Virgin Coconut Industries: Venturing into unchartered waters

Monday, 2 January 2012 00:31 -     - {{hitsCtrl.values.hits}}

By Devin Jayasundera

Coconut, which is the oldest plantation in the country, has evolved in to one of the most important agricultural commodities today, only second to paddy in the Sri Lankan household.

Currently the coconut industry produces an annual turnover of Rs. 100 billion. Most of its revenue is generated by traditional means such as production of coconut oil, processing of desiccated coconut and mainly supplying coconuts for domestic purposes for households in the country.

Virgin coconut oil production is unchartered territory when it comes to the manufacturing of coconut-related products in the country. Currently virgin coconut oil fetches one of the highest prices for edible oil in the global market place.

A pioneering company in this field, Virgin Coconut Industries (Pvt) Ltd., has made its mark in the industry since its inception in 2006.

“In the West there was constant effort in promoting their oils such as palm oil and vegetable oil. As a result of this, coconut oil, which was mainly from tropical countries, were discouraged. But today due to findings of the medical and nutritional properties of virgin coconut oil, there is demand from the Western countries,” said Virgin Coconut Industries Director Doreen Jayakoddy.

Virgin oil is mainly consumed for its health properties. It is said that three to four tablespoons of virgin oil per day will increase energy and revive metabolism. The lauric acid in coconut oil is proven to be antibacterial, antiviral and antifungal, which helps boost the immune system.

According to Jayakoddy, many sporting governing bodies encourage athletes and body builders to consume virgin oil daily due to its health benefits.

The special process in the production of virgin oil is the ‘cold pressing’ technique, noted Jayakoddy.  The simple difference between normal coconut oil and virgin coconut oil is the amount of heat that is used in extracting the oil.

As Jayakoddy explained, to produce virgin coconut oil, the temperature should not be set at more than 40°C; this is in contrast much lower than the heat used in the production of normal coconut oil.

“This is a long process and this is mainly done to retain the nutritional qualities of the coconut,” expressed Jayakoddy. She also noted that the coconuts selected for this process are all organic and of 45 days maturity.

“There is a strict process and it cannot be hurried as the quality of the oil depends on it. This is one reason why Virgin Coconut has such a high price in the market.”

Virgin Coconut Industries mainly exports to countries like South Africa, New Zealand and the UK and European countries such as Germany, Ireland, and Poland. Jayakoddy mentioned that in 2012 the company will be focusing on penetrating the USA and Canada markets, as there seems to be a huge demand for virgin coconut oil. She noted that local companies such as CBL and Expolanka also buy their products and resell it in other countries.

The company has invested Rs. 50 million in setting up the new factory in Pannala. She asserted that this would enable them to increase capacity and supply more adequately in response to the demand. The company hopes to achieve a target of 20 metric tonnes of virgin oil in 2012.

She mentioned that the biggest constraint the industry is facing is the constant fluctuation of coconut prices. “Buyers normally want to hold the price for 12 months, but in reality there’s a tendency for the price of coconut to vary from week to week.”

With regard to low consumer demand prevailing in the West in the backdrop of the economic crisis, Jayakoddy mentioned that there was no drop in demand for virgin oil and that demand has in fact been rising, with 2010 and 2011 both performing exceptionally well. “We hope that this would continue in 2012 as well,” she added.