Navigating the complex landscape of Sri Lanka's Alco Bev Industries Vs. FMCG By Chathura Ganegoda, Head of Commercial Excellence

With over a decade of experience in the FMCG sector and now spearheading group commercial excellence at Rockland Distilleries, Chathura Ganegoda , shares his insights and reflections on navigating the dark market versus FMCG.

The Alco Bev sector navigates through a highly regulatory environment causing the sector to adapt and continuously find ways to remain competitive. So how does Rockland stay ahead of the curve? Let’s find out.

• Can you elaborate on the distinctive consumer behavior trends you've observed between the FMCG sector and the Alco Bev industry, particularly within the Sri Lankan market?

While alcohol consumption is often linked to social gatherings, FMCG products are purchased regularly for daily needs or impulsively. It is also evident that established Alco Bev brands rely on taste preferences and familiarity for loyalty, whereas FMCG brand loyalty spans multiple categories. Regulation further plays a role in ensuring responsible alcohol consumption and product safety, while balancing the cultural attitudes towards alcohol.

Pricing in the Alco Bev industry, meanwhile, is heavily impacted by taxation, leading to affordability concerns, whereas FMCG brands can employ competitive pricing strategies to appeal to value for money consumers.

• In terms of sales and distribution strategies, how do you navigate the regulatory landscape and cultural nuances that are specific to the Alco Bev industry, compared to the FMCG sector?

The Alco Bev industry requires a deep understanding of the regulatory landscape, particularly in terms of compliance with industry standards governing sales, distribution, and advertising. This includes adherence to strict regulations on labeling, taxation, and a minimum drinking age, ensuring all sales and distribution activities comply with these requirements to avoid penalties or legal consequences.

Additionally, limitations to certain types of information that can be shared with the consumer without it being perceived as advertising. This comprehensive understanding and compliance are vital for successful operations in the alcoholic beverage sector.

• What are some of the challenges in the Alco Bev industry compared to FMCG?

The opportunities and challenges in the Alco Bev industry depend on understanding the cultural, regulatory, and ethical practices surrounding it. The industry faces strict regulatory practices in marketing and promotions. Additionally, social and cultural nuances also play an important role, particularly regarding attitudes towards alcohol consumption. Economic factors also impact consumer behavior. Recent inflationary pressures have led to affordability concerns, causing consumers to cut back not only on alcohol but FMCG too. This shift necessitates highlighting value propositions to resonate with cost-conscious customers.

“Only 40% Sri Lankan Alco Bev industry is regularized while that balance 60% is causing a critical damage to the consumers health and government revenue.”

• What are some of the opportunities presented in the alco-bev industry?

Apart from new product development, brands with distinctive flavors and cultural heritage exemplify the potential to go from local to global. These products can captivate international markets, showcasing rich culinary traditions and heritage.

• From your experience, what are the key operational differences you've encountered in supply chain management between the two sectors?

There are three distinctive areas when comparing the FMCG and Alco Bev industries: product characteristics, regulatory compliance, and distribution networks. The Alco Bev industry must focus more on inventory management and efficient distribution due to the longer shelf life and nature of its products, while navigating complex regulatory challenges. The industry is also influenced by seasonal and cultural norms.

Like the FMCG sector, Alco Bev manufacturers leverage supply chain visibility tools and real-time data analytics to optimize inventory levels, streamline production, and improve forecasting accuracy. However, they place greater emphasis on managing distribution channels and ensuring compliance with regulatory requirements, given the sensitive nature of their products.