Despite its global reputation for tea, Sri Lanka is emerging as a noteworthy producer of high-quality specialty coffee. Over the past decade, the local specialty coffee industry has grown significantly, enhancing both its production and quality. “Specialty coffee”, often single origin, is defined by its superior quality, cultivated at specific altitudes and temperatures, and must achieve a high ‘cupping’ score to earn its classification. Sri Lanka’s unique geographical positioning, favourable climate, and increasing investment have catalyzed the industry’s revival. With the global market for specialty coffee booming, Sri Lanka is well-positioned to establish itself as a major player in this expanding market.
With the private sector being an engine of growth for the development of the specialty coffee industry, the Market Development Facility (MDF) an Australian government-funded programme began working with businesses to positively facilitate growth opportunities while ensuring that the local coffee culture began to take root. MDF decided to focus on three key areas: improving the production of coffee, enhancing the quality of sourcing and processing, and improving industry coordination and promotion, which would address three of the biggest constraints to sector development.
In 2021, MDF played a crucial role in establishing Sri Lanka’s first national coffee association, the Lanka Coffee Association (LCA), bringing together private sector stakeholders to develop industry linkages and provide a platform for stakeholders to work closely in improving the quality of locally sourced specialty coffee.
In an insightful interview, Deshan Wickremesinghe, Country Team Coordinator of MDF, and Kushan Samararatne, General Manager at Colombo Coffee Company and Chairperson of LCA, discuss the resurgence of Sri Lanka’s coffee industry and their vision for the sector’s future.
Can you take us through the resurgence of the coffee industry and its potential to become a major contributor to the economy?
Deshan: Sri Lanka has a rich history in coffee as being among the top three leading global coffee producers in the world dating as far back as the late 1800s. However, a shift in focus to tea took place in the 1860s, due to the coffee leaf rust outbreak. Yet over the past decade, the increasing global consumption of specialty coffee has resulted in making it a high-value crop that is sought after to produce.
Climate change has had a significant impact on major coffee-producing nations, affecting global coffee production. Sri Lanka has the advantage of offering favourable climatic conditions that create an optimal environment for cultivating high-quality specialty coffee, and the opportunity to meet the unmet demand on a global scale.
At present 80% of coffee production is conducted by smallholder farmers and is a joint cultivation activity with both males and females in the household involved. The inclusive status of the sector, along with the story of a resurgence as a new-origin coffee producer and increased investments over the last few years allows Sri Lanka to realize its potential to position itself as a major specialty coffee-producing nation. Sri Lankan specialty coffee will have the opportunity to compete on a global scale, while creating much-needed foreign exchange revenue, driving further private sector investments, and increasing the potential to improve the lives of smallholder farmers.
What was the rationale for forming the Lanka Coffee Association to catalyze coffee industry growth?
Kushan: The Sri Lankan coffee industry consists of several competing stakeholders with a shared objective: to enhance the quality and increase the production of local coffee. However, although there was a common interest, each company was working independently, which diluted their efforts. In 2021, the Lanka Coffee Association (LCA) was established with support from MDF, bringing together private sector stakeholders such as coffee green bean processors, roasters, plantation companies and hotel chains to a single table. Over the past three years, the LCA has been a representative body for the entire coffee industry and has had a focused approach to developing strategies that address market constraints and achieve sustainable industry growth.
By implementing coordinated strategies and engaging with both the private and public sectors through the LCA, the coffee industry is presently in a better position to achieve the desired results of further advancing the sector’s growth.
What is the envisioned impact of the Sri Lanka Coffee Festival and what were the big takeaways from this year’s event?
Kushan: The key aspiration of the LCA is to promote Sri Lanka’s growing coffee culture and specialty coffee industry. The Sri Lanka Coffee Festival is dedicated to bringing together a wide variety of interested stakeholders such as businesses, investors, consumers and coffee enthusiasts from across the country, creating a platform to showcase and promote Sri Lankan coffee both domestically and internationally.
This year marked the third edition of the festival, in partnership with MDF and Jetwing Hotels. Our goal is for the Sri Lanka Coffee Festival to become a significant event on the global coffee calendar.
To build a synergy between the coffee and tourism industry this year for the first time we decided to have the main festival outside in Galle as it is a tourist hub and the festival drew the interest of locals as well as tourists.
In addition to the main festival, LCA also hosted the second edition of the LCA Barista Championship in 2024. Three regional competitions leading up to the festival were held in Dambulla, Galle and Colombo, three major tourist destinations, with the finals taking place at the coffee festival. This was an opportunity to highlight skilled baristas across the country and provide them with a platform to showcase local specialty coffee.
The LCA and MDF are working towards ensuring that the festival will continue to create market connectivity opportunities and commercial benefits to industry stakeholders, while also increasing the general awareness of Sri Lankan specialty coffee.
One of the major takeaways was to see how much interest has grown over the last three years and increased private sector involvement, with certification organizations, finance companies, and other entities wanting to see how they can get involved in the sector.
Can you elaborate on the key findings of the study on climate change and coffee in Sri Lanka that was unveiled at the festival and how these insights will shape the future strategies of coffee cultivation and production in Sri Lanka?
Deshan: Changing climatic conditions are affecting coffee production worldwide. In Sri Lanka, climate change has significantly impacted the coffee sector over recent years, with erratic rain and weather patterns disrupting the production and quality output for both large coffee growers and smallholder farmers. It is vital that as an emerging coffee producing nation, Sri Lanka should prepare itself to combat the effects of climate change at an early stage for it to be competitive in the future.
To understand better adaptive methods, for the first time ever in Sri Lanka, MDF collaborated with an international climate scientist to conduct a study examining the effects of climate change on coffee production. The study analyzed five key coffee-growing regions: Badulla, Matale, Kandy, Kegalle, and Nuwara Eliya using parameters such as temperature and rainfall, modelling scenarios for 2030, 2050, and 2070 to understand the future impacts.
A key finding was that the area of cultivable land for coffee in Nuwara Eliya is expected to increase, which offers a positive outlook as many key coffee growers are based in this region. This report was officially unveiled at this year’s festival with a positive response from the industry.
To ensure industry awareness, MDF is conducting an event to disseminate the findings of the study through a workshop for the private sector, the government sector, and other key stakeholders to kickstart a dialogue on the impacts of climate change on Sri Lankan coffee and how the industry can find solutions to adapt. The key purpose of the event is to develop strategies that support sector stakeholders adapt to and mitigate the risks posed by climate change. This collaborative effort aims to ensure the implementation of sustainable and resilient solutions for Sri Lanka’s coffee sector in the face of changing climate conditions.
As a champion of the Sri Lankan coffee industry, how is MDF supporting industry growth by facilitating investments, providing technical advisory, market access and economic inclusivity?
Deshan: MDF recognized the unique opportunity to place Sri Lankan specialty coffee on the global market while uplifting the livelihoods of smallholder coffee farmers and has been working since 2017 towards achieving these goals.
Towards this end, MDF works with the government and private sector, more specifically with coffee processors, roasters, nurseries, plantation companies, agribusinesses and tourism industry-based stakeholders.
We support our partners to identify and grow commercial opportunities that are profitable, scalable, and deliver social and environmental value. Our aim is to increase private sector investment in Sri Lanka and drive sustainable and equitable economic development.
To support our objectives, MDF supports the private sector in implementing innovative business models that address key constraints in the market. These include supporting industry players such as helping plantation companies with their diversification strategies and setting up inclusive opportunities for men and women, supporting nurseries to increase sapling availability, establishing efficient sourcing models and strong farmer support systems, setting up centralized processing centres, and climate resilient drying facilities.
We start by identifying areas of the market that have high potential for growth and positive social outcomes but are either still nascent or facing challenges. Specialty coffee is an example: it is an emerging industry but has the potential to improve the livelihoods of thousands of smallholders.
We then work with our partner to pilot innovative business models in strategic areas. We co-invest, but also offer technical advisory services and connect our partners to our wider business networks. In coffee, these strategic areas include production, processing, marketing and industry coordination. Some of our more recent work in coffee has been with plantation companies looking to diversify from tea into coffee.
As a result of MDF’s work in the coffee sector, 1200 farmers have benefited from higher incomes out of which 500+ have been women.
Using our wider networks as an Australian-funded programme, we facilitated Sri Lankan specialty coffee being showcased for the first time at an international forum, at the Melbourne International Coffee Expo in September 2022. Many people knew about our tea, but the coffee was a big surprise! Sri Lankan coffee received much positive feedback from international green bean brokers, roasters and investors, who responded positively to the unique flavour notes prevalent in Sri Lankan coffee.
How do you plan to build on the recent successes including the festival to further develop and globalize Sri Lanka’s specialty coffee industry in the coming years?
Kushan: Establishing Sri Lankan specialty coffee involves two main strategies: perfecting our product and effective marketing. The Sri Lanka Coffee Festival plays a crucial role in this process, as it has helped people realize that Sri Lanka produces excellent coffee.
One strategic move was during our Barista Championship. Typically, baristas bring their coffee, which can be a local or international brand, but we provided Sri Lankan coffee to be used solely for the competition. The feedback was overwhelmingly positive, with remarkable beverages showcasing the quality and potential of Sri Lankan coffee.
The festival and its concurrent events have significantly contributed to the development and marketing of Sri Lankan coffee. Our association aims to build on this success. This year, we took a risk by hosting the event in Galle instead of Colombo, but the turnout was extremely impressive, indicating the strong interest in the coffee industry across Sri Lanka.
Our goal is to revive the coffee culture that once thrived here. Although we can’t compete with major producers like Brazil and Vietnam on volume and price, we can carve out a niche in the specialty coffee market. This requires a strategic approach, targeting the right markets for our specialty coffee.
Sri Lanka’s coffee culture thrives alongside tourism. Tourists seek high-quality coffee, creating a link between the industries and we are capitalizing on this by attracting partners like Jetwing Hotels for coffee events, uniting competitors for a shared goal: improving the quality and increasing the volume of Sri Lankan coffee.