ECONOMYNEXT – Sri Lanka’s privately owned Uswatta Confectionery Works is venturing into the crowded domestic biscuits market hoping to capture a 10 percent market share, doubling revenues.
Uswatte had invested 500 million rupees on a 100,000 square feet biscuit factory on a 15-acre land in Millaniya, Horana.
Quintus Perera, Chairman of Uswatte said revenues grew 30 percent to reach 2.0 billion rupees in 2017.
"We hope to double revenue with the new biscuit range."
The company is introducing three hard-dough biscuits and three soft-dough biscuits to the domestic market.
Uswatta, founded by the late Christy Perera in 1956, manufactures popular savoury snacks Tipi Tip and Jumbo Peanuts, and confections like Glucorasa jujubes and Jelly, and wafers. The company was on the verge of bankruptcy before the second generation stepped into restructure the firm.
"The market is crowded," Perera said. "There are 15 biscuit manufacturers in the country and there are many imports as well, but we believe our quality product and sales network of over 80,000 outlets will help us reach the number three position, easily."
He said imported biscuits are charged import duties and cess, so the firm was not worried about foreign competition.
But, duties and commodity levies on imported ingredients is a cause for concern.
"Our prices are not competitive overseas because of these taxes," Perera said.
Uswatta is exploring export opportunities for biscuits in the Maldives, Seychelles and Singapore. "But our main focus will be the domestic market," Perera said.
Uswatta already exports its other products in small quantities to over eight countries including India, Japan and the UK, but they account for less than 1 percent of total revenue, he said.
A proposed sugar tax will dent profitability at Uswatta. For instance, a roll of peppermint priced at 10 rupees, will be taxed at 8.50 rupees due to its sugar content, Perera said.
"We don’t expect fat profit margins, if we can reach 7 to 10 percent margins we’ll be alright," Perera said.
The company has plans to venture into chocolates, bubble gum and snacks, he said. (COLOMBO, 10 July, 2018)