Renuka Shaw Wallace to become one of the largest F&B companies in Sri Lanka

By Cheranka Mendis

Coco Lanka PLC, Renuka Group’s food and beverage holding arm, yesterday launched its new corporate identity as Renuka Shaw Wallace, taking the company’s focus from being an agri business related company to a fully fledged food and beverage company.

With a long term plan of becoming one of the largest companies in the segment, Renuka Shaw Wallace will invest Rs. 1.8 billion in capital expansion and brand expansion by 2015 in the areas of FMCG product manufacturing, and investments in organic certified plantations, fish processing plants, coconut water and dairy.

Primed for explosive growth via the aggressive expansion of their product portfolio, the company expects to add Rs. 1.3 billion in incremental revenue per annum by 2015.

CEO and Executive Director of the company, Shamindra Rajiyah noted that the company’s decision to acquire both Richlife and Shaw Wallace at a total of approximately Rs. 1 billion came with a decision made by the company to expand in all areas of the food and beverage market.

With the amalgamation of the businesses, the turnover is anticipated to be in excess of Rs. 5 billion, of which 60% will come from local business and 40% from international business. “We expect double digit growth within the next three years considering the new and innovative product launches we have in mind,” Rajiyah said.

From the Rs. 1.8 billion, Rs. 690 million will go to Renuka Consumer Foods Limited of which Rs. 200 million will be invested in manufacturing, Rs. 160 million for distribution, infrastructure, and IT, and another Rs. 160 million in enhancing working capital.

The company is to raise Rs. 1,008 million by way of a rights issue which closes on 7 December.

“Our new name better reflects the complete spectrum of businesses we are in and the opportunities we are unleashing. Renuka Shaw Wallace brings together a portfolio of food and beverage companies which are leaders in their respective segments,” he asserted. “We hope to consolidate direction and unlock synergies by controlling the value chain from raw material to shelf, and in turn, achieve our mission to ‘make every day delicious’ for consumers locally and globally.”

A clear set of goals and strategies which includes focusing solely on the F&B business, controlling the value chain in all businesses the company operates in, having strong brands in each product segment, building and nurturing lasting relationships with key stakeholders/customers, and growth via selective acquisitions is expected to take the company forward.

The businesses consist of household brands in Sri Lanka such as Captain Jack Mackerel, Captain Soya Meat, Renuka Coconut products, Richlife Dairy products, Sun Gold instant drinks, Cheers fruit juices, Plaza canned fish, and Rainer’s Colourings and Essences.

The domestic strategy for the company is to leverage the household brands and establish a larger distribution network, Rajiyah said. “We have planned ten brand extensions within the top four brands with planned investments of over Rs. 200 million by 2015.”

For the Captain brand, four brand extensions are expected for 2015 with a planned investment of Rs. 77 million in the first year.

He added that Captain Soya was introduced to the market in Q2 of the financial year 2012 and that the next new category will be out in stores by Q3 FY 2012.

For Renuka coconut milk products, two brand extensions are planned for 2015 with a planned investment of Rs. 52 million in Y1. The next new categories will be in stores by Q3 FY 2013.

Richlife and Sun Gold have two brand extensions planned for each with a planned investment of Rs. 28 million and Rs. 60 million respectively in the first year.

The next new category is to be in stores by Q3 FY 2013 for the former while the new categories will be in stores by Q2 FY 2013 for the latter.

“Currently we have over 65,000 outlets covered which we hope to raise to 100,000 by 2015,” he said.

“With the expected growth in the tourism sector, we hope to be the one-stop shop for the hotels, restaurants and cafes by the said year.”

The company also has plans to become a major player in the local fish processing industry by 2014 and will invest Rs. 200 million in a state-of-the-art fish processing plant which will manufacture value added fish-related products under the planned brand extensions.

“Local milk manufacturers are to profit from Government’s initiative of promoting self-sufficiency in milk. Domestic milk production needs to grow at an 18% compound annual growth rate for the Government to achieve its 50% self sufficiency in milk production target by 2015. We plan to add new product categories and use the existing distribution network to grow sales of Richlife.”

Renuka Shaw Wallace’s businesses consist of fast moving consumer goods (FMCG), food service, dairy and agri-exports.

These operate under Renuka Consumer Foods Ltd., Shaw Wallace Ceylon Ltd., Shaw Wallace Food Services Ltd., Renuka Products (Pvt.) Ltd., Renuka Agri Foods PLC, Renuka Organics (Pvt.) Ltd., Renuka Teas Ceylon (Pvt.) Ltd. and Kandy Plantations Ltd.