- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Technology Trends
- 9 Regulatory Trends
- 10 Market Size and Forecast
- 11 Market Outlook
- 12 Distribution Chain Analysis
- 13 Key Market Players
- 14 Strategic Conclusion
- 15 References
- 16 Appendix
Definition / Scope
Food & Beverage is one of the important sectors which have product categories such as rice and cereals, ready to serve food, confectionary and bakery product, processed fruits and vegetables, concentrates and juices, processed gherkins, semi-cooked foods, animal feed, alcoholic and non alcoholic beverages, etc.
Food & Beverage deliver benefits in the economy of country by providing suitable employment, contributing in innovation of food system and playing important role in local economy. There is mandatory requirements such as food standards, technical regulations and sanitary and phyto sanitary in manufacturing of food and beverage. There are small, medium and large scale exporters of food and beverage in the market.
Most of the manufacturers are supplying their products direct to the exporters as well as for the local consumption. Food manufacturers and producers are scattered all over the country.
With the potential to grow in fastest way, Food and Beverage industry is among the growing industries in Sri Lanka. Food and Beverage sector has also the potential to create market for export and it is capable of generating employment opportunities to the people of Sri Lanka. Food and Beverage sector is categorized as one of the seven key priority sectors by government of Sri Lanka. The demand of food and beverage is also high due to standards of living of the rural population, increasing per capita income of the consumers, rapid growth in consumer spending, narrowing urban-rural divide in the country and massive influx of tourists in the country. Food and Beverage are mainly exported to European countries like Germany, France, Netherland and UK along with other countries like India, Thailand, UAE, USA, etc. 
Wide range of food and beverage products is exported to diverse market all around the world. Increasing quantity of food and beverage products are exported to EU, USA, Australia and Middle East. Products such as herbal powder, herbal tea, milk and cream, preserved gherkins, soya based products are mainly exported to UAE, Ireland, Japan, Maldives, Australia, etc. whereas cream and powder, coconut milk, various types of fruit juices like pineapple, mixed fruits, jams. Jellies, cordials, frozen and canned vegetables are exported to US, Germany, France, India, etc. 
|Base Year||2018||Researched through internet|
Food and Beverage industry is one of the key industries which influence the economic growth of the country. The industry comprises of farming food production, distribution, retailing and catering. In the past decades, the consumption pattern of consumer and preferences are changing due to which F/B industries need to be more market oriented. The high demand of F/B causes the industry to be more competitive.
The high competitive market causes industry to depend on high technology for food processing in order to compete in market because the competitor uses more advance technology to produce food and beverages. Also there are multinational companies like Nestle, Kraft Foods, Unilever and Cargil who produce 5% of global food and beverage supply. So in order to survive in the market, local business industry of Sri Lanka should be more strategic and market oriented.
Top Market Opportunities
In Sri Lanka one of the most emerging industries in terms of production, consumption, export and growth aspects is food processing industries. These industries help for overall development of country’s economy as it provides linkage and synergy between industry and agriculture. These industries also help to commercialize the farming market, generate employment opportunity and create markets for export. Wider range of food products could be sold and distributed in the market with the help of food and beverage industries. There are various factors that contribute the development of Food Processing Industry (FPI) in Sri Lanka which are as follows:
- The agro-climatic condition is diverse with large availability of raw material for producing food and beverage products.
- For investing in infrastructure, packaging and marketing of food and beverage, Sri Lanka is on aggressive path.
- New opportunities and rapid growth in the sector of Food and Beverage is due to rapid urbanization, changing life style, rising per capita income, increased literacy, etc.
- Expenditure for food items by consumer is more than one third of household.
- There is vast infrastructure and distribution network along with scientific and research talent pool in sector of food and beverage.
Sri Lankan food and beverage industry has become a thriving sector in the economy driven by post war optimism and gathering maximum benefits from peace dividends. The F/B industries listed in Colombo Stock Exchange (CSE) showed growth of 42 %. With the end of prolonged war, private sector of F/B industry entered into the market of East and North province of Sri Lanka with massive way of firm level increasing by two to three folds.
The expansion of food and beverage industry is also due to post conflict buoyancy in the tourism industry. With the enhanced security and peace condition of East and North province with other province, private sector got chance to enhance their profit and earning by freely moving goods, services, capital and people all over country. Food and beverage industry showed fastest growth of country’s economy with potential to grow even further in future year. With the increasing demand of F/B products, majority of industries are expanding their activity on a massive scale. 
The market of food and beverage industry in Sri Lanka as showed notable growth but the industries faces various challenges to compete in the market and to grow in future because of technology to drive productivity and innovation. Due to high packaging cost, seasonality of raw materials, cultural preferences for fresh foods, quality control mechanism, lack of adequate infrastructure and facility, the industry of food and beverage remains highly untapped.
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There are different selling channel like sales on direct to consumer sites, e-commerce platforms which accounts sales of 36 % of specialty food and beverage. The demand for online delivery and subscription of foods will grow in 2018 with acquisition of whole foods by Amazon because busy consumer wants their foods at their door steps.
Nowadays customer chooses to order their foods from devices and want them to be delivered within time. Customer will do research of food and beverages on their smart phones and choose the product they want to consume before buying. So in order to get success in the business of food and beverage industry the management should use strategy to make use of digital and social platforms to connect with their customers by providing detail about their product.
- Quality Assurance & Standards
With the concept of “Food for Health” food and beverage industries are working to ensure consumer health through quality products. The food and beverage manufacturers are maintaining hygienic and quality standards in whole production process. To maintain food safety requirements of consumer’s health these industries comply with international standards like ISO 9000, ISO 22000, HACCP, Halal, Kosher, Organic EU etc. so that the buyers can be assured that the product that the Sri Lankan industry supply meets the quality. The food and beverage industries of Sri Lanka work with International Food Processors Associations. They also participate in international trade fairs so as to be updated of new product technology, standards and regulations.
Market Size and Forecast
- The GDP at constant price (2010) for the first quarter of 2018 recorded as USD 13115.84 million.
- Economic growth rate for the first quarter of 2018 has been estimated as 3.2 percent.
- Agricultural activities have recorded a significant growth rate of 4.8 percent during the first quarter of 2018.
- Most of the agricultural activities have experienced positive growth rates during the first quarter of 2018 which is shown in the figure.
In the past decade the Sri Lankan food and beverage industry has grown vigorously. The market of food and beverage has expanded due to political stability of country causing per capita income to increase resulting expansion of middle income segment of economy causing socio economic benefits to the country.
The people of rural area spend their income on quality food products due to which food and beverage industries started expansion of their business in Eastern and Northern Province. This causes industries to increase their earning and scale up their business. The purchasing power of clients or customers is increased due to increasing tourism in Sri Lanka leading the industry of food and beverage growing in the fastest way. 
Similarly Export of different food products such as Processed food, animal feed, rice and cereals, confectionery and bakery products, processed vegetables and fruits is listed in figure below. The table shows positive average growth in terms of processed food and processed fruits and vegetables whereas other product showed negative growth.
Also the table below showed that processed vegetables, fruits and juice is mainly imported by USA, UK, Germany, Australia and Maldives. Confectionery and bakery product is imported by Ghana, Maldives, UAE, India and Uk. Also Processed foods is mainly imported by UAE, Hong Kong, Ireland, Saudi Arabia and Maldives. Rice and Cereals is imported by Thailand, Singapore, Indonesia, Malaysia and Hong Kong.
Distribution Chain Analysis
The retailers, hotels, restaurants procure food products directly through distributors. The distributors of food and beverage products are focused on their product so as to offer variety. The supply chain industry of Sri Lanka is interlinked and modern which offers increasing market penetration for perishable products. The distribution channel for imported foods involves several intermediaries.
Key Market Players
Following are the brands of leading food and Beverage Company with their brand value.
- Nestle: Nestle is brand name of its parent company Nestle Lanka with its brand value USD 127.68 m along with brand rating AA+ and enterprise value USD 642.75 m.
- Lion Beer: Lion Beer is brand name of its parent company Lion Brewery (Ceylon) with its brand value USD 106.54 m along with brand rating AA- and enterprise value USD 243.33 m.
- DCSL: DCSL is brand name of its parent company Distilleries Company of Sri Lanka with its brand value USD 100.81 m along with brand rating A+.
- Elephant House: Elephant House is brand name of its parent company Ceylon Cold Stores with its brand value USD 64.33 m along with brand rating AA+ and enterprise value USD 479.30 m.
- Dilmah: Dilmah is brand name of its parent company Dilmah Ceylon Tea Company with its brand value USD 24.54 m along with brand rating AA- and enterprise value USD 55.79 m.
- Prima: Prima is brand name of its parent company Ceylon Grain Elevators with its brand value USD 13.19 m along with brand rating AA- and enterprise value USD 18.04 m.
- Krest (Formerly Keells Foods): Krest (Formerly Keells Foods) is brand name of its parent company Keells Food Products with its brand value USD 7.69 m along with brand rating A+ and enterprise value USD 20.86 m.
- Harischandra: Harischandra is brand name of its parent company Harischandra Mills with its brand value USD 5.77 m along with brand rating A and enterprise value Rs. 17.38 m.
- Bairaha: Bairaha is brand name of its parent company Bairaha Farms with its brand value USD 5.01 m along with brand rating A+ and enterprise value USD 16.57 m.
- Lanka Soy: Lanka Soy is brand name of its parent company Convenience Foods Lanka with its brand value USD 3.40 m along with brand rating A+ and enterprise value USD 3.57 m.
With product categories such as rice and cereals, ready to serve food, confectionary and bakery product, processed fruits and vegetables, concentrates and juices, processed gherkins, semi-cooked foods, animal feed, alcoholic and non alcoholic beverages, etc. Food & Beverage is one of the important sectors. Food and Beverage sector has also the potential to create market for export and it is capable of generating employment opportunities to the people of Sri Lanka. Wide range of food and beverage products is exported to diverse market all around the world.
There are multinational companies like Nestle, Kraft Foods, Unilever and Cargil who produce 5 % of global food and beverage supply. Wider range of food products could be sold and distributed in the market with the help of food and beverage industries. Food and beverage industry showed fastest growth of country’s economy with potential to grow even further in future year. Industries face various challenges to compete in the market and to grow in future because of technology to drive productivity and innovation.
To maintain food safety requirements of consumer’s health these industries comply with international standards like ISO 9000, ISO 22000, HACCP, Halal, Kosher, Organic EU etc. The purchasing power of clients or customers is increased due to increasing tourism in Sri Lanka leading the industry of food and beverage growing in the fastest way. The distribution channel for imported foods involves several intermediaries.
- %: Percentage
- CSE: Colombo Stock Exchange
- Etc: Et cetera
- EU: European Union
- F/B: Food and Beverage
- FDA: Food and Drug Administration
- FPI: Food Processing Industry
- GDP: Gross Domestic Product
- GMO: Genetically Modified Organism
- HACCP: Hazzard Analysis and Critical Control Point
- ISO: International Organization for Standardization
- m: Million
- Rs: Rupees
- UAE: United Arab Emirates
- UK: United Kingdom
- USA: United States of America
- USD: United States Dollar
- WHO: World Health Organization