Market
Ceylon Cold Stores Limited (CCS), also known
as Elephant House, has established itself as the
leader in Sri Lanka’s carbonated soft drinks
market, gaining a 47% share and outperforming
leading multinationals such as Coca-Cola, Pepsi
and other local brands in a highly competitive
business environment. The company’s success is
attributed to its marketing strategies and brand
positioning, which have taken into account the
psyche of local consumers. Most comparable
products in many other countries have lost
market share to multinational brands, but
Elephant Soft Drinks has been able to compete
successfully because CCS, which has a long
history, has understood local consumers’ needs
better than its competitors. The latent desire
among Sri Lankans to patronise
so-called national products has
also helped the brand to
establish itself as the market
leader.
Statistics indicate that there
will always be a market for
carbonated soft drinks, because
these are popular and command
a global market share of about
50% of all beverages. Sri Lanka’s
economy has grown significantly,
averaging over 7% in the first
half of 2006. GDP per capita
increased to US$ 1,197 in 2005,
compared to US$ 1,030 in the
previous year (Source: Central
Bank of Sri Lanka). The income
trends of consumers indicate
that more people can now
afford to purchase and consume
soft drinks, which augurs well for
market growth. However, rising
inflation has reduced the
disposable incomes of
consumers significantly, impacting
on market growth.
The state’s levying of a cess
on many imported items since
2004 has caused production
costs of carbonated soft drinks
to rise. Despite appeals by the
industry to reduce excise duty
on carbonated soft drinks, the
state increased this tax to Rs. 6
per litre, from Rs. 5.50, with
effect from November 2004.
VAT was also increased in
January 2005 to 18%, from 15%.
With rupee depreciation and
inflation impinging on raw
material costs, the operating
margins of Elephant House in
this highly competitive industry
has declined.
Achievements
Elephant House has been rated
among the most valuable brands
in the country, according to the
ratings published by LMD in its
December 2005 issue, which
also judged the brand to be the
second most powerful brand in
Sri Lanka. CCS also won the
National Icon Award at the first
such ceremony organised by the
Sri Lanka Institute of Marketing
(SLIM), which is an indication of
its widespread popularity. One
of the Elephant House products,
Cream Soda, won the
SLIM/ACNielsen Power Of The
People award for the most
popular beverage in Sri Lanka,
which is a significant
achievement. Committed
employees and the right
processes have contributed the
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SUPERBRANDS
most towards strengthening Elephant
House brands. The company has
invested in research and is obtaining
the assistance of leading firms in
related spheres to enhance its
business prospects. CCS has also
achieved much in the areas of
Environment, Health and Safety (EHS)
standards. An in-house EHS
committee comprising 32 members
acts as the catalyst in driving EHS
initiatives and shaping the company’s
EHS policies.
History
CCS was originally known as The
New Colombo Ice Company and was
launched more than 100 years ago, in
1894, having purchased the Colombo
Ice Company, which was producing
ice and mineral water at that time. In
1922, an era of improvement began
with the replacement of the old
rubber-ringed bottles by crown corks.
At a time when there were no
advertising agencies, the company
announced its changes from old to
new bottles in an intriguing caption, A
Tale Of Two Bottles. This also gave
way to the symbol of an elephant on
the bottle, a sign that it contained a
potent brew. More than eight
decades later, the elephant symbol
still remains on the brand’s bottles
and has even become the company’s
official logo. Due to its association
with the elephant logo, CCS is better
known by the public as Elephant
House.
In 1935, the company installed its
own carbonic acid gas-generating
plant to reduce the heavy cost of
imports and proceeded to produce
carbon dioxide and dry ice. In 1936,
CCS installed the latest automatic
machinery at that time, used in the
production of carbonated soft drinks,
which were then known as aerated
waters. Presently, one of Sri Lanka’s
leading blue-chip companies, John
Keells Holdings, owns Elephant
House. The company’s production
facility, which was previously located
in Colombo, has shifted to a factory
at Ranala.
Product
Carbonated soft drinks are a thirst
quencher and consumers are known
to purchase them mostly on impulse.
This requires the product to be
widely available, especially in its chilled
form, in places where impulse buyers
could readily purchase them. CCS
also caters to the bulk or take-home
market with its 1.5-litre mega bottles.
According to Elephant House, both
these segments recorded double-digit
growth in 2005. CCS manufactures a
variety of soft drinks such as Ginger
Beer, Orange Barley, Cream Soda,
Lemonade, Necto, Orange Crush,
Soda and Peyawa, with most of these
products having a history as old as
the company itself. Compared to
products offered by its competitors,
CCS has a much wider product range,
which gives it a competitive edge.
Elephant Soft Drinks has been able
to achieve Superbrand status because
the company took timely action to
market its products effectively to
different segments of society, despite
having to invest heavily in the brands.
Ginger Beer, which is produced using
essences extracted from natural
ginger, is specially manufactured at the
company’s essence factory, and is
marketed and sold as EGB. Soda is
touted as the King Of The Chase,
Peyawa as a traditional home remedy,
Necto as a children’s drink, Lemonade
as a sports drink and Cream Soda as
the must-have for teens. The company
has been able to strategically position
these brands, which were previously
considered traditional products by
consumers, by consistently investing in
them. The company is also focused on
innovation and intends to introduce
New Age beverages which include
sports drinks, fruit juices, isotonic and
energy drinks, to its range of products
in the future. Already, Alcopops, a
drink with a fruit-juice base and Wild
Elephant, an energy drink, have been
launched in keeping with the
company’s forward strategies.
complements the company’s
marketing strategies, especially in
positioning its brands. The company’s
promotional strategies have met with
success because the brand’s strategists
were able to understand the psyche
of the local consumer better and
were better able to use promotional
channels.
Understanding the consumers’
needs has ensured the company’s
survival in an intensely competitive
market and has enabled CCS to
perform beyond expectations, despite
challenges posed by leading
multinationals as well as the threats
posed by the country’s business
environment.
Brand Values
Recent Developments
Elephant Soft Drinks has been reengineering itself in many areas. The
company has redefined its
manufacturing systems and adopted a
new operating model. The changes
were intended to increase
manufacturing productivity and reduce
procurement spending.
CCS merged with Ceylon Cold
Stores Distributors with the aim of
increasing distribution efficiency by
bringing their respective activities
under a single supply-chain function.
Voluntary retirement schemes have
been introduced to optimise the
number of employees, with the intention of
becoming a leaner company focused on efficiency.
The overseas demand for Elephant Soft
Drinks in traditional glass bottles and cans is
growing – although export volumes have been
moderately low. In 2005, exports grew by 50%
over the previous year. The company markets its
products in Western Europe, Thailand and
North America, and is exploring opportunities
to expand in several different geographical
regions.
Promotion
The company’s well-planned and effectively
executed marketing strategies are considered
the driving force behind the brand’s success in
the carbonated soft drinks business. All possible
media such as electronic, print, radio, billboards
and posters are used in the promotion of
Elephant-branded products. Consumer and sales
promotions are also widely used as tools to
attract new consumers. Much emphasis is placed
on TV, because it is an attractive medium that
Elephant Soft Drinks are wellestablished products with a long
history and the trust of consumers.
Orange Barley is so popular with local
consumers that carbonated drinks
were generally referred to as barley,
especially in the country’s rural areas.
In other countries, people are known
to refer to carbonated drinks as
sodas. CCS products have a heritage
value, with trust in them being
ingrained in local consumers. Elephant
Soft Drinks aims to capitalise on these
brand values and build on them by
maintaining the quality of its products.
Building brand loyalty is considered
vital in the industry, because soft
drinks are mainly an impulse product
and emotions play a major role in
most customers’ decisions to purchase
them. The company is focused on the
value-for-money proposition and it
promotes the concept of more
content for the same price in most of
its advertising campaigns.
CCS is also focused on innovation
and is planning to introduce new
products which are expected to add
more variety to the Elephant product
range. The company also values the
sustainability of its relationships with
local raw-material suppliers. The
ginger outgrower programme – which
was started in 2004 in Hataraliyadda,
in the Kandy District – enabled CCS
to enter into forward-buying contracts
with farmers from whom it purchases more
than 90% of its ginger requirement at present.
www.keells.com
THINGS YOU DIDN’T KNOW ABOUT
Elephant SOFT DRINKS
CCS is the leader in Sri Lanka’s carbonated
soft drinks market, with a 47% market share.
The company’s marketing strategies have
enhanced performance and propelled its
products to Superbrand status, despite stiff
competition from leading multinational
companies.
Ceylon Cold Stores was originally known as
The New Colombo Ice Company and was
launched in 1894.
Due to the company’s association with the
elephant symbol, which has adorned its
bottles for more than eight decades, CCS is
better known in the public domain as
Elephant House.
SUPERBRANDS
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