Financial Times

As the saying goes: “If at first you don’t succeed: try, try again.” And that is exactly what the Spice Council has done, even if it’s only a beginning at cracking a potentially huge market.

A delegation representing the council recently returned from the United States with $3 million (Rs 309 million) worth of sales orders for “Ceylon Spices”, as the product is being branded, and the immediate response from American companies met was very positive. The initiative was supported by the US Agency for International Development through its The Competitiveness Programme (TCP).

TCP provides technical assistance to private sector associations and organisations that are committed to advancing industry competitiveness and economic development.

As for the build up to the New York state visit, as well as the “Natural Products West Expo” in Anaheim, California, the Spice Council had to decide what it needed to make an impact there.

“The first was to evaluate those companies that exported spice; to see if they could do well in the US market,” said Sarada de Silva, Chairman of the Spice Council. In the end, 12 companies were put forward, eight were picked, and but only six eventually went.

The six companies were: EOAS Organics, Lanka Organics, G. P. de Silva & Sons International, Rathna Producers & Traders, SDS Spices and Spice of Life.
John Varley, Chief of Party, TCP, said the visit was a success story. “It’s like playing cricket, where at the beginning you play and miss, but with coaching and hard work you eventually strike the ball just right,” he said, adding that there is a bit of luck involved, as well as hard work.

To ensure the best results for the business trip, three US consultants were brought in to initially pick the most suitable candidates to go, and then work out what the best matches with US companies were.

For more of an insight into the trip, Alex Ponweera, Programme Specialist, TCP, mentioned the expo in California as an eye-opener to the type of products being produced and bought. “There was everything, from drinks, to toothpaste, to food flavouring, to ice cream, among many spice uses,” he said, adding that it showed the vast market that was the US, especially as the country consumes 454.5 million kilograms of spice in 2005.

“Due to the ever-increasing demands for organic food, even if presently quite small but doubling each year, that too offers potential. There are also the fast-growing markets for value-added spices and spice blends, where high-quality spice fetches premium prices,” Ponweera said.

Touching on another business opportunity was the outsourcing of processing and blending, where presently India, China and Indonesia rule the roost. “But Sri Lanka also has the potential to join this club,” the programme specialist said.

“Ceylon Spices’ have always fetched a good price, and presently demand is high for high-quality produce such as hand-picked cloves, cut-fine cinnamon, aflatoxin free nutmeg and white sesame,” he added.

But what about the businessmen who went: enter T. P. L. Raj, Director, Lanka Organics, and his objectives?

“We wanted to create awareness of our products, meet potential buyers, learn the market trends, as well as its intelligence. Through the consultants we got to meet spice brokers, processors, quality analysts, and potential customers,” Raj said.

And what was found out was that the brokers look for strategic alliances, quality and traceability of the product, whereas the processors also looked for traceability and quality, and source their materials from the larger producing countries, such as India and Turkey. “But we shouldn’t worry about this too much as those bigger producers are now becoming bigger consumers which opens up the market for smaller players like us,” he said.

One of the more important meetings were with quality analysis’, to find out exactly what was needed to ensure a smooth passage into the country. “Here we found out about the regulations, the expectations and the industrial norms, as well as ensuring that product analysis was up to scratch, for which Sri Lanka as a whole has a problem,” he said, adding that at times there were contradicting reports from laboratories from each country, which has to be sorted out by cross-testing.

As for potential buyers, that’s where the expo was useful, as it gave the Sri Lankan delegation the chance to mix with them.

“In conclusion I’d say what we need is a proper laboratory to test all exports to ensure the same standards are held to. I think we will succeed in the US marketplace but there will be hard work ahead to prove me right,” Raj said.

“Success stories are always nice, but we still have to take baby steps as far as the US market is concerned,” said Dr. Carol Becker, Mission Director, USAID/Sri Lanka.

Quality, it seems, was the word, with a little help from prompt delivery times. “More producers, processors and exporters need to experience a trip like this, where a look has to be taken at the high-end niche markets. If that market is moved into then the money from such sales will filter down all the way to the grower (of which most are small scale),” Dr. Becker said.

“Innovation and new markets also need to be looked at. The younger generations need to get involved to stop potential talent from going abroad.”

Problems also surface due to a lack of testing facilities, but as De Silva said, “To build such facilities means a big investment, meaning it won’t be easy.” But as Raj countered: “When talking about such needs in the US, there were people we met who were interested in investing in such labs.” Which would be useful as today, according to De Silva, there are no test labs accredited by main markets such as the US, Europe and Japan.

The Spice Council (formerly the Spice Cluster) was formed in response to challenges, both global and local, facing the spice industry in Sri Lanka, with the aim to place the country within the top five branded and value-added spices and allied products marketers in the world.