Colombo, Aug 17: A century-old brand loyalty and aggressive marketing have helped Sri Lanka's Ceylon Cold Stores Ltd take on multinationals on its home patch.

The company, which began making ice 131 years ago, has since moved on to make soft drinks and ice-cream, competing with the marketing and financial muscle of the likes of Coca Cola , Pepsi and Unilever Plc.

People in tropical Sri Lanka swear by Ceylon Cold Stores'lemonade and ginger beer, and its Elephant brand ice-cream has the biggest chunk of the market. They also drink its soda in large quantities.

Since being taken over in 1990 by the Sri Lankan conglomerate John Keells Holdings Ltd , Ceylon Cold Stores has emerged as the most profitable of the 61 companies in the group, its managing director Sumithra Gunasekera said.Net profits grew by 73 per cent to 152.78 million rupees in the financial year to March 31, 1997 after a 250 per cent rise to 88.33 million in the previous financial year.

Profits in the first quarter of this year rose sharply by 197 per cent to 61.48 million rupees.

``Our customers have come to associate value for money with us and we try not to let them down,'' Gunasekera said.

``But heritage and longevity are no guarantee of customer loyalty if you stop giving value for money,'' he added.

``With annual volume of 110 million bottles, we have about 42 per cent of the soft drinks market which is growing steadily,'' said Raji Goonewardena, finance director of Cold Stores.

An official of one of its competitors in the soft drinks industry said distribution was one of Cold Stores's biggest advantages.

``Their distribution system has been in place for years.Their other advantage is that they don't use branded bottles but plain bottles with labels, thereby saving on costs. They also save a lot by way of depreciation on old machinery and trucks,'' he said.

Ceylon Cold Stores has now invested 280 million rupees on a modern bottling plant at the Colombo suburb of Kaduwela, Goonewardena said.

With a 55 per cent share, Ceylon Cold Stores also leads the way in the local ice-cream market, giving tough competition to Unilever's Walls brand.Unilever has vigorously promoted Walls in the past year, but Gunasekera is not worried.

``Walls has opened up a new market of street sales and sticklines, which will grow the overall ice cream market and benefit everyone,'' he said.He said Cold Stores has been able to increase output in its core areas of soft drinks and ice-creams by about 40 per cent using the same machinery, due to higher efficiency.

Analysts said Cold Stores is able to take on the multinationals mostly due to aggressive marketing of its products, which started after John Keells took it over.

``There is brand loyalty because Cold Stores has been around for over 100 years and its green Elephant trade mark is a byword,'' said food and beverage sector analyst at brokerage Jardine Fleming HNB, Avanka Herat.Jardine Fleming forecast above-average growth in the next two to three years.``Cold Stores also has a 5-10 per cent share of the local market for processed meats and caters to a segment which still prefers sausages and bacon cured the traditional way,'' Ceylon Cold stores manging director Sumitra Gunasekera said.

The official contended that the scare of Multinational companies should be tackled at the home turf itself through effective methods. This example is likely to embolden many neighbours facing rigours of liberalisation.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.