Coconut chips have been gaining popularity in the global snack food market due to their unique taste, nutritional benefits, and versatility. Coconut chips are made by toasting or dehydrating coconut slices, which gives them a crispy texture and enhances their flavor. The main drivers for the next two years for toasted coconut chips are expected to be the low freight rates and the high demand for premium quality coconut chips from Sri Lanka.
Freight rates have been very low, and this trend is set to continue for the next 18 months, which will benefit the market for coconut chips. This will result in lower transportation costs for coconut chips and may encourage more companies to enter the market, increasing competition and driving down prices.
However, Sri Lanka, which is a major supplier of toasted coconut chips, is facing its own challenges in terms of coconut pricing. The local government's decision to increase or decrease import taxes on palm oil, which is commonly used for cooking in Sri Lanka, has a direct impact on the pricing of coconuts. When palm oil prices are high, locals switch to coconut oil for cooking, which drives up demand and prices for coconuts. This may lead to increased costs for coconut chips that are sourced from Sri Lanka.
Despite these challenges, Sri Lanka remains a preferred origin for middle eastern countries that value premium quality coconut chips with a rich flavor and high fat content. This is because the millers in Sri Lanka dry the green coconut for a couple of weeks prior to milling, which concentrates the coconut meat and enhances its flavor. This unique process sets Sri Lankan coconut chips apart from those produced in other regions.
In conclusion, the market for toasted coconut chips is expected to remain strong over the next two years, driven by low freight rates and increasing demand for premium quality coconut chips from Sri Lanka. However, the fluctuating coconut prices in Sri Lanka due to import taxes on palm oil may pose a challenge for companies sourcing coconut chips from this region. Companies that are able to navigate these challenges and provide high-quality products that meet consumer demand are likely to succeed in this market.