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Monday February 6th, 2023

The Rapid Transformation of Pelwatte Dairy

Akmal Wickramanayake Managing Director, Pelwatte Dairy

Akmal Wickramanayake, Managing Director at Pelwatte Dairy, is leading the company to its next phase of rapid growth, diversifying its product portfolio and venturing into the export market. Wickramanayake, representing the second generation of this successful family business, wants to transform Pelwatte Dairy into a food and lifestyle brand where customer experiences matter and where rural farmer consumers can thrive.

Can you give us a brief overview of Pelwatte Dairy, including the dairy farm operations and production facilities?

Pelwatte Dairy began its journey in 2006 with fresh milk, subsequently venturing into ice cream and yoghurt products and started manufacturing milk powder in 2011. Our state-of-the-art production facilities, upgraded in 2015 and 2018, process over 150,000 litres of fresh milk daily, making us one of the two largest locally-owned dairy processing companies in Sri Lanka. Pelwatte Dairy sources fresh milk from an island-wide network of over 10,000 dairy farmers. We also operate a training farm with about 200 milch cows to facilitate our R&D and introduce new technologies and global best practices to our rural farmer network to help them scale.

We have full-cream and non-fat milk powder, salted and unsalted butter, garlic butter, and chilli butter, the latest product in our portfolio to be launched soon. The Pelwatte range also includes 15 flavours of ice cream, yoghurt, drinking yoghurt, fresh dairy ghee and fresh cream. All our products reach the shelf within 48 hours after the fresh milk leaves the farm. With our focus on wholesome products and community values, we aim to help Sri Lanka achieve self-sufficiency in dairy products and empower rural communities to develop. At present, in terms of SKUs, we have about 40. When I took over as Managing Director in 2017, we had about 20 SKUs, and we have doubled our range of products to over 40 over the last five years.

What is the company’s approach to building consumer loyalty?

The dairy industry is intensely competitive, but we have had phenomenal success over the past few years, mainly because the consumer is at the heart of everything we do. We strive to build lasting loyalty to the brand by focusing on wholesome nutritional products and improving consumer experiences. We continuously invest in R&D to expand our product range with unique flavours using local ingredients naturally sourced, creating opportunities for local dairy farmers to supplement their incomes with crops.

Our customer-centric approach has been instrumental in helping us realize growth even during the challenging pandemic and the supply crunch caused by the unfolding balance of payments crisis.

Pelwatte Dairy was one of the few companies that unlocked their potential during the pandemic. We fell back on our values and business model that focused on creating domestic value chains and uplifting rural farmers. We kept our manufacturing plants open and ensured that customers could access our products.

In the last 18 months, we grew our sales by 50%, before which year-on-year growth was around 15 to 20%. During the COVID pandemic, we were one of the few organizations that adapted quite well, adhering to all the health and safety guidelines, had minimal downtime in our operations and ensured that sales never came to a halt. The dollar crisis and import restrictions created a milk powder shortage in the market, so we had to double our efforts to keep the market supplied. That strategy helped us scale up production and gave us the confidence to come out with more products and scaled-up volumes resulting in phenomenal revenue growth. We bolstered the Board of Directors, bringing together top professionals from diverse and related backgrounds to take Pelwatte Dairy to its next phase, from a dairy company to a food company and lifestyle brand.

How will the new board transform the company from a dairy brand to a food and lifestyle brand?

We aim to steadily increase market share in each of our products and venture into the export market, and that is the core strategy formulated by the new board. The board is also spearheading the digital transformation of Pelwatte Dairy to improve internal process efficiencies and, importantly, to create a digital marketplace to enhance customer experiences and help them source delicious, high-quality, nutritious and affordable dairy products.

We are also introducing traceability so that our customers can find out where the fresh milk originates and how Pelwatte Dairy is helping rural communities in their development journey. Our training farm provides rural dairy farmers with the technical inputs and support they need to build resilience, increase yields, and incorporate modern dairy farming practices to upscale their farms. We also distribute young milch cows to our farmers because Sri Lanka does not have a marketplace for milch cows, making it difficult for farmers to increase their livestock to scale their farms.

What is your vision for the company?

We want to rapidly expand our market share in each dairy product segment and evolve into a food-based lifestyle organization; that is the next logical phase for Pelwatte Dairy because most of our farmers also cultivate fruits, spices, vegetables, pulses, and paddy. By investing in R&D and expanding our product range, we are also creating new growth opportunities for our farmers and their communities.

The export segment holds a lot of promise, and we are negotiating with overseas distributors and vendors to take our products globally. We expect to start exporting our spreads and ice creams within the next 18 months. Our research has shown that our unique flavours sourced from local ingredients will help us gain a foothold in target export markets.

Also, in our R&D pipeline is a plan to expand our dairy portfolio with new varieties of cheese products. We are proactively looking for opportunities for collaboration and deepening synergies with our farmer network to scale production by addressing their supply chain issues and exploring opportunities for joint ventures and mergers that would allow us to venture into other food sectors.