LNP – Sweet surge in growth for local confectioneries in early 2025

By NUZLA RIZKIYA

---

Sri Lanka’s confectionery industry is experiencing some sweet growth as it on an upward trajectory this year, supported by improving economic sentiment, consecutive festive seasons, and a forecasted increase in consumer spending following the salary hikes outlined in the national budget.

Industry stakeholders noted that as the economy stabilises, sales of confectionery products have picked up, reflecting a shift in consumer confidence post-economic crisis. People are becoming less cautious about discretionary spending.

Speaking to Mirror Business, Lanka Confectionery Manufacturers Association (LCMA) Senior Advisor Adrian Fonseka shared that the local industry is expected to record a year-on-year growth of approximately 15-20 percent in sales and volume during the first two months of 2025.

He attributed this growth to several key factors, including the convergence of Ramadan and the Sinhala and Tamil New Year, rising disposable incomes, and a growing preference for branded products over cheaper alternatives.

“This quarter has been good. We still haven’t reached the volume levels of 2021, but sales turnover is up by 15-20 percent. Last year, consumer sentiment was a little low, but with recent salary increases, people will have more disposable income and will be more willing to spend on non-essential products like confectionery,” Fonseka explained.

During the festive season, demand for confectionery products tends to rise, with sweets, biscuits, and puddings among the popular choices.

“This year, we are experiencing two key seasons simultaneously, which is rare, but we are hopeful for a good outcome,” Fonseka said.

However, despite the formal confectionery sector regaining ground, it continues to face stiff competition from the informal and unregulated sector, which gained a notable share in the local market, particularly after the Covid pandemic and subsequent financial downturns.

Following the economic crisis in 2022, marked by a sharp appreciation of the dollar, the industry saw raw material costs surge by nearly 200 percent. This led to a 40 percent drop in production volumes and a corresponding decline in sales.

While prices remain a concern, Fonseka noted that economic stabilisation has helped consumers gradually adjust to higher costs, allowing the local market to recover.

“During difficult economic periods, consumers tend to opt for cheaper, unregulated confectionery products since they are not essential. But, now we are seeing a shift. People are now focusing on quality and brand reputation over price,” Fonseka stressed.

Commenting on the recent reduction in wheat flour prices, Fonseka noted that while the price cut was welcomed, its benefits were primarily felt in the bakery sector, with mixed outcomes for the confectionery industry, particularly the biscuit segment.

He shared that industry stakeholders had requested the government to extend the wheat flour price reduction to the biscuit sector and are still awaiting a positive response. Regarding government policy support, Fonseka highlighted that digitalising import processes would significantly fast-track bureaucratic procedures, reducing delays, increasing transparency, and helping eliminate malpractices to create a more business-friendly environment.

However, he stressed that stringent labelling regulations imposed on the confectionery industry remain a major challenge, as manufacturers continue to face legal issues due to unclear guidelines.

“Authorities need to address these concerns urgently. With the peak season approaching, it is important for us to resolve these challenges quickly to keep up the momentum,” Fonseka said.

As the industry anticipates strong first-quarter growth, stakeholders remain hopeful that regulatory hurdles and market challenges will be addressed to sustain this momentum.