Financial Times

Ceylon Cinnamon Holdings Ltd, a company engaged in cinnamon growing, processing and marketing is planning to enter the US market with its La Canela brand in August with a US$50 million initial investment.

“We plan to launch Sri Lanka’s brand of Ceylon Cinnamon as ‘La Canela ‘ in the US niche markets and build a reputation for distinctive offerings with Ceylon Cinnamon,” Feroz Meezan, Chairman, Ceylon Cinnamon Holdings told The Sunday Times FT.

He said that the company has appointed dealers and distributors in all the states in the US and will be starting operations in early August. “The local exporters lose nearly 30 times compared to the retail price the value added cinnamon is sold at in USA,” he said, explaining that the bulk prices the Sri Lankan cinnamon exporters supply to the US and the retail prices in the US have a 30 times gap.

“We want to eliminate intermediaries in our target markets and go direct to the consumers and we are not going into any other spices. Rather we would stay focused only with cinnamon, piggy back on the Ceylon Cinnamon image whilst helping restore it in our own way,” Meezan said.

He said that the brand will have an organic cinnamon range and products such as Cinnamon supplements, cinnamon powder and cinnamon oil.

He said that Sri Lanka is the largest producer of cinnamon in the world, accounting for about 70 percent of the global production. “Because of its aromatic, carminative and digestive properties, it has wide applications in food, beverage, liqueur and perfumery industries.

Due to growing concern of health hazards of synthetic food flavours, there is burgeoning demand for cinnamon in the food industry especially in the US,” he said.

He said that Bottomline Strategies International (BSI Consulting), an export strategy consulting company is doing the entire export strategy for his company. “The brand will be marketed as Single Origin Cinnamon and certain cinnamon plantations have been identified to suit the single origin theme,” Meezan said, adding that ‘La Canela’ also has identified traditional cinnamon peelers and will be launching its Authentic Peeler’s range where, handpicked cinnamon peeled by the most senior peelers in the country will be marketed as up market collector, designer cinnamon. “This way the brand will pay its tribute to the peeler community which is the backbone of the whole industry,” he added.

Meezan said that the brand is targeted to achieve revenue of US$ 2 million in the first year and contribute to the country’s coffers through its low volume, premium pricing strategy.

He said that Sri Lanka exports close to 12,000 tonnes of cinnamon per year in the form of quills in different grades mainly in bulk form, major markets being Central and South America. “However, we have lost our markets in Europe and North America to Cassia, which is a cheap substitute for true cinnamon,” he said, adding that the total annual world trade in cinnamon and cassia averaged around 85,000 tonnes over the past seven years.

“If Sri Lanka supplies 70 percent of the world demand and the Cinnamon grown in Sri Lanka is unique given the soil structure, we must drive a premium price with branding to make this business a Rs. 10 billon industry before the competitor 'Cassia' makes in roads into our markets,” he said.