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Tuesday February 27th, 2024

Keells Food Products cooks up new food trend in Sri Lanka with Ezy Rice

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.

Gaining Traction

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.”

Scalable

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.

Innovation

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)

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Sri Lanka president appoints Supreme Court-faulted official as police chief after CC clearance

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe appointed Deshbandu Tennakoon as the 36th Inspector General of Police (IGP) of the country after the Constitutional Council (CC) cleared the official who along with three other police officers were asked by the Supreme Court to compensate 2 million rupees in a fundamental rights case last year.

“President Ranil Wickremesinghe has appointed Deshbandu Tennakoon as the IGP in accordance with the provisions of the Constitution,” the President’s Media Division (PMD) said.

The island nation’s Supreme Court on December 14 ordered Tennakoon when he was the Acting IGP and three other officials to pay a compensation of 500,000 rupees each for the violation of the fundamental rights of an individual.

The Supreme Court also instructed the Police Commission to take disciplinary action against the said Police officers after it considered the petition filed by W. Ranjith Sumangala who had accused the Police officers of violating his fundamental rights during his detention at Mirihana Police Station in 2011.

The Supreme Court held that the four police officers violated the fundamental rights of the petitioner by his illegal arrest, detention and subjection to torture at the Mirihana Police Station, which was under the supervision of Tennakoon at the time of the arrest.

President’s Secretary Saman Ekanayake presented the official appointment letter to Tennakoon on Monday (26) at the Presidential Secretariat.

When Tennakoon was asked over if the Supreme Court decision would have an impact on his appointment as the IGP last week, he declined to comment, saying that it was a Supreme Court matter and he does not want to say anything about it.

Tennakoon was also criticized by Colombo Archbishop Cardinal Malcolm Ranjith when he was appointed as the Acting IGP citing allegations against him related to security lapses leading up to the Easter Sunday attacks which killed at least 269 in April 2019.

However, Tennakoon rejected the allegations. (Colombo/Feb 26/2024)

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No water tariff hike in Sri Lanka this year: Minister

Millennium Challenge Corporation Photo.

ECONOMYNEXT – Sri Lanka’s planned water tariff formula is ready, and the government will implement it this year only if the formula’s tariff is lower than the current price, Water Supply Minister Jeevan Thondaman said.

President Ranil Wickremesinghe’s government has been implementing IMF-led pricing policies on utilities and the Water Supply Ministry has already come up with a formula.

“There is a water tariff formula in place right now and we are waiting for it to be drafted and seek approval from the cabinet,” Thondaman told reporters at a media briefing in Colombo on Monday.

“Once this water tariff formula is in place, there will be an annual revision with an option of biannual review.

The formula has been developed with the help of the Asian Development Bank. The formula includes electricity and exchange rate among many others as components like the fuel formula.

The National Water Supply and Drainage Board (NWS&DB) increased the water tariff in August 2023, claiming that the operating cost had been increased owing to high interest payment for bank loans and increased electricity prices.

The last year revision saw the consumers paying 30-50 percent increase from the existing water bill.

Minister Thondaman said he will implement the new formula this year only if there is a reduction.

TARIFF CUT WILL BE IMPLEMENTED 

“We will have to wait to see what the formula is. If the formula shows us there needs to be a reduction in the water tariff, we can implement it. But if there is an increase, why should we burden the people when we are on a road to recovery?” he said.

He said a group of experts including University Professors are working on the formula and the numbers.

“Once they come with the number, we will have to take a decision on whether we are going to impose on the people or not,” he said.

“We have already spoken to the Asian Development Bank and informed them we have established the formula. But according to the ADB requirement of this policy-based loan, the implementation period is only in 2025.”

“But right now, you want to take the approval for the formula for sustainability.”

The Energy Ministry is considering a drastic slash in electricity tariff soon. Thondaman said the exact numbers will be decided on after the finalized electricity tariff.

However, he said that as per the formula, there has to be a up to 10 percent increase in the water tariff as of now.

“Given the current formula set up, there must be around a 9-10 percent increase. It was actually at 14 percent. What we have done is since it is at 14 percent, we also did a calculation to see how we can do a cost cutting,” he said.

“So, despite our cost cutting measures, there will be an increase of 9 or 10 percent. But we will not be imposing it as of now because this year is meant to be policy sector reforms. Next year is meant to be the implementation.”

“As per August 2023 water tariff hike, we are able to come close to sustainable. So right now, there is no issue in the water sector. But a formula eventually needs to be established.” (Colombo/Feb 26/2024)

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Sri Lanka rupee closes at 310.80/311.00 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 310.80/311.00 to the US dollar Monday, from 310.95/311.05 on Thursday, dealers said.

Bond yields were down.

A bond maturing on 01.02.2026 closed stable at 10.60/80 percent.

A bond maturing on 15.09.2027 closed at 11.80/90 percent down from 11.90/12.05 percent.

A bond maturing on 15.03.2028 closed at 12.00/12.15 percent down from 12.10/25 percent.

A bond maturing on 15.07.2029 closed at 12.20/70 percent from 12.20/95 percent.

A bond maturing on 15.05.2030 closed at 12.30/70 percent down from 12.40/95 percent.

A bond maturing on 15.05.2031 closed at 12.60/80 percent from 12.45/13.00 percent.

A bond maturing on 01.07.2032 closed at 12.50/90 percent from 12.50/13.30 percent. (Colombo/Feb26/2024)

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