As Sri Lanka steps-up to middle income status, Sri Lankans are stepping up to new opportunities and challenges. Through our experience, working with brands and interacting with consumers on a regular basis, we have spelt out some of these interesting changes. Find out how these changes will impact your brand.

1. Step Up Sri Lanka 2019

2. Sri Lanka
Economic Overview

3. GDP Growth
2003 2017 2025 2031 2060
Average
5.88%
$ 5000$ 4073
Middle
Income
country
Estimated
Average
6%
Malaysia Singapore

4. Economic transformation
Rural based
economy
Semi urbanized
& urbanized
Economy
14.60%
18.20%
80%
77.40%
5.40% 4.40%
2001 Census 2012 Census
Population Change
Urban Rural Estate
Source: Central Bank of Sri Lanka (2018)

5. Economic transformation
Agriculture
Manufacture
& services
Source: Central Bank of Sri Lanka (2018)
7.7 8 8.2 7.5
29.2 28.3 27.2 27.3
56.4 56.9 57.4 56.9
0
10
20
30
40
50
60
70
80
90
100
2013 2014 2015 2016
Composition of the Sri Lankan
Economy
Agriculture Industry Services

6. Social Indicators
Highest in South Asia
HDI value HDI rank Life expectancy
at birth
Expected years
of schooling
Mean years of
schooling
Sri Lanka 0.770 76 75.5 13.9 10.9
India 0.640 130 68.8 12.3 6.4
Pakistan 0.562 150 66.6 8.6 5.2
South Asia 0.638 - 69.3 11.9 6.4
High HDI 0.757 - 76.0 14.1 8.2
The HDI is a summary measure for assessing long-term progress in three basic dimensions of human
development: a long and healthy life, access to knowledge and a decent standard of living.
Source: UNDP (2018)

7. Changes at the household level
45000 62000
2012/13 2016
Mean House Hold Income
Source: Household Income and expenditure survey
Size of the
household
3.9 3.8
Income

8. Changes at the household level (2012 – 2016)
34% 31%
Rural Urban
Mean Household Income
Source: Household Income and expenditure survey
40%
Non Food
Expenditure

9. Growth Projection - 2019
Central Bank
ADB
World Bank
4.5%
4.5%
4.0%

10. How the consumer landscape is changing

11. These are experiences we are seeing often in markets
across the country
Its too early to tell how strong each of these
experiences will become or how wide they will spread
These will impact the purchase decisions and market
size in the coming few years

12. Blurring of the boundaries between segments

13. Dramatic increase in accessibility of ‘premium’ categories
Wide branch networks, easy payment schemes, island wide
delivery and cheaper ‘Chinese’ alternates are changing the
accessibility of products across different corners of Sri Lanka

14. Complexification of the purchase basket
The consumers across the echelons are showing even more
complex behaviors, they would have dinner at a five star
restaurant with the family and be seen the next day at the
Mathara Bath Kade, enjoying a rice with pol sambol.

15. The traditional axes of segmentation will lose
their edge
While the traditional segmentation based on income, affluence
and rural and urban boundaries may show limited growth
opportunities, identifying the new and emerging customer needs
and aspirations can create newer opportunities.

16. Opportunity for marketing depts. to own the data
Internal data stored is under utilized by most organisations. It is
important for marketer to take control of the data available
within your organization. Move the ‘control’ of your customer
data from the IT department to the marketing department as it
can be your next currency.

17. Gone is our money – now it’s yours and mine

18. More opportunities for income supplementation
With the rise in economic conditions the female now has the
ability to puts away a portion for ‘herself’, not to be spent on her
but to give the family as a treat from her. This spend can range
from a treat (holiday for the family, a dinner out or a household
durable) or convenience (spending additional for convenience).

19. Gender roles are changing

20. This phenomenon is cutting across social strata
This phenomenon is today growing across single income
households. While some house wives save from the monthly
purchases, others engage in (part time) income generation
activities to help them get their own money.

21. … across the country

22. Beyond consumables
This impacts the household purchasing patterns and are
enabling households that are managing their month with a
limited income, to purchase durables and services that upgrade
their lifestyle. In periods of tougher economic climate they will
reduce the spent on the day to day FMCG purchases or switch to
a low cost brands, yet they would still have the power to
purchase into premium categories when required.

23. Emergence of fintech brands

24. An Uber-esque approach to unsecured
personal loans
Today instant loans are changing the way customers are
purchasing products. They are removing the deliberation time
between desire and actual purchase.

25. Varied business models and objectives
Fintec companies are opening doors for the impulse purchase of
high value products, which previously had a long decision making
process including a visit to the bank to pawn a piece of jewellery.

26. Used to finance lifestyles, a vaccine against FOMO
Consumers are able to buy the products they like without having
to save up money. The purchase decisions for high value products
are becoming shorter and faster.

27. Changes to purchase behavior and category dynamics
While traditional lending platforms will be obsolete, businesses
will be provided opportunities with new financing partners to
drive sales.

28. Reduction of local migration

29. Opportunities for economic growth is not
limited to the major towns
While the major cities attract the youth from across Sri Lanka,
today we are starting to see more and more youth moving back
to their home towns to start and run their own business, to stand
out on their own.

30. Yesterday…

31. Birth of homegrown entrepreneurs
Today with the ease of access to technology youth are finding it
easier to replicate established businesses, and start their own
business in relatively less competitive markets.

32. Youth are grabbing traditional opportunities
We see the average youth moving into smaller businesses such as
IT based services and even into areas like cultivation, which the
youth of yesterday were shying away from.

33. Sadun
A young ad agency copy writer who has turned into a farmer in
Embilipitiya

34. Consumption patterns
Restaurants on google in Batticola

35. Growth of localized competition
The growth in local entrepreneurs also brings the threat of new
entrants. Localized entrants who are using their destination of
origin to their advantage are gaining market from the larger
brands.

36. The Rise of Social Commerce

37. eCommerce has yet to fully win over the
customer
E-commerce platforms are still winning the trust of
consumers

38. Social Media provides that sense of familiarity,
human face to the act of consumption
Social commerce is making inroads into the ecommerce
industry and this phenomenon is here to stay for a
while.
Today ecommerce is being challenged by social
commerce, where businesses are building trust through
two way communication with their clients.

39. A nearly zero-cost distribution,
engagement and communication channel
Consumers are seeking convenience of dealing with suppliers
who are in their social sighting. Who are recommended to them
by their trusted social media network.

40. Increasing brand vulnerability

41. An ad with good intention and a wrong copy line can kill a full
campaign. We saw an example last year for a leading payment
gateway, where the message was interpreted as ‘women belong
in the kitchen’.

42. In social communities, brands, professionals and even categories
are vulnerable to exposure as well as criticism. If the criticism
reaches its tipping point, the negative image can tarnish a brand
overnight

45. Brands and categories will need to change from what we have
been doing all this time to doing the right thing

47. Consumers place their trust In-House Brands

48. With tight purse-strings value is sought
everywhere, experimentation is reduced
Turbulent economic times is leading consumers to cut their
spending at one time or another. In the process consumers are
likely to try out cheaper brand alternates available in the market.

49. Store brands offer a win-win proposition
With the growth in the reach of modern retailers and electronics
retailers, the retail brands are finding it profitable to grow in-store
brands using the brand equity already build.

50. Use your hard won equity & trust to deliver real value

51. Potential lies across retail formats & categories,
beyond supermarkets
New retail formats will grow and challenge the existing retail
structure

52. Sense of built up frustration

53. 2009
While the period after the war bought a high level of
satisfaction amongst the larger Sri Lankan population,
current economic conditions and the feeling of
lawlessness is driving high levels of consumer
frustration.

56. rikindle
3880751057_71a7319e8e_o
Rekindle your relationships…
Brands that help alleviate this sense of frustration,
brands that bring forward stories that rekindle Sri
Lankans’ faith and optimism may see fame and growth
through evangelist customers and recommendation.

57. … and deliver faith and optimism

59. Merging of the E/S/T structure

60. A snappy, hybrid, visual lingo to break barriers
Today “#🛫🌎🌍🌏🛬”
Says “Make a round the world trip”

61. It has crossed over to common parlance
E/S/T as we know it is merging into a common language,
with the evocative tongue give way more to a hybrid mix
of words, idioms and slangs.

62. Fitting in with shortening attention spans,
makes brands cool and contemporary

63. Return of swadeshi

64. Foreign is better?
Foreign is better?
With the emergence of localized (regional) business and
current economic conditions, people are open to trying
local brands. This trial is leading to loyalty if the brand is
providing the right experience.

65. Endorsing local
Flaunting local

67. Newer brands and categories are giving a good run to
the established brands in the market

68. While others are developing a whole brand promise on
the “Place of Origin”

69. Fitness & Health as a status symbol

70. A preventative rather than curative
approach to a healthy lifestyle

71. The evolved and affluence consumers are aspiring to
quantify every minute of their day either through fitness
wearable devices or through the performance at the
gym.
The fitness bug has bitten everyone across age groups

72. It is an all-encompassing lifestyle with
badge value
More and more consumers will be reading the labels of
the products they buy. More people will look for organic
products, consumer will align themselves with brands
that are perceived to be natural and healthier.

73. Experience Seeking on the rise

74. Sensorial consumer
Consumers are not going into the restaurants or cafes
for the food, they are going for the experience, the
ability to share the experience and social value of the
experience are driving footfall.

75. Service
Looks for the experience
This is not limited to the food industry, but customers are
switching from establish brands for higher risk, newer
brands that are providing them a better experience.

76. Product Experience

77. Whight
Consumers want to experience and share. Consumers
will always be looking out for the experience they are
getting. They will associate value to the experience,
which will in some instances over power the value they
associated for the commoditized product itself.

78. Premium and difference
Charge a premium and differentiate

79. If you would like more details on the way the changing trends are driving
opportunities for your brand don’t hesitate to contact us:
Dilini@breakthrough.lk
Abhishek.Hariharan@mullenlowe.com
All images and models are copyrights of the websites and have been used to illustrate examples of real life situations. We have tried not to highlight any brands in a
negative or positive manner, but brought to life content available on social media to illustrate the social impact.

80. Thank you