By Duruthu Edirimuni Chandrasekera
John Keells Holdings (JKH) is aggressively trying to gain market share in the soft drinks market through the 'Elephant' soft drink brand, despite posting low profits in the sector during the past few quarters, company officials say.

"The Elephant soft drinks brand has done well. There is sustainability in this brand, but the soft drink market in the country has shrunk by about 10 percent during the past year due to the excise duty implications," a JKH official told The Sunday Times FT. Ceylon Cold Stores (CCS) owns the Elephant brand which markets both soft drinks and ice cream.

CCS posted a drop of 56 percent in profits to Rs.25 million for the quarter ended
June 30, 2008 compared to Rs.56 million in the same period last year. The official said that 'Elephant' volumes on soft drinks are slightly above the shrinkage in the soft drinks market. He added that the uncertain economics conditions have made the (supplier) credit terms more vulnerable.

A CCS official, when asked about the Elephant soft drink decline in performance, said the retail side in CCS which is Keells Supermarket has gone into an expansion programme. "This is affecting our cash flow because of the high interest costs. Also, the super-marketing per se has declined to a certain extent due to the poor economic conditions," he said.

JKH’s annual report has said that although the carbonated soft drink market has reached a maturity stage (with consumption being relatively stagnant, while there are number of entrenched players), CCS has invested in expanding its manufacturing operations by commissioning two new bottling lines for the expansion of its soft drink operations, which has increased its beverage production capacity by over 50 percent.

"In the Fast Moving Consumer Goods (FMCG) business the current adverse macro economic conditions affect the bottomline. But presently we are trying to grab market share through aggressive campaigns," the CCS official said.

Contrary to stockmarket reports, JKH will not let go of the Elephant brand or the CCS. "This is a Sri Lankan brand and we reach more than 85,000 outlets. This is our pride, which we will not let go of," he added.