From a tea kiosk to the biscuit brand everyone loves, and now a global food company, Group Chief Executive Officer Ravi Jayawardena discusses how revenue was more than doubled within a decade, diversification with a focus on global reach, and managing Covid-19 challenges.
Everyone knows where Maliban Junction is. No other company has that distinction where a geo – graphic location is named after it! Located on a sprawling complex facing the Galle Road in Ratmalana, stands Maliban, an iconic company with an armoury of well-loved household names like Maliban Gold Marie, Smart Cream Cracker, Lemon Puff, Chocolate Biscuit, Wafers, Ginger Biscuit, and Nice, delighting kids (and adults) for generations.
The company’s humble origin belies its meteoric rise. Angulugaha Gamage Hinniappuhamy, left his hometown in Galle to seek his fortunes in Colombo. That was in 1922, and with the benefit of hindsight, what really happened was this: he ‘made’ his destiny. He opened a tea kiosk down Maliban Street in Pettah, which he later converted to a small hotel. From there, he expanded the business and opened several hotels in Colombo. He then started a bakery and made handmade biscuits, and thus the ever-popular Marie Biscuit was born! A hot favourite, to keep up with demand for Marie biscuits, Hinniappuhamy imported a biscuit cutter to boost production. Meanwhile, he also ventured into dairy, bottled mineral water, ran six hotels, one tearoom and an ice cream parlour before incorporat – ing Maliban Biscuit Manufactories (Pvt) Ltd in 1954 after acquiring a biscuit production plant from Baker Perkins. In 1965, he relocated the factory to a 10ha property facing Galle Road at Ratmalana. He left an enduring legacy in the country by introducing the first machine-made biscuits and the introduction of Marie, Cream Cracker, Lemon Puff, Chocolate biscuits, Ginger Biscuit and many more to Sri Lankan consumers.
Today, Maliban biscuits are sold in over 90,000 stores in Sri Lanka and exported to over 50 countries across five con – tinents. The company produces more than 25 million packs of biscuits every month in its state-of-the-art manufacturing facility at Ratmalana under stringent hygienic conditions. Maliban is an ISO 9001, ISO 14001, ISO 22000, and OHSAS 18001 certified company. It has won Sri Lanka’s prestigious National Quality Award on multiple occasions. Employing over 3000 people in the group, the company is managed by a team of profession – als who head key disciplines. The Board of Directors consists of second and third-gener – ation family members of the founder. Mr A G Ratnapala Samaraweera, the current Chairman, has led the company with distinction for the past five decades, making Maliban a household name in Sri Lanka. Maliban remains a truly family driven company and is well set to con – tinue that legacy for many more decades as the 3rd generation headed by the current Managing Director of the Group and the daughter of the Chairman, Ms Kumudika Fernando.
The group currently surpasses Rs. 25 bil – lion in revenue annually, more than threefold from a decade earlier when Ravi Jayawardena joined the Maliban Group. The group comprises of Maliban Biscuits Pvt Ltd, Maliban Milk Products Pvt Ltd, and Maliban Dairy & Agri Pvt Ltd. Previously, Jayawardena was the Country Head of Sales and Customer Management at Coca Cola Sri Lanka before heading several senior management positions in customer management, marketing, and category management at Unilever Sri Lanka. At Maliban, Ravi Jayawardena was one of the key members of the Senior Strategic Management Team that transformed the business from a $70 million annual revenue company to $ 125 million within five years. In this interview, Jayawardena talks to Echelon about how Maliban transitioned from a biscuit manufacturing business to a diversified food company expanding to bakery, cereal, dairy and plantations that supports rural farmer communities, how the company is coping with the Covid-19 pandemic and plans for local and global expansion.
Can you tell us how things have been in the last one to two years, particularly during the last one and a half years when we faced COVID?
When Covid-19 broke out in March 2020, everyone had to deal with uncertainty at an unprecedented scale. Many would have panicked, not knowing how the unfolding pandemic would impact lives, livelihoods, businesses, and the economy. However, the Chairman, Board of Directors at Maliban and the senior management team had a different mindset. We knew country-wide lockdowns and curfews would come, but they would be out of our control, so there was no point fretting about them. We decided to take control and devote our energies towards what we could control as a company and anticipated challenges in two fundamental areas: production and sales.
To achieve that we focused on three things during the initial stages of the pandemic.
First, we took every precaution to safeguard our staff and their families; this was our number one priority, and by extension, we also contributed towards keeping our stakeholders and communities safe. And we strongly motivated employees to have a positive mindset to handle high-pressure situations.
Second, when the lockdowns came, around 40% of the 2,000-strong factory staff had already left for their hometowns, so we had to get special approvals, and collaborate with healthcare and law enforcement officials to get them back to work. Everyone at Maliban pulled through those difficult days as a tightly-knit team. So, I would certainly say we got off to a surprisingly good start in dealing with the pandemic-related challenges that were unfolding.
Third, we made a conscious decision not to exploit the new opportunities that emerged for food companies with lockdowns. Instead of focusing on commercial gains, our main priority was to make our products available for people to consume, immaterial of the cost of operation. Servicing the community was our prime objective.
Focusing on these three aspects helped the company sail through the most challenging economic period this generation has experienced globally. We as a team are humbly proud to convey that despite Covid-19, Maliban reported the best results in its 70-year history during the last financial year ending March 31, 2021. While many contemporary businesses were in reverse gear, we had the distinction of reporting the best top-line and bottom-line results in our history due to visionary leadership from the Chairman, Board of Directors and the supreme dedication of all employees at Maliban. It’s truly a team effort.
Most people still see Maliban as biscuits, but if we explore a little deeper, we find a food company with a diverse range of products. Can you tell us about this transformation?
There is no question that consumer preferences are evolving. People are looking for greater choice and variety. At the same time, they don’t want to compromise on taste and nutrition.
Maliban has always been a strong brand with a portfolio of top quality products. We have a manufacturing-centric operation with product quality etched in our DNA. Our Chairman and Board Directors visit the factory daily starting at 6 a.m. and spend two to three hours: a unique devotion of our senior leadership, leading from the front and inspiring the production floor personnel.
Ten years ago, our distribution reached around 50,000 grocery stores across the country, many of them mom-and-pop shops. Although we have extensive coverage of major supermarket chains in the country, small grocery stores generate 85% of our sales. The estimated total number of retail stores in the country is around 200,000, from which around 150,000 outlets sell branded products. Some leading FMCG companies usually cover about 90,000 of those on average. Our coverage was far below, at just 50,000.
Distribution is one of the critical factors for the success of any FMCG brand. If your brand is not available in the store at the point of consumer visit, only 20% of consumers will go to another store looking for your brand, our research reveals. Most consumers will buy something else if they cannot find your brand at a particular store. Even brands with strong equity will suffer if the availability is not up to the mark. Only in pharmaceuticals, consumers devote time to visit several pharmacies until they find the brand they need. So, during the last five years, we devoted resources to bolster our distribution network, increasing our reach to 90,000 stores directly covered by our sales force island-wide; thus we are within the best in class. Indirectly through wholesalers, we cater to another 40,000 outlets across the country.
We also have a clear focus on consumer-centric marketing. We have several high-quality products, so we created narratives around these and made sure we put them out there to create more awareness about our product offerings. We have a young and energetic marketing team who have done a tremendous job. Creating awareness among the target group by creatively communicating an authentic message is crucial for success. Great product, backed by sound distribution, excellent marketing and a fully motivated team is a strong formula for sustainable growth.
All these pieces have to go together for the sustainability of a company. Across the company, we have created an enabling and rewarding environment for every one of our team members to reach their full potential. We have promoted a culture of openness, transparency and a non-hierarchical structure in the company thus Maliban is independently verified as a Great Place to Work.
When it comes to expansion, we invested over Rs2 billion in machinery as part of our diversification strategy over the last five years. We invested in a state of the art cookie plant, rejuvenated our milk business and invested in an Agribusiness that manufactures cereal products. Maliban Yahaposha is a four cereal product enriched with vitamins and we buy our raw materials almost 100% from local farmers. We are connected to around 3,000 farmers across the country and invested Rs 800 million in a state of the art cereal plant in Dambulla. We are also in plantations, and currently grow mangoes in 150 acres of land. Furthermore, the company has a very aggressive expansion plan to expand cultivation, especially to grow corn to facilitate our upstream operation for the cereal business.
Considering our product portfolio and expansion strategy, we brought management control over the earlier independently-run Little Lion which has a brilliant confectionary fit with Maliban biscuits. Little Lion has a very promising range of bakery items, pastries, and cookies and the Maliban management synergy is evident in the sound operational results within a short period. Furthermore, we launched Maliban Tea in the beverage sector three years ago, and I am proud to say that out of about 450 brands in the Sri Lankan market, currently, we are within the top five brands in the country.
Now we are the only company in Sri Lanka; probably in Asia, that has all three key products that go for the “tea table”, biscuits, milk and tea. Today, we are a Rs 25 billion revenue company. Ten years ago, Maliban group turnover was around Rs5-6 billion. The overall business has grown in leaps and bounds since. It has been an impressive and fulfilling journey so far.
What is it that you think you brought as a leader that may have enabled that to happen?
The success of the company is truly a team effort. Starting from Chairman Mr Ratnapala Samaraweera to the factory flow employee, and the salesperson who works tirelessly on the street catering customers; all of them have contributed immensely putting their heart and soul in the business to achieve this wonderful and successful journey of Maliban. We always had a quality product portfolio, but we improved tremendously in other areas such as distribution, marketing, process, product quality, innovation and overall productivity of the human capital through knowledge enhancement and motivation.
We won the reputed World Class Award for the third year at the Global Performance Excellence Award (GPEA), thereby being the only organisation in Sri Lanka to achieve this award. Our team of production, quality and engineering in the factory is of exceptionally high calibre. We also have sustainability goals and give back to communities as part of our corporate social responsibilities. All these ingredients are fundamental to success. We are on a continuous improvement journey; we have done well in the past, but I must say there are still many areas for improvement. It’s a never-ending journey for excellence. Especially post-Covid, to be successful as a company we need to have very high resilience and adjust to different situations quickly and move forward.
In your view, as a leader, when you look at where you want to take the business, what factors do you think will shape or influence the way Maliban grows in the future?
As a group, though we are highly diversified, our main growth driver will be biscuits and cookies, because that’s our core competency and our core business which expands over seven decades. Five years from now, our vision is for Maliban to operate at least three biscuit production facilities outside Sri Lanka, making Maliban a truly regional/global company. Right now, we export to over 50 countries, including Australia, the U.K., and the U.S. For confectioneries like biscuits, the cost to export is high compared to other exported goods due to freight costs, various border controls and taxes at destination markets. Furthermore, Sri Lanka has a high manufacturing input cost. For aggressive growth, Sri Lankan market size is always a limiting factor, so you need to look at large markets. There are locations outside the country, which may offer considerable competitive advantages, fewer input costs that are not available here and something worth exploring.
So, there is a strong business case to have production facilities that offer better advantages, and for this, we are exploring opportunities in Asia and Africa. Covid-19 has forced us to pause our expansion plans for a while, but hopefully from next year, we look forward for things to come back to some normalcy.
We have perfected world-class manufacturing processes backed by a talented team of professionals. We want to leverage that to build scale and continue to grow Maliban, which is why we are scouting for opportunities to set up manufacturing plants in a few countries outside Sri Lanka. Any company aspiring to grow must think of expanding to new markets and remain grounded to its core competencies to unlock opportunities and contain risks.
The other area that we are extremely focused on is healthy food. If you consider the industries in Sri Lanka, the food sector has done well over the last few years. Consumers increasingly care about health and wellness; this is shaping the future of the food industry. Consumer awareness of the effects of sugar, oils, and fats are high. As a confectionery manufacturer, we are very much aware of adjusting to the evolving demands of consumers. Maliban has one of the best research and development networks in the food industry, continually innovating and renovating our portfolio to meet changing consumer demands. We also work with leading-edge partners around the world, including well-known research laboratories, academic institutions and public organisations. They help strengthen our capabilities by generating ideas, accessing skills and developing new technologies, so we can remain at the forefront of consumer trends.
Apart from that, we want to go up in the value chain with product portfolio management. What we intend is to move up the value chain because the same volumes will generate better revenue management. We do have tremendous value in our product segmentations that we hope to unlock. Right now, 70-80% of our product portfolio sits in the mid-range. While we have products for the bottom end of the pyramid of the market, we also have high-end products that appeal to more inspirational customers, with offerings to satisfy sweet temptations or sugar-free products for those interested in health and wellness. We can only reap the returns of moving up the value chain three to four years from now when more consumers become affluent and discerning. We have established collaborations with top international institutions to research and develop high-quality health and wellness food products at reasonable prices to capture a large share of the Sri Lankan market. Our main objective is to provide the tastiest and healthiest choices, at all times of the day and for all stages of life. People today have an excellent knowledge of good nutrition and of managing their health and wellness by selecting the right food for them. They want products with simple, understandable ingredients, natural or organic, and ideally locally produced. Our Maliban Ginger Biscuit is now manufactured with 100% local ginger.
In Sri Lanka, the biscuit and milk powder markets have reached saturation points. Household penetration of those two product categories is almost 100%. With kids at home and schools closed due to the pandemic, the biscuit industry has seen a 7-10% increase in consumption. Usually, the market grows around 2-3% annually in volume terms. We are focusing less on market penetration and more on market development. Hence value creation focusing consumers on mind and cost efficiency in operation are two key growth drivers.
Consumer-centric product innovation is our other area of focus. We have a dynamic product innovations team led by our Chairman’s daughter, the current Managing Director Ms Kumudika Fernando, and we are constantly looking to introduce new experiences to consumers. In Sri Lanka, about five out of about 50 different products, account for around 60% of the total biscuit market, comprising around 30 biscuit manufacturers.
Indulgence, or comfort food, is the area occupying our attention. We introduced Maliban Real Temptation, Sri Lanka’s first liquid chocolate filled biscuit, and we are looking at developing other new experiences for the domestic market.
Managing business channels are very important to cater to the right target consumer segment through the right channel of distribution. In this context general trade – small grocery stores and mom-and-pop shops – will continue to dominate retail trade at least for the next five years. Supermarkets, also known as modern trade, are growing their coverage rapidly, but are unlikely to overtake the general trade segment soon. So our strategy is to manage the channel dynamics in a very effective manner, as we reach and cater to our valued customers more effectively.
Maliban is a big company with international ambitions. What do you think this will require of its leaders?
We are entering a post-Covid era, but the pandemic will be with us for the next one and a half to two years. Business disruptions from lockdowns and pandemic-related economic challenges will continue. In such challenging times, leaders need to be able to inspire and motivate teams and build resilience. We live in an uncertain world. Traditional business models are either upended or rendered outdated at an alarming rate.
If there is one lesson for businesses from Covid-19, it is the importance of building resilience. No matter how big or financially powerful a company may be, surviving a crisis and emerging stronger is a tough task. Instilling resilience into the culture at Maliban helped us through the worst of times during the unfolding pandemic. Starting from the Chairman, everyone in the organisation worked as a well-knitted team to achieve one common objective – serve the customers to the best. All the departments synchronised together and worked round the clock to deliver great customer service. Our 750-strong team of sales officers performed their duties in highly vulnerable situations ensuring that all our retailers have received adequate stocks to cater to their customers.
Agility is an indispensable trait, not just for a leader but everyone else across the organisation. Having fundamentals in order will always help to grow the business more sustainably. Excellent products backed by customer-centric distribution and marketing, managed by highly skilled, motivated people will always give a winning formula.
Another area we are very focused on is developing future talent. You need to have a strong bench strength to replace the seniors whenever it’s necessary. A well-planned hybrid organisational structure consisting of experience and youth will always give better results.
From an operational point of view, attaining cost-efficiency is critical but challenging: and the larger the firm, the bigger the challenge. We are looking at it across all layers, across every department, without sacrificing service parameters and product quality. People are going through a tough time, and costs are running high, but increasing the prices of a product must be the last option for a company, although it is the easiest option available.
As a responsible company, social and environmental wellbeing will always matter to us. Ethical practices and strong values continue to dictate our every move. These dimensions should come into play, more so during a crisis. Therefore, we have allocated a fairly handsome budget to give back to the community and drive our sustainability goals. We must do these things to remain a truly successful and sustainable company. One decision the senior management took with the blessing of the Chairman and the Board, when the covid pandemic started last year, was that we will manage the business in such a manner that protects all our employees’ jobs and their benefits are not reduced. We are proud to say as a company we achieved that 100%.
Looking at the new post-Covid trend, we will shift our marketing communications and distribution with more weightage to digital platforms. E-commerce has been a revelation to this country since the pandemic broke out in March 2020. E-commerce has emerged in a big way, and it will grow rapidly like in the developed world. Communication dynamics have changed thus we will allocate bigger budgets for digital advertising campaigns. Television ads are still a force in Sri Lanka because of their reach, but social media is gaining traction, is comparatively cost-effective and can give you more mileage. It all boils down to being cost-efficient: you need optimal returns on every rupee that you spend, that is the key, and it is something we are pursuing with intent.
Moving forward it’s important to adjust ourselves and live with the pandemic. Hence, we are constantly trying to contain the covid risk of doing business. At Maliban, we spend around Rs. 25 million each month on Covid-19 prevention. We provide all our factory staff with meals, transportation, personal protective equipment, and sanitized and safe environments to work; necessary investments to keep our teams and families safe so that the business can continue without interruptions.
Being a CEO is a tough job. You have to devote considerable attention to strategy and the long term direction of the company. At the same time, you have to give leadership to day-to-day operations of the business. How do you manage these often conflicting needs?
As you move up the ladder, you spend less time on a day-to-day operation and more time on strategy. However, in a family business like Maliban, you need to do both because what we do every day is as important as strategizing for the future. We have General Managers with high competency and experience leading different departments. The Board of Directors, myself and the General Managers meet once a month for a full day, especially focusing on the “Strategic Direction” of the company, and it is a 360-degree analysis of the business. For strategy meetings, we sometimes invite people from the junior management team to share their views and ideas because what we have seen is that when we talk about the future, young people have brilliant ideas. That has helped us immensely in deciding how and where the ship should go. I firmly believe that sound strategy requires having a blend of youth and experience at the table.
As a Group CEO of a large blue-chip company and a renowned corporate leader, what’s your advice to the budding future talent?
Firstly, always follow your heart, meaning “do what you like to do”. Then you will enjoy what you do. Focus on a career, not on a job. For example, though I do a general management job currently, my background is sales and marketing, and I enjoyed every minute of my sales and marketing career. Do not go behind positions and rewards, they will invariably follow.
Secondly, focus on your emotional balance. Today’s younger generation is fully focused on educational qualifications, meaning technical skills. It’s an important element, however, it’s becoming a hygiene factor because nowadays everyone has some sound educational qualification. Hence companies are now recruiting people with a positive attitude. If you come across a problem, immediately focus on the solution rather than worrying about the issue. Especially post-Covid, we are exposed to all sorts of negative messages and stories. Hence, having a positive mind is one of the key differentiators for sustainable success.
Thirdly, play to your strength. It’s a comparative strength. You must be better in certain areas than the rest in the pack. The issue is most people don’t have a clear idea about their strengths, hence self-awareness is key. Play to your strengths, then your journey is happier and rewarding.