Consumer Goods

Our consumer goods segment comprises the largest branded tea company in Sri Lanka, selling three trusted brands that consistently perform well in the domestic market. Under the Consumer vertical is our export arm, which is renowned globally for its high quality Ceylon tea. We also have a consumer goods sub segment which currently leads the market in the confectionery category.

Sunshine Consumer Lanka Ltd., our consumer segment, has for over a quarter of a century been one of the top performing entities in the entire Fast Moving Consumer Goods sector. An undisputed industry giant, Sunshine Holdings PLC’s consumer goods trade is Rs. 19.0 Bn. business that all but dominates the local market in tea and confectioneries.The company is also a leading player in the tea export trade, helping Sri Lanka earn much needed foreign exchange.

Consisting of several distinct business units that cater to both the local and international markets, Sunshine Consumer Lanka’s tea brands, Zesta, Watawala and Ran Kahata, all record high sales volumes in their respective target markets, while the 75+ products of the more recently acquired Daintee Ltd. are among the most popular confectionery brands in the country.

Meanwhile, our export arm, Sunshine Tea (Pvt) Ltd. is consistently ranked among the top exporters of Ceylon Tea. The company exports over 200 varieties of the finest teas grown in the island to an exclusive clientele scattered over 80 countries.

Having recovered from the unprecedented economic crisis of the previous year that tested the resolve of all sectors, the 2023-2024 financial year proved largely lucrative for the consumer goods segment, with both tea and confectionery businesses performing well throughout the reporting period.

The domestic tea business, in particular, performed exceptionally well, marking double digit growth as the country’s macroeconomic situation improved and economic activity increased, while the confectionery business nearly achieved its targets despite some struggles.

Sunshine Tea (Pvt) Ltd., however, found the year under review somewhat challenging, initially due to input cost increases caused by currency fluctuations, Value Added Tax (VAT), poor weather and, later in the year, the still ongoing depreciation of the US dollar. Geopolitical conditions also played a part in a drop in volumes. However, the segment’s overall performance during the year under review was commendable, all things considered, and we’re hopeful of a resurgence in the current financial year.

Tea

With an estimated 98% of the population indulging in a hot cuppa at least once a day, tea is the most widely consumed beverage in Sri Lanka. The approximately 30 million kilogrammes of domestically consumed tea in Sri Lanka is retailed to customers both as branded tea and loose tea, with the former making up about 60% of the market. Sunshine Consumer is a dominant player in the branded tea segment, with its three brands enjoying nearly 50% market share and occupying the top five brands of tea.

Zesta

Going back over 25 years, Zesta is our premium tea brand renowned for its unique flavour and rich, full-bodied taste. Made entirely of 100% BOPF tea, the Zesta brand celebrates the ‘Art of Tea’ and is synonymous with exceptional quality. Besides tea, we sell a range of wellness infusions blended with herbs and healing spices under the Zesta brand to the discerning the discerning consumer.

Watawala Tea

Launched in 2002, Watawala Tea is today the number one brand in Sri Lanka’s tea market, according to the Kantar Worldpanel, an international company dealing in consumer knowledge and insights based on continuous consumer panels. The brand has won the “Most Popular Hot Beverage Brand of the Year” at the SLIM People’s Awards for five consecutive years since 2016 and continues to grow in popularity all over Sri Lanka.

Ran Kahata

An affordable cup of high quality tea remains elusive to many Sri Lankans, despite Ceylon tea’s global renown as a tea of premium quality. Ran Kahata is our solution to this unfortunate disparity. Promising two cups for every teaspoon of tea, this innovative brand proved an immediate hit with tea drinkers from all walks of life and is among the top five selling tea brands in the country. Ran Kahata remains a popular choice among those who crave a strong cup of “kahata” after a hard day’s work.

Confectioneries

Daintee is perhaps the most recognisable confectionery brand in Sri Lanka, going back nearly 40 years. Launched in 1984 as a collaboration with UK confectionery giant, Barker and Dobson, Daintee Ltd. is famous for its assortment of candy, jellies and other confectionery items and popular toffee brands like Milady, Chocomint and X-tra, all of which has contributed to its unchallenged position as market leader. The Company enjoys a 40% market share in the hard candy (toffee) space and, since its acquisition by Sunshine in 2020, it has expanded the chocolate, biscuits and other confectioneries looking to fill niches that aren’t occupied by the bigger players.

Perhaps the most recognisable candy brand in the country, Daintee is an icon in the confectionery trade, with a legacy spanning four decades. Established in 1984 through a partnership with the UK confectionery giant Barker and Dobson, Daintee Ltd. is well known for its wide range of candies, jellies, and other confectionery delights. Its popular toffee brands such as Milady, Chocomint, and X-tra have played a significant role in solidifying its position as the undisputed market leader. The Company enjoys a 40% market share in the hard candy (toffee) segment and, since its acquisition by Sunshine in 2020, has further diversified its offerings, expanding into chocolates, biscuits, and other confectioneries, to fill niche markets that are not dominated by larger players.

Daintee, along with Milady and several other confectionery brands under Sunshine Consumer, offer affordable treats that qualify as accessible indulgences available at the grocery store level, making them immensely popular with the masses. Milady Chocomint, in particular, boasts a remarkable track record and is currently the largest-selling confectionery item in Sri Lanka in terms of volume.

Year under review

Having carefully navigated the rough seas of 2022, the 2023-2024 financial year was a fresh opportunity for the consumer goods business to thrive once again. Performance improved significantly during the reporting period, with the Company recording high double-digit growth in terms of revenue, net revenue, and gross profit by the end of the fiscal year.

We experienced double-digit growth in the tea segment, both in volume and gross revenue, with a similarly notable gross profit margin compared to the previous year. As Sri Lanka’s economy stabilised and consumers’ purchasing power increased, our volumes grew, helped by favourable currency fluctuations despite some challenges.

Our confectionery segment, meanwhile, faced some hurdles in meeting targets set for the year under review but recorded considerable progress regardless, nearly meeting all revenue and profitability targets. Strategies are in place to bridge gaps in the current fiscal year.

Both segments encountered challenges such as the increase in value-added tax (VAT) – from 0 to 18% for tea and 15% to 18% for confectioneries – which impacted pricing strategies and profitability targets. The management took a conscious decision to absorb this added cost and not pass it on to the customer given the state of the economy. Earlier in the year, dollar appreciation and consequent increases in raw material costs as well as a rise in the sugar tax further complicated matters, which had a particularly big impact on the confectionery business.

To address these and other challenges, we strategically promoted our products with value-for-money offers to attract shoppers during the reporting period, which proved highly effective.

We currently lead the consumer goods sector in numeric and weighted distribution compared to our competitors and aim to improve the quality and presentation of our products, particularly in the confectioneries segment, to surpass our competitors with a view to dominating the domestic market before venturing out to the export market.

Challenges remain in the tea business in the form of price fluctuations and competition from small, untaxed players who aggressively engage in the sale of dubiously sourced and packaged loose tea to circumvent VAT obligations. We intend to counter this challenge by resolutely promoting hygienically packaged, high quality tea to our growing base of customers. To this end, strategic promotions were carried out during the reporting period, including price waivers and branded offers, to maintain market share and consumer interest.

Our sales approach was also revisited during the year under review, merging our tea and confectionary sales teams to improve efficiency and customer service. Our goal is to reach more outlets and wholesalers to expand our market presence. While the confectionery business leads in distribution, it faces tough competition, especially from international players, and efforts are underway to enhance product presentation and brand recognition. Plans have also been made for improvements in the chocolate category and a relaunch of the wafer biscuit line under the Daintee brand.

In the new financial year, we intend to strategically implement innovation and renovations in both segments, with a focus on quality enhancement and vertical expansion. Plans for market expansion include targeting the HORECA channel and increasing presence in middle and lower-tier establishments such as bakery chains and eateries.

Despite challenges, with Sri Lanka’s economy now well into and perhaps already beyond its recovery phase, we are hopeful of new opportunities for growth. We are confident that the consumer segment is well poised to capitalise on these developments.

Export market

Sunshine Tea (Pvt) Ltd. is a leading exporter of premium Ceylon tea, serving over 80 clients in the US, China, Europe, Middle East, and various Asian markets. The company exports a diverse range of nearly 200 varieties of tea, including its flagship brands AvanTea, Gordon Frazer, and Teazup. Renowned for its high-quality offerings, Sunshine Tea is a reputable and reliable contributor to foreign exchange earnings for the country.

Sunshine Tea has built a reputation for its advanced blending and packaging techniques, adhering to international standards and stringent quality assurances. With state-of-the-art high-capacity tea bagging machines, the company has cemented its position as a prominent exporter of value-added Ceylon tea.

Our factory, equipped with a comprehensive array of cutting-edge machinery, processes over 8 million kilogrammes of tea every year. From tea cleaning and blending to packing operations, every aspect of our facility is outfitted with highly sophisticated equipment and processes. The factory also features an in-house tea room and laboratory specifically tailored for conducting chemical and microbiological analyses, ensuring the highest standards of quality and safety are upheld throughout production.

Sunshine Tea relies on the expertise of more than 100 dedicated personnel, contributing to an annual turnover surpassing USD 18 Mn. Our product offerings extend beyond tea bags and bulk tea, showcasing versatility across various categories and capabilities. Our commitment to quality is underscored by a range of certifications, including ISO 9001, FSSC 22000, GMP, Fair Trade, Rainforest Alliance, Halaal, SMETA, and SGP (Green rating), ensuring adherence to rigorous standards across all aspects of our operations.

Year under review

Sunshine Tea, however found the year under review challenging due to several factors, including increased input costs driven by currency fluctuations, value-added tax (VAT), adverse weather conditions, and the ongoing depreciation of the US dollar. Additionally, geopolitical factors contributed to a decline in volumes. Despite these obstacles, the segment's overall performance during the review period was commendable. Looking forward, we remain optimistic about a resurgence in the current financial year.