Roman Scott, TEA AGM and future of Ceylon Tea

Friday, 11 September 2015 00:00 - - {{hitsCtrl.values.hits}}

I refer to your article in Monday’s FT entitled ‘Winds of change for tea?’

The Tea Exporters Association is said to have unveiled a set of strategies to improve the tea market. It immediately shifts the responsibility to Government to make these goals achievable, referring to a protectionist model, presumably the longstanding ban on dumping of cheap imported tea, designed to protect the Ceylon Tea industry and its four million dependents.

It is ironic that this price-based strategy is diametrically opposed to the lucid argument of the guest speaker at the very same AGM, Roman Scott. Scott, an eminent economist and marketer, highlights the narrow range of limited buying power countries that Ceylon Tea is exported to, (which is the primary cause of the collapse of auction prices). Ceylon Tea’s high cost of production, in his view, makes “the next move a no-brainer”.

He says “you’re the guys with the best tea”…”the premium stuff”…”lovely orthodox production” and encourages Sri Lankan brands to enter countries where the benefits of pure Ceylon Tea is best appreciated.

“It is the rich Western markets who have the sophisticated consumers with the money” to pay for “a premium, ethically positioned, artisanal, origins product that Sri Lanka is in prime position to do and cannot do anything else because you’re so expensive”. He goes on to say “even if you try to control your costs, you will always be more expensive”.

To align marketing strategies to the product we grow in Sri Lanka is what Scott encourages the tea industry to do – to sell as a premium product in sophisticated markets. There are no Government restrictions whatsoever as claimed in this regard. This has been precisely Dilmah’s strategy over the last couple of decades which has met with some success.

Having listened to an eminent speaker passionately advocating the premium quality of Ceylon Tea, its unique qualities and the need for Sri Lankan brands to market it appropriately, for the association to conclude that the Government is the primary deterrent and ask it to change its attitude and remove “restrictions” on imports of cheap tea, is a tragic reflection on tea marketers. Perhaps the next guest speaker should be C.K. Pralahad of ‘The Fortune at the Bottom of the Pyramid’ fame?

As Scott says, the association’s strategy to increase tea exports 300% to $ 5 billion is a stretch – he says that “a fundamental change in strategy” is needed if Sri Lanka is to even come close to realising it. Clearly he means the industry has to change and not the Government.

Malik J Fernando