Tea without tears

The hub and the pledge

The recent Government pledge voiced by none other than the Secretary to the Treasury to protect ‘Pure Ceylon Tea’ is laudable and reassuring. It is the popular and patriotic view held by the vast majority of Sri Lankans who are extremely proud of the tea we produce in our country and the ‘Pure Ceylon Tea’ label. A much lesser number of people, however, have been directly associated with the different aspects and sectors of the tea industry and trade, both locally and internationally, and it is from this group that the persistent view has been emanating that the interests of the country in terms of value to be derived from our tea is best derived by opening up our country as a tea hub; the objective of a hub being to blend teas of other origins (not low quality teas) with our own teas to be able to compete with tea products being marketed in the super- and hyper-market shelves in the modern trade channels of the world.

International tea brands

As a country, all these long years, we have been only selling the tea we produce as opposed to marketing it. The aspect of marketing tea has always been in other hands. The presumption that in the case of tea everything happens within our shores is incorrect.

The creation of greater value with regard to our tea happens outside the borders of our island and does not accrue to our people. When we sell the tea and it is shipped, it loses its identity as Ceylon Tea and then we do not have the capability of protecting it or tracing it any longer. The largest part of our tea crop suffers this destiny and goes into the hands of persons we no longer have any control over.

So how do we propose to protect this vast quantity of Pure Ceylon Tea? The multinationals have strategically played down the importance of Pure Ceylon Tea in their blends and those famous brands which prided in having a very high percentage of Ceylon Tea previously make no such claims any longer and indeed contain no Ceylon Tea at all in a few glaring cases.

The brands have remained famous and strong notwithstanding the transformation and the consumer has been none the wiser about the change of blend composition. Do we propose to stop selling tea to these multinationals?

The desired change in focus

To change the consumer from where he is at present to accept Pure Ceylon Tea brands on a scale that will make significant returns to our country will be a monumental task and requires sustained investments over a long period, beyond the levels that our tea corporates would be ordinarily capable of mustering on their own. It is not only the challenge of changing and influencing consumer behaviour but setting up the distribution channels to reach the consumer in order that he may have access to our product.

Indeed, no lending agency has come up with proposals to assist us in the marketing end of this industry. Every project during the time of my 40-year association with this industry has been focused on developing the production end, while the ultimate challenge has always remained in the marketing arena, which will make all the difference to the fortunes to be derived from our investment in tea.

Ceylon Tea brands

Only a handful of Sri Lankan-owned tea companies up to now, have recorded any degree of success in the area of marketing tea. We need to examine and understand the reasons why this is so and address the issues involved to pave the way, if that is at all possible, for Pure Ceylon Tea brands to take their due place in the world.

Failure is certainly not for the reason that our people lack the entrepreneurial spirit. The vast resources required, the fierce competition which already exists and the acquisition of skills in international brand marketing will be crucial factors. The latter will be particularly challenging as competition from the multinationals which are engaged in the business of multiple brands where the absorption of costs is more economically shared has to be contended with.

In a mono brand marketing business, the absorption of marketing budgets will be inefficient and will impact on costs and pricing. The marketing and promotional budget to support local businesses to market 330,000 metric tons of tea branded internationally would not be generated by the charge of an insignificant market levy on every kilo sold at the auctions.

Market shares and key players

Even amongst the very small number of Sri Lankan-owned tea brands being marketed internationally, the ones which have achieved any significant market share and are classified as ‘key players’ by rating agencies in any sizeable market would be the absolute exception.

Maybe our brand owners have made progress in certain markets, but while this is truly admirable the reality remains that the real value and profit from the vast quantity of tea Sri Lanka produces is derived by multinational companies which are engaged in a whole host of other business activities amongst brand marketing and not only marketing tea but a whole range of fast moving consumer goods as well. Therefore, they have the edge in entering and capturing markets at their will and pleasure.

Just take one example: Unilever, which is believed to enjoy over 50% of the world’s retail market for tea products. The individual annual budgets of these leading multinationals exceed the national budgets of several countries, including our own.

In the event we are serious about marketing our entire tea crop i.e. all 330,000 metric tons of it as Pure Ceylon Tea, then we have to stop selling it and start marketing it and we need to properly understand what we are up against. Mouthing patriotic slogans in Sri Lanka about the goodness of the tea we grow here may not help to market teas on shelves internationally.

Tea and tears

Every sector of the tea industry and trade is today crying out for relief and seeking solutions to their individual problems. The workers who constitute the greatest number of people affected are constantly seeking a better deal.

The rising cost of living compels them to periodically make demands for an increase in the wage rates. The managers and owners of properties complain of low productivity and yields resulting in unviable returns from their investments.

Researchers are addressing at great cost the acidity in the soil, its impact on yields and are experimenting with new clones. The issues concerning tea should be discussed dispassionately by all stakeholders sitting down together.

Years behind in innovation and use of technology

Despite the spend on research, not much has changed in the field or the factory. The plucker still moves her hands and bends her elbows more than a thousand times to deliver her quota of leaf for the day with the heavy basket on her back. By and large, the British model instituted for manufacture of tea a century ago is still very much in place in the factories.

The tea industry has seen little change and innovation has been conspicuous by its absence. The methods of engaging human inputs in cultivation and harvesting and paying for those inputs needs urgent review if we are to sustain the industry over time.

On the positive side many factories have adopted quality systems and have been ISO certified. While we have simultaneously retained the relative purity of the made tea by good cultivation practices, hazard analysis the controlled use of pesticides and other chemicals, the cleaning of tea by removal of foreign substances entering externally such as wood shavings, sand, bristles and metallic objects are not as widely practiced as necessary at factory floor level to maintain a higher overall image and reputation for the brand we are desirous of protecting i.e. ‘Pure Ceylon Tea’ and projecting it.

The Colombo trade

At the next stage in the chain of transactions, most of the tea to be sold arrives in Colombo to be cared, stored and catalogued by a broker for sale by public auction. To facilitate the sale and to create the widest interest, the brokers distribute samples to a large number of potential buyers (exporters) seeking to obtain the best price. This auction mechanism has been zealously guarded and defended by the trade in Colombo and has undergone little or no change over the last half century.

A dispassionate examination of the existing practices in detail may reveal certain inefficiencies and hidden costs which if not eliminated could reduce the competitiveness of Pure Ceylon Tea. Teas ex-Colombo Auctions have had a record of fetching the highest prices relative to other tea markets of the world.

This does not mean however, that we should not critically examine the buildup of costs at the different points in the value chain and eliminate redundant and inefficient procedures which could be dispensed with. There may be better ways of doing what we do week after week without a thought or care for improvement and change.

Free importation

The cry for policy changes in regard to having free access to imported teas for blending and sale ex-Colombo originates mainly from the trade, which is also experiencing serious set- backs in many of our traditional markets.

Reference was made earlier to multinationals and large foreign business houses importing Ceylon Tea and adding value in their factories dotted all over the globe and often in locations which do not grow any tea at all. There is no control the producing country can exercise in these businesses except the drastic measure of banning the export of tea in bulk ex-the producing country. Most producing countries especially those who have large exportable surpluses encourage the shipment of teas in bulk and have no say as to how that tea is finally presented to the consumer.

Sri Lankan businessmen are not prevented from entering this blending business overseas. Should they see the merits of selling multi-origin blends as opposed to competing in markets otherwise closed to them (being limited to ‘Pure Ceylons’ ex-Colombo), perhaps the way forward for them would be to set up factories overseas.

Anticipating change

Hope lies in the future and not in the past. We may have already missed the bus to climb in with branded Ceylon Tea. In any case we are not positioned to take advantage of the tea bag business, the way we manufacture our tea. The sales presently going through modern trade channels are mainly in tea bags in most of the major markets of the world.

However, we could still get ahead if we are not late in grasping the opportunities that new trends in tea consumption may soon present us if we reposition ourselves and strategise. We need to carefully follow what is going on. We need to observe study, analyse and dive in before others do, if indeed the trend is established.

The tea bag has been with us for a very long time. I believe the use of tea bags emerged and grew in the last half of the last century and unlike the last time when the tea pot gave way to the bags over a period of time and rather gradually too, the next phase in consumption patterns may take place faster than we can imagine.

There are indications that the younger generations are not taking tea. The speed at which the world is moving, Generation Y (presently between (15 and 30 years of age) will not stop for tea and do not have the patience to wait for boiling water and for the tea bag to infuse. They would like to drink on the move. They would take a bottle or can and go. The purchase perhaps will be off a vending machine? Generation Y is unlikely to sit down and have a cup of tea. Just watch their behaviour.

Technology has developed integrated extraction systems and state-of-the-art flavour recovery processes with the ability to capture and preserve key flavour features. The variations of seasonal quality and flavour could be preserved in technologies that are now available.

Tea drinks tailor made for the young using ready to drink technologies would be ideal for the Pure Ceylon Tea label with its Uvas, Dimbulas, Nuwara Eliyas, Uda Pusellawas, etc. They are already world renowned and I presume geographically identified and registered recently. Generation Y is known for its health conscious approach where food and beverages are concerned. A part of our Pure Ceylon Tea crop may have waves of opportunity here for the future starting with targeting Generation Y.

We need to wipe the tears dry from the 2.5 million people directly dependant on this magical brew for a living and think responsibly for the country which justifiably expects the people involved to generate more value from tea for our economy.



(The writer is a past chairman of the Exporters Association of Sri Lanka and can be contacted on [email protected].)