Sri Lanka, our neighboring country, is not too different from us be it in terms of culture, customs or consumer behaviour. We have seen many brands from our country venturing into Sri Lankan market. Most recent of them includes leading FMCG firm Dabur and the leading fast-food restaurant Dominos.

Dabur India Ltd has recently announced to invest Rs 70 crore over the next one year in Sri Lanka to build an export-oriented beverage production unit. The company has inked a pact with the Board of Investment of Sri Lanka for the project. The proposed Sri Lankan facility, which will be established at Gampaha, north of Colombo, will have a capacity to make 280,000 cases per month and will be on-stream in Aug-Sept 2012. "Building manufacturing facility in Sri Lanka was an important strategic decision for Dabur as manufacturing presence here gives us a competitive edge that we intend to utilize in full," says Sunil Duggal, CEO, Dabur.

Market potential

While the eating out segment in Sri Lanka is still smaller than the Indian market, Dominos sees growth potential there. Earlier this year, Dominos has opened its first outlet in Colombo, Sri Lanka. The company plans to add more stores in that region.

Commenting further to its foray into Sri Lankan market, Duggal says, “The new facility will produce a range of juices and fruit-based beverages for the Indian market. This will be an export-oriented unit, catering to the demand for our Réal range in India. About 90 per cent of the production will be shipped to India to meet the growing demand for our products here.  A small portion of the production would be used to seed the local market in Sri Lanka.”

Explaining the reason behind opening production unit in Sri Lanka, Duggal says, “With a plant in Sri Lanka, the freight costs for shipping juices to South India would be much cheaper and would give the company greater penetration and presence in this market.”

Micromax, the leading mobile company which forayed into Sri Lanka last year says that the company is on second position after Nokia in market there. Micromax has entered into a distribution arrangement with Infinity Lanka Holdings, which will make Micromax products available through 1,500 outlets across the Sri Lanka. As per the company, market there has immense potential for the growth of mobile phone industry and there is a huge untapped telecom consumer segment waiting for a range of innovative mobile phone models.

Duggal says that he sees a good potential in the Sri Lankan market. “We plan to expand this facility to include production of some personal care products for the local market in Sri Lanka,” he adds.

Future expansion

The market in Sri Lanka is largely untapped and has higher growth potential. With the increase in average income of consumers there, each and every sector of consumer product will witness higher growth trajectory, says a market analyst.