corporate objectives.

During the last three years, we are growing at a very higher rate in terms of both top line and bottom line and 2010 was the best year for Scan products in terms of sales and profitability. Therefore we have clearly defined business objectives in terms of business growth in the coming years and moving forward to achieve this.

Q: Do you see the Sri Lankan F&B industry growing?

A: The F and B sector has become one of the thriving sectors in the Sri Lankan economy. After the post war, the industry is reaping maximum benefits with peace. The category nearly contributes 7.5 percent of total Gross Domestic Product, which is very significant. From 2009 to 2011, F& B has witnessed a staggering 39 percent growth rate attributable to opening untapped markets in the North and East since most investors and companies reached these areas.

Another reason is, after the war, a lot of tourists came to Sri Lanka and that has automatically increased growth of this category with the food service sector. The consistent macro economical fundamentals introduced by the government also largely helped to increase consumer confidence as well as investor confidence to grow this business.

Q: What areas is Scan Products concentrating in Sri Lanka?

A: Scan is into the fast moving consumer sector and importing, manufacturing and distributing throughout the country. Out of the FMCG category, we are focusing and specialising in the F&B category.

Q: Any plans to expand your presence in the country, particularly in the Northern and Eastern areas?

A: The company has already penetrated to the North and East. Even during the war we used to continue our supply chain and logistics in limited quantities. But the retail price was very high because of the transportation cost. Now we have access to these areas and have established our distribution almost to all the districts in the North and East.

With the government resettlement process the company is in the process of expanding distribution further. Scan has loyal customers based in these regions and it is improving and compared to 2009, we are getting a large volume growth from these areas.

Q: What are the challenges and opportunities you see in the local food and beverage industry?

A: Every player is fighting to get their share in the market. It is very competitive and it has a high level of growth potential.

The people living in rural areas are upgrading their living standards, changing their buying behaviour patterns and shifting to branded products.

As a country, we are growing at a rate of eight percent of GDP and per capita income also increases in line with the consumer spending higher than in the past. A considerable amount of consumers are shifting from traditional to modern trade. To capitalize these opportunities, we need to concentrate on our marketing plan to get the major share out of the competition and those are the challenges and the opportunities I see in the F&B sector in Sri Lanka.

Q: How do you plan to support the future growth aspirations of the company?

A: For the last three years, we are growing at a high rate and managed to provide various incentives for the staff. We are maintaining the same growth in the first half of its financial year with the 23 percent revenue growth.

We are very much confident of ending this financial year with similar type of growth and have set plans for that. All the brands are performing well. We have clearly defined business objectives in terms of business growth and we are moving forward to achieve this.

Q: How important is it to innovate the new products in the F & B sector in Sri Lanka ?

A: Research and development plays a vital role in this industry with continuous improvement in product quality, product expansion.

New products development will play a very important role as far as growth is concerned.

Scan has a professional team of quality assurance research and development persons to accomplish this task.

Business is moving very aggressively and we believe human resource is the most important asset of the company. Several company skills development programmes, training programmes have to be given to both internal and external staff.

Also in line with the country's policy framework is more encouraging the local industries specially agro based, manufacturing local based companies. It has a growth prospect for the corporate sector in the country.

Q: What sort of investment plan does your company have in mind?

A: One of the major concerns is for our water factory. We have plans to expand our business. However it will take some time to do the preliminary investigations and the company is in the process of doing that.