ECONOMYNEXT – HVA Foods Plc, a Sri Lanka based company known for its Heladiv branded ready-to-drink tea, said it has opened a unit in California, USA to distribute tea concentrates and speciality products.
"The first trial shipment has reached the US and marketing has commenced with a view to effectively penetrating the US market, using tea concentrates and specialty teas," HVA Foods Chairman Chairman Rohan Fernando told shareholder in the annual report.
HVA Foods has expanded from traditional tea products into tea concentrates, which are used for iced tea, cordials and other tea-based beverages.
"A new range of products is being developed including energy drinks, herbal infusions and gift tea items aimed at the highly advanced new beverages, making a positive impact in the beverage sector," Fernando said.
Industry analysts say that the world has been switching from sodas to alternatives such as iced tea over the past decade.
HVA Foods had used a partial grant from the Asian Development Bank to set up a 100 million rupee tea extraction plant in 2011 to create tea concentrates.
The beverages are now produced by four outsourced service providers, after the group disposed of its manufacturing facilities, except for the extraction plant, over the past financial year.
Fernando said that due to protectionism against blending, many tea exporters are now looking at setting up operations in liberal and business friendly countries like UAE, Oman and India.
In Sri Lanka several so-called Mercantilist ‘oligarchs’ have been getting around politicians to maintain their position, eliminate competition, gain privileges using the coercive power of the state in several sectors.
HVA Foods is expecting the government funded promotional campaign to help in its US sales.
"We also await the unveiling of the global campaign to promote Ceylon tea, which is due to be launched before the year end in several countries including Russia, Japan, Turkey, China and USA,” Fernando said.
He said HVA Foods Executive Direector Harsha Fernando will oversee HVA Foods’ US operation.
The group’s exports to the US and Canada have declined over the past three financial years. Sales in US and Canada had reached a peak 34.4 million rupees in 2015.
In 2018, revenue from the US and Canada market fell to 21 million rupees from 21.8 million rupees a year earlier. Sales in the region amounted to 1.7 percent of HVA Foods’ total revenue and exports in 2018.
Revenue from other markets except for Far East/Asia grew for HVA Foods. The group’s revenue in 2018 grew to 1.2 billion rupees from 884.3 million rupees a year earlier. (Colombo/Sept11/2018)