Cold Stores hit by consumer spend freeze
View(s):Ceylon Cold Stores (CCS), manufacturer of Elephant House soft drinks and ice creams and a leading consumer food company, has seen its manufacturing income drop during the last quarter owing to low consumer spend hit by inflation.
Inflation was largely triggered by taxation and tardy economic outlook. For instance, the special commodity levy on sugar that was increased to Rs. 33 has also pressurised margins at CCS.
CCS, a subsidiary of John Keells Holdings PLC has been trying to balance its focus on carbonated soft drinks (CSD) substitutes (it launched Fit-o fruit drink last year) with increasing number of consumers opting to be more health conscious.
In a bid to combat this, CCS replaced sugar with natural sweeteners for selected products. The company competes strongly with Coca-Cola in the beverages business.
CCS accounts for more than 55 per cent of market share in CSD and ice cream segments.
Analysts say that CCS may face further competition in the ice cream segment with Tablez Food Company, the food and beverage arm of Lulu International Group, signing an agreement with US-based Kahala Brands to bring its ice-cream brand Cold Stone Creamery to Sri Lanka. They aim to open five new stores in Sri Lanka by 2021. CCS is currently the country’s second-largest food retailer and the largest ice-cream vendor and is investing Rs. 3.8 billion in constructing a new ice plant to drive its ‘impulse’ product range growth. Its bulk sales (1 litre containers) in ice creams account for more than its impulse sales.