Brief History of Sri Lanka’s Trade
Strategically located in the Indian Ocean, historically Sri Lanka has been a key player in Asian trade, acting as a bridge between South East Asia and the Indian Subcontinent. As the island is also blessed with a good climate and a wealth of natural resources, it has a thriving export market for primary products.
Today Sri Lanka is synonymous with pristine beaches and lush rainforests, with a thriving tourism industry. However, in the recent past, Sri Lanka was synonymous with its most well-known exports—cinnamon, tea and gemstones. In ancient times, the Sri Lankan export industry predominantly comprise of primary products like the aforementioned.
If you were wandering through Sri Lanka’s urban areas and wondering why everything is named after cinnamon—it is simply a homage to Sri Lanka’s most ancient and renowned export. True authentic cinnamon, which was one of the world’s most sought-after spices, was once endemic to Sri Lanka. Ever since then, Sri Lanka has been an attractive trading hub for the global spice trade.
Then came two more products that soared in popularity—Ceylon tea and sapphires. Sri Lankan tea became highly popular around the dawn of the 20th century under British rule. In 1980, Sri Lanka was the official supplier of tea at the summer Olympics in Moscow.
Ironically, Sri Lanka was also at one point in the late 19th century, the biggest exporter of coffee in the world. This was until, in a weird twist of fate, a novel disease ruined the coffee crops and collapsed the country’s coffee export industry. Tea was then introduced from China, as a solution for this, and it’s safe to say that the tea industry is still thriving today.
Where Sri Lankan Exports Currently Stand
As of 2019, Sri Lanka’s total exports were valued at USD 16.4 billion . The largest export industries in the country are apparel, gemstones, food and agricultural products. The apparel industry makes up a huge chunk of Sri Lanka’s total exports at USD 5.3 billion (2019). Sri Lanka’s tea exports came in at USD 1.24 billion .
The main buyers of Sri Lankan exports are the US and EU countries. Almost 45% of Sri Lankan apparel exports went to the US.
For a long time, Sri Lanka’s exports have predominantly been from the primary industry (products that rely on natural resources in the country). This is, however, changing as the country develops further. Manufacturing and tertiary industries are taking over Sri Lankan exports—which includes telecommunications, technology and tourism.
Sri Lankan Export Food Industry
The most popular foods in the food & beverage sector are tea, coconut-based products, spices and dried food. The Sri Lankan export food industry has expanded in both volume and categories over the past few years.
A part of this has to do with the growing Sri Lankan community residing abroad who are buying them. Also, Sri Lankan cuisine is becoming increasingly popular in the food & beverage industry. The export food industry is predicted to grow with increasing opportunities for exporters.
Storage, processing, dry and bottling technology is also constantly improving, so the export food industry continues to grow. Things like dried coconut milk powder, dried fish, papadam, dried soy dried fruit and bottled pickles and condiments are highly popular products.
The biggest exporters in food and beverage sector include Amazon and C L Synergy Pvt Ltd. Other local companies like Dilmah, Hayleys and Araliya Group are huge players in the Sri Lankan export food business.
There are over 110 food and beverage organizations involved in exporting Sri Lankan food, and the list is growing. The export revenue for this sector was $250 million in 2018. This value had remained somewhat steady in 2019, before taking a small hit in 2020 due to the coronavirus pandemic and stalling of global trade.
Unlike other Sri Lankan exports, the biggest market players for Sri Lankan food are mostly Asian countries, particularly those in South Asia itself. India, for example, was the biggest destination for Sri Lankan food exports—bringing in revenue of around $35million in 2018. This is followed by Maldives, US and SEA countries like Singapore and Thailand.
Outside of the South and South East Asian region, the United Kingdom and Australia are the biggest export markets. The UK and Australia both have large Sri Lankan community, which is partially behind the high export numbers.
Source: Sri Lanka Export Development Board
A Closer Look At Some Of The Highest Selling Products
For the past century, Sri Lanka was famous for its black tea. Recently, however, the local tea industry has expanded niches within the industry. There is a growing trend of wellness around the world which is causing a higher demand for green tea. Hence, tea production has expanded to include things like white tea, green tea and Oolong tea.
Sri Lanka is currently the 3rd biggest tea exporter in the world with around 12% of global tea coming from Sri Lanka. Tea exports contributed around 2% of Sri Lanka’s GDP.
2. Coconut Products
Coconut products are a huge contributor to the Sri Lankan food export industry. Coconut oil and coconut milk are very frequently used in Sri Lankan cuisine, so it is popular with Sri Lankans abroad—especially those living in Europe and North America.
There is also a huge potential for growth in this particular niche because of a growing use of coconut milk and oil globally. A growing demand for non-dairy milks, vegan and plant-based food internationally presents an ever-increasing demand for coconut products.
Coconut and coconut-based products brought in nearly $600 million in export revenue in 2017. However, this figure also includes other products outside of the F&B sector such as coconut fiber and shell products.
Popular coconut food products include coconut oil, dried and canned coconut milk powder, desiccated coconut and coconut water. Some of the biggest exporters in this sector are Amazon, Adamjee Lukmanjee & Sons, Expolanka, and G.P Desilva & Sons.
This list would not be complete without mentioning spices. Cinnamon is the biggest spice export in Sri Lanka, taking up around 54% of total spice exports. The island has long established itself as a leading cinnamon exporter globally, spanning back hundreds of years.
True cinnamon is associated with Sri Lanka, with the country dominating at a 90% market share for true cinnamon. It is currently the second largest cinnamon exporter in the world. There continues to be a growing demand for cinnamon globally, as it is highly popular in beverages, condiments and desserts.
Other popular spice products include pepper, cloves, cardamom, nutmeg and mace. In general, Sri Lanka is the 9th biggest exporter of spices around the world, bringing in $361 million in export revenue in 2018.
4. Fish Products
As an island, it is no surprise that Sri Lanka consumes a lot of fish. Dried fish products are quite common in Sri Lankan cuisine, such as Maldive fish and dried sprats for example. Hence, there will always be a demand for Sri Lankan fish products from Sri Lankans living abroad.
Common Sri Lankan fish products include canned fish, dried sprats, dried mora (baby shark), fried dry fish and bottled fish ambulthiyal. Ambulthiyal is a popular dry and sour fish curry in Sri Lanka, and is often bottled for exports.
Fish in general is quite expensive around the world, with increasing concerns about overfishing and intensive fishing methods. However, it is a very valuable protein source compared to other animal products like chicken or beef. Unlike the latter two, fish also has Vitamin D, Vitamin E, Vitamin B12 and Omega-3 fatty acids.
Vitamin D has had a resurgence in interest during the pandemic due to its role in immunity. As growing health & wellness trends prefer leaner proteins like fish, there will be a growing demand for fish products in the near future.
5. Other Specialty Foods—Sambols and Pickles
Sri Lankan cuisine makes heavy use of pickled products, and condiments such as sambol. Sambol is so popular because it is extremely versatile and can be eaten at breakfast, lunch or dinner. As they do require a lot of time to make and certain ingredients that are hard to find outside of Sri Lanka, Sri Lankans living abroad rely on exports of bottled or dried sambols.
Sambols are often a mix of lime, chilli, onion (fresh or fried), dry fish and sometimes desiccated coconut. There are many different variations that come in pickled, fried and fresh forms. Pol sambol is the most popular and often eaten fresh, and hence the hardest to export. However, companies have found creative ways to preserve its shelf life.
Some companies have dried and packaged pol sambol, while others are bottled. Araliya Group, for example, offers bottled Pol Sambol. Hygiene and quality are essential for these products, which Araliya embraces by using strict preparation and storage conditions.
Other popular sambols offered include seeni sambol (fried onions), Araliya katta sambol, Araliya batu moju (pickled eggplant or brinjal), Araliya polos achcharu (pickled jackfruit) and Araliya Kooniso sambol (dried prawns). All of these are offered by Araliya in bottled form as well.
Despite the setbacks from the pandemic, there is growing potential for Sri Lankan food exports. They often contain ingredients that are hard to find outside of Asia but are increasing in popularity—coconut and jackfruit, for example. Coconut products in particular will most likely be surging in demand, due to increasing popularity of plant-based lifestyles.