FMCG manufacturers have always sold products packaged in small quantities – like shampoo and toothpaste in sachets – to capture a large rural market or maintain continuity of sales in an economic downturn. However, Ceylon Cold Stores, a listed ice cream maker, is selling ice cream in smaller quantities – in cups, cones and sticks – for another reason: it’s easier to tempt health-conscious consumers to commit a small indulgence rather than convince them to buy a two-liter tub of sin.
Globally, as incomes improve, people are becoming more conscious about their health and well-being. The globalization of eating habits is making it possible for people to consume organic super foods anytime of the year at affordable prices. Food companies are forced to make their products healthier or risk losing market share to those who do. These trends are now catching on in Sri Lanka.
“Sri Lanka’s transition to a middle- income country, rising disposable incomes and the growing middle class have resulted in increased customer sophistication,” says Ceylon Cold Stores (Cold Stores) in its 2016/7 annual report. The company also manufactures fizzy drinks
(Cream Soda, Ginger Beer) and operates a supermarket chain (Keells Super). “The result is rising demand for premium ice creams and growing preference for non-price characteristics such as convenience, quality and dietary diversity,” it says.
Health-conscious consumers are not likely to buy one to four liter tubs of ice cream because they know they’ll give in to the temptation sooner or later, or they just don’t want to spoil the kids.
Ice cream makers are reacting to falling sales by making it easier for people to give in to the temptation more often and without the guilt—by making ice cream available in smaller portions. They’re calling it ‘impulse buying’. “Globally, the impulse ice cream segment dominates
the ice cream market, with an estimated share of around 60-70%,” Cold Stores says.
Sri Lankans consume 40 million liters of ice cream annually, and the market is growing at around 14% annually. Cold Stores’ Ranala ice cream factory is running out of capacity to meet growing demand.
Cold Stores, established in 1866 as an ice factory for cold storage, is investing Rs3.8 billion in a new ice cream manufacturing facility on a nine-acre property located in the Seethawaka Export Processing Zone. “The new factory will facilitate a significant increase in impulse production capabilities and capacities,” the company said in its annual report. The plant, which is financed by bank borrowings, will begin operations in 2018.