The alcohol retail industry in Sri Lanka is not an easy space to operate in. Extensive regulations, astronomical license costs and archaic rules – which include women being unable to purchase alcohol and a maximum transport volume of nine litres – do little to create a welcoming business environment. The economics of a retail business are difficult to manage without a high-volume, low-cost sales approach that lends itself to the proliferation of the hole-in-the-wall style ‘wine shops’ seen across the country.
The costs involved in obtaining a license to sell alcohol alone promote a business model where companies recoup the millions in fees by selling the cheapest products available at the highest volume. Wine stores across the island take this approach by selling entry-level products to entry-level consumers, who are often not making informed choices.
Shalindra Fernando is trying to change all this by creating a new retail experience with upgraded service, lower volume sales and higher-quality products. He is chief executive of Liquid Island, which specialises in non-alcoholic beverages and Wine World, which retails alcoholic beverages. Fernando’s background is extensively in retail with stints at Unilever, Coca Cola and almost a decade at Triumph International under his belt. During his time at Triumph in Sri Lanka, Fernando expanded the retail footprint through department store operations and direct sales.
“While it may sound mundane”, he says, “In the context of the Sri Lankan industry, it’s a superhuman effort.”
During Fernando’s tenure and driven by a prediction of future consumer sentiment, their bottled water brand, Olu Water, has switched from plastic (PET) to glass bottles—a bold decision, given that PET bottles then accounted for 70% of revenue. A sparkling version of Olu Water, launched mid-2019, has been particularly well received by F&B outlets who can now offer a fizzy option to customers without the costly import price-tag. Future plans include creating their own brand of mixers targeting adult consumers. While Liquid Island is primarily B2B focused, it is under Wine World that Fernando is changing the retail experience for general customers.
He has expanded the number of stores from 6 to 16, with future plans to treble that island-wide by 2024. The stores themselves are a world away from the ‘wine shops’ usually seen on street corners—air-conditioned, in central locations with informed staff and attentive service they aim to offer a uniquely different consumer experience. In addition to this expansion, Fernando plans a network of flagship stores in key cities. The Galle flagship store is already operational, and the Colombo flagship will open in the Shangri-La mall. In 2017/18 the business grew threefold, and Fernando aims to continue this trajectory.
However, creating more upscale shops carries with it the risk of alienating entry-level consumers, who may feel intimidated. This act of balancing volume trade against high-quality products means the immediate target is to breakeven and create a loyal customer base, rather than generate large profits.
Wine World’s seamless in-store and online consumer experience, where guests can order online and pick up instore or have the goods delivered directly to their villa for their weekend away, is a first for the Sri Lankan industry. They offer delivery within 24 hours in Greater Colombo and 72 hours island-wide. Digital development has also been a priority for the brand. In 2018, wineworld.lk was re-launched and the site now has 40,000 monthly visitors. In five years Fernando aims to have 100,000 subscribers for their omnichannel portal, up from the current 6,000.
Through the website, app and network of physical stores, Wine World aims to offer customers a variety of choice and flexibility that elevates the consumer experience to something exceptional, and something they can’t get anywhere else. With the aim of redefining the retail experience for wines and spirits in Sri Lanka, Fernando and Wine World is taking a forgotten industry and driving it towards a level comparable with a vibrant modern economy. “While it may sound mundane”, he says, “In the context of the Sri Lankan industry, it’s a superhuman effort.”