The pandemic had an impact on consumers across the globe, changing trends that had previously seemed unshakeable. Remote work became more prominent, digitalization took off, and consumption habits evolved, and many of these changes endure to this day.
According to Colombo Coffee Company (CCC) Chief Executive Kushan Samararatne, the abrupt shifts seen during this period played a role in the company’s decision to diversify its offerings. In a conversation with Echelon, he explained that the company has grown significantly in other sectors in the last few years, and despite retaining its dominant position in the Hotels, Restaurants, and Cafes (HoReCa) sector, this now represents around 60% of the company’s total interests. Previously, HoReCA represented above 95% of its business.
Colombo Coffee Company is recognized for its premium coffee solutions in Sri Lanka. How are you leveraging your strong foothold in the hospitality sector to expand into the corporate and retail markets?
I think people are always looking for a brand or partner they can trust, and that’s exactly what we have created in the HoReCa sector.
With 20 years’ experience, 95% market share amongst 4-Star and 5-Star hotels, and the largest cafes within our portfolio, we’ve created trust in our brand and the service we provide. This is especially important in the corporate sector, where we are appreciated for the results we have achieved, but you’ll find our brands like Lavazza and Toscana Ceylon are highly respected on the domestic front as well today. It’s all due to the trust we have continuously delivered to all our customers.
With your push beyond hotels and cafes into co-working spaces and residential projects, how are you tailoring your approach to meet the diverse needs of these new sectors and regions beyond Colombo?
Each sector has unique requirements. Hotels need larger machines, for example, or even several machines, but office spaces usually make do with one or two appliances, and domestic users prefer even smaller units.
As a business, we understand what the market needs. In addition to the so-called industrial machines, we’re also investing heavily in domestic products and developing solutions to provide what our customers want. We work with a variety of brands and products in order to cater to the domestic market. It’s always a question of identifying what kind of product fits where and then finding a solution for that space.
What is driving the movement beyond coffee beans into ready-to-drink beverages and home brewing, and how do you see these new offerings changing your customer base?
Colombo Coffee Company used to work almost exclusively in the HoReCa sector. A few years ago, we were extremely dependent on the hotels, but the pandemic taught us not to put all our eggs in one basket, given that our business went down once tourists stopped coming in.
Fortunately, having reached market saturation at the time, we already had good reason to start developing other sectors. We had to diversify both to grow and survive. Today, we have introduced new kinds of coffee, we have flavoured coffee powder, we have capsules, and more, but we also knew that success in the retail sector required us to add more products to our portfolio to develop this business segment. Considering the small size of Sri Lanka’s ready-to-drink coffee market, we had an opportunity to bring our expertise to the table.
Last December, we launched a new brand called Rush with two products: a coffee-infused energy drink and our version of the chilled Americano. Those products are doing extremely well today, demonstrating that we understand what customers are looking for.
In a market as segmented as Sri Lanka’s, how does Colombo Coffee Company design customized coffee experiences for clients ranging from luxury hotels to everyday office spaces?
Each coffee experience needs a singular set of products and services. Hotels need larger machines, yes, but also training and accompanying services, the latter of which is critical. For a cafe, however, a single machine is often enough. In both cases, the brand of coffee matters, but the way the coffee is consumed and the overall experience can be very different.
The domestic user takes it a step further because their preferences are refined exclusively for their palate and needs. When we were a B2B company, we worked exclusively with industrial machines, but now we are bringing in all kinds of machines because we recognize that the domestic market is different. A hotel might stick to one type of coffee, but a domestic user is likely to explore. This is what influenced the decisions we’ve made about our portfolio.
Post-pandemic trends have changed how people consume coffee. How has this affected Colombo Coffee Company’s approach to product innovation and its connection with the growing home-brew segment?
We’ve noticed that people are far more likely to visit cafes following the pandemic. Lots of new cafes are opening up. In fact, the largest chain in Sri Lanka has more than 50 cafes across the island. This is true in Colombo, in Kandy, in Galle, Matara, and more. Cafe culture is growing, so we’re very happy about that.
People are also brewing more at home, which we believe is primarily driven by people returning to Sri Lanka from abroad. They are accustomed to having coffee every morning, and they want to make it themselves. They want to do the grinding and the brewing. This growing market is why we’re investing so heavily in terms of equipment and the varieties of coffee we offer.
What challenges and opportunities do you expect as Colombo Coffee Company expands across the country, and how do you plan to educate new markets about specialty coffee culture?
There are several hurdles to overcome, but we have to keep in mind that this is a tea-drinking country. Coffee has room to grow, which means we similarly have a lot of scope to grow the business. People once did not know what a cappuccino, latte, and so on were, but that is changing. They’re discussing what a pour-over is, they are interested in getting a French press, and more. To build on this, we’re actively giving people a chance to test out the machines in-store.
It is clear that many will continue to treasure convenience above all. That’s why we have instant coffee, but we also want to give people the option to experiment and discover more.
How will you maintain your focus on sustainability as you branch out regionally and internationally?
We have adopted a structured, segmented approach to maintain sustainability while expanding regionally and internationally. Each sector, such as hospitality, corporate, retail, and so on, now has a dedicated team, which ensures focused service and quality as we grow. On top of this, we believe that the company is most productive when the entire team is aligned, so we look for people who fit in with our corporate culture and are ready to support their team members.