ECONOMYNEXT- Keells Food Products Plc (KFP), a unit of Sri Lanka’s John Keells Holdings, is expecting its ‘Krest Ezy Rice’ branded product line to become a top revenue earner over the next two years as the firm kindles the next big food trend in the country.
The firm commissioned a 200 million rupee plant in September to produce the Ezy Rice line, entering a market that is now dominated by instant noodles.
“The feedback we have received over the past quarter has been very encouraging,” John Keells Consumer Foods Sector Head Daminda Gamlath told EconomyNext.
“Next year, the instant rice products would comprise 5 to 10 percent of the KFP revenue,” he said.
“In two years, we are aiming a 30 to 40 percent contribution.”
In the year to March 2019, KFP posted revenues of 3.4 billion rupees.
The instant rice line is a diversification strategy for KFP, which is known for its processed meats and crumbed products such as Chinese rolls, fish fingers and kochchi bites offered through the Keells, Krest and Elephant House brands.
The new product is gaining traction, Gamlath said.
“In the first month, we didn’t go out to the market to promote the product, but when we did start our communications campaign, sales grew 40 percent over the next two months,” he said.
KFP is also receiving tailwinds from the government’s fiscal stimulus package, which is expected to put more discretionary cash in the hands of the consumer through income and sales tax cuts.
In addition to mass media marketing, KFP is aiming for as large a section of the population to sample the new rice product at the Keells Super stores and public events.
Competing directly with the current king of convenience food instant noodles, which is dominated by Nestle and Prima, Krest Ezy Rice is being offered as a healthier and more filling alternative, Gamlath said.
The 99 rupee product, on which KFP keeps a 30 percent margin, is being marketed to parents, as the largest consumers are children and young adults, he said.
“When we were researching, we found that mothers cared most about the nutrition in the meals they are providing to their children.”
“So, with Ezy Rice, it’s more nutritious than noodles and the mothers could add their own twist to the rice by adding meats, vegetables or an egg. Maybe they would serve a salad alongside it.”
Ezy Rice is available in four flavours; fried rice, spicy rice, red rice and yellow rice. With demand for red rice below expectations, production will be lowered in favour of others.
Over the next four months, KFP will put more flavours in the market.
So far, only 30 percent of the 100 tonne per month plant is being utilized in an average work day. As demand increases beyond the current limit, KFP is planning 24 hour production cycles, and introduce more automation.
“We didn’t want to invest a lot at the start until we got the scale in demand, but the plant was constructed in a way which would allow easy upgrades through automation,” Gamlath said.
KFP had been researching and developing the processes for seven years, though the plans to build the plant were only announced last year.
Ezy Rice uses technology similar to instant noodles, with the technical assistance provided by the Industrial Technology Institute.
Helix Engineering, a tea drying machine producer, made the equipment for the rice plant, as the processes followed similar principles.
The dried instant rice akin to Ezy Rice is popular in Latin American countries. Parboiled rice immersed in water or sauces in microwavable retorted packets such as the US-based Uncle Ben’s are more popular in many other countries.
KFP chose the dried rice as it packs more nutrition in and allows for more customization in household kitchens, Gamlath said.
A handful of local companies had attempted various iterations of instant rice in the local market over the past five years, but had failed, due to various factors, including high prices, low convenience and taste.
Keells has found success thanks not only to its large marketing budgets, but also due to its long development time.
“We had to perfect how the rice tasted and felt during experiments in our lab machine,” Gamlath said.
This has provided KFP with a large first mover advantage, but the firm is aware that competition could catch up swiftly.
As the ‘Krest Ezy’ brand gains equity, KFP is hoping to extend the instant convenience food range into other segments, such as traditional Sri Lankan food, to stay ahead of the competition, Gamlath said.
Samples of the new Ezy Rice have also been sent to Keells dealers in the Maldives, UK and Japan to get a feel on the product’s export potential, Gamlath said. (Colombo/Jan06/2019)