Sri Lanka's Ceylon cinnamon — a distinctive variety of the plant that has made a mark in the culinary world — holds profound historical and economic significance for the nation. In 2022, according to TrendEconomy, the export value of cinnamon in Sri Lanka reached a grand total of US$232 million, highlighting its importance in the country's export economy.
This guide aims to equip Sri Lankan businesses within the cinnamon industry with vital knowledge about the market dynamics, challenges, and potential solutions for successful exporting.
Navigating the global marketplace
According to the same TrendEconomy report, Sri Lanka’s cinnamon trade accounted for 1.7% of the nation's total exports and a considerable 13.9% of the commodity group's total sales in 2022. This data underscores the immense potential for Sri Lankan businesses to tap into a broad global customer base.
Key markets for Sri Lankan cinnamon, both in stick and powder forms, include Mexico (39%), the USA (17.8%), and Peru (12.2%). Understanding the demands and preferences of these markets — including the health benefits and side effects of cinnamon appreciated by consumers, such as weight loss and blood sugar regulation for diabetes — can offer Sri Lankan businesses strategic insights for enhancing product offerings and targeting marketing efforts effectively.
Upholding quality standards
One key differentiator of Sri Lankan cinnamon is its quality, often regarded as having come from the best cinnamon trees in the world, with its only viable competitor being Chinese Cassia cinnamon. Ensuring the production of 'true cinnamon', or Ceylon cinnamon, and adherence to international food safety norms can boost the global reputation of Sri Lanka’s spice exporters.
Each key market for Sri Lankan Ceylon cinnamon has its own specific set of food safety regulations. For instance, the USA's Food and Drug Administration (FDA) mandates compliance with the Current Good Manufacturing Practice (CGMP) regulations for food safety, which covers aspects like sanitation, employee hygiene, and equipment maintenance.
On the other hand, Mexico follows the regulations under the Federal Commission for Protection Against Sanitary Risks (COFEPRIS). It emphasises the traceability of food products, requiring detailed documentation about the product's journey from farm to market.
In Peru, the National Service of Agrarian Health (SENASA) lays down the food safety norms. They highlight the importance of sanitary standards and pest control measures in the production process.
It's essential for businesses to stay abreast with these regulations and ensure that their operations align with them. This minimises the risk of regulatory breaches — which can lead to costly delays and rejections — and boosts customer confidence in their products.
Overcoming industry challenges
The cinnamon industry in Sri Lanka, while offering significant opportunities, also poses several challenges. Labour shortages, price fluctuations, and competition from other spice-producing nations are just a few. Moreover, overcoming the difficulties in managing logistics effectively can make the difference between a product reaching its destination in optimum condition or not reaching it at all.
Investing in technological upgrades and innovative farming practices can help overcome labour shortages and enhance productivity and quality. Simultaneously, the use of effective pricing strategies and a clear understanding of competitive dynamics can mitigate price fluctuations and competition.
However, amidst these challenges, the critical role that logistics plays cannot be overstated.
The ability to get all types of cinnamon products from farms to markets promptly and in optimum condition is vital. Delays in shipping can result in product degradation, which could tarnish the reputation of the exporter and impact future sales.
Inefficient logistics management can also lead to increased costs, resulting from issues like cargo rerouting, storage charges, or even regulatory fines in case of non-compliance with import/export rules. This is where partnering with a seasoned logistics provider becomes crucial for businesses looking to export from Sri Lanka.
