Sri Lanka shines at World Tea Expo

Sri Lanka’s celebrated Ceylon Tea roared at this year’s World Tea Expo, drawing attention to the official country of origin and showing by example its pedigree of social, economic, and environmental responsibility.

Sri Lanka is the largest exporter of black orthodox tea, accounting for 6.2% of world production and exporting 16.9% of the world’s tea. The island of tea employs 1.5 million people in the cultivation and processing of hand-plucked leaf.

 

Premala Srikantha, Director of Promotion for the Sri Lanka Tea Board, in the Ministry of Plantation Industries, received a plaque commemorating 150 years of Ceylon Tea from Manik Jayakumar, founder of QTrade Teas & Herbs, in Cerritos, Calif. Jayakumar is a native of Sri Lanka and former manager of several prestigious Sri Lankan tea gardens.

 

Rohan Pethiyagoda, who chairs the Sri Lanka Tea Board, said the occasion presented not only an opportunity to share with the United States “but the whole of the tea-drinking world”.

 

The Tea Board announced a Global Ceylon Tea Party to be celebrated 6 July at 5 p.m. at Sri Lankan diplomatic missions worldwide. The event begins in Fiji, then advances by the hour to New Zealand and continues in every time zone.

 

On the exhibition floor, Chamara Udugama at Tea Talk said the Sri Lanka pavilion provided good exposure to the 3,500 attending. The company offers 40 types of single-estate teas. The fruit teas used in making iced tea are popular, he said, citing papaya peach as an example. “The K-cups are getting notice as well,” said Udugama, whose company, founded in 2013, sells wholesale and operates a tea shop, restaurant, lounge, and hotel in Colombo.

 

Jayakumar, the event’s Platinum Sponsor, described Sri Lanka’s commitment to sustainability during a presentation at the Special Events Stage. Teas from Sri Lanka are the only teas in the world to earn “ozone-friendly” status under the Montreal Protocol, one of the most successful and effective environmental treaties ever implemented. Many of the gardens there are organic and all greatly limit the use of pesticides, he explained.

 

Gail Gastelu, publisher of The Tea House Times, presented slides showing the beautiful landscape, modern factories, and people who make up the tea industry in Sri Lanka, with its great diversity of teas from seven distinct producing regions. Her publication is on a mission to help people in the U.S. learn more about Ceylon tea and how special it is, she said.

 

Srikantha said that Sri Lanka has developed the capability to process tea quickly and to add value in packaging and advanced shipping. The tea auction at Colombo consistently ranks first in pricing teas.

 

“World Tea Expo is very good,” she said. “I like this show as everybody is serious about tea big or small. They come her to learn. I’m very pleased as we had quite a few visitors.”

 

Date - 22nd June 2017, Daily FT

India’s April tea exports drop 9.2%

IN-2

Mumbai (Reuters): India’s tea exports in April fell 9.2% from a year ago to 12.21 million kg, the state-run Tea Board said in a statement.

 

The country’s tea exports in the first four months of 2017 rose 5.7% to 72.77 million kg, it said.

 

India, the world’s second-biggest tea producer, exports CTC (crush-tear-curl) grade mainly to Egypt, Pakistan and the UK, and the orthodox variety to Iraq, Iran and Russia. 

Date-19th June 2017, Daily FT

 

Ceylon Tea – A celebration of 150 years

One hundred and fifty years ago, the pioneers of Ceylon Tea, cultivated the land, built the infrastructure and laid out the foundation for an industry to be nurtured and grown. Today, producing 350 million kilograms annually and employing over 2% of the population of Sri Lanka, Ceylon Tea has become one of the top five export earners for our country.

 

Tea, inherently, has been Sri Lanka’s most important agricultural commodity. With its beginning in 1867, when the enterprising young Scotsman James Taylor experimented with tea as a replacement for the then disease-ridden coffee industry, the Ceylon Tea industry celebrates its 150th year anniversary in 2017. 

 

The Colombo Tea Traders’ Association (CTTA), together with the Sri Lanka Tea Board, and supported by the Ceylon Chamber of Commerce, the Ministry of Foreign Affairs and all the stakeholders of the tea industry, is celebrating this momentous sesquicentennial of the industry that sustained Sri Lanka’s economy for over 100 years with many events taking place throughout 2017.DFT-10-6

 

DFT-10-6The celebrations began with the unveiling of James Taylor’s monument at the Sri Lanka Tea Board’s premises in January.  Two Educational fairs too were held, one in Nuwara Eliya and the other in Pilimathalawe, with the aim of educating the children of plantation families on the importance of the tea industry and its sustenance. A tea festival is being planned to bring people from various sectors and countries, together. 

 

A major event planned by the CTTA is the Global Ceylon Tea Party. Beginning in Fiji, down to New Zealand and continuing in every time zone a tea party will be held in the relevant countries at 5 p.m. in each time zone on 6 July. This will make it a continuous, 24-hour global Ceylon Tea party. With the endorsement of the Ministry of Foreign Affairs of Sri Lanka, the CTTA will coordinate the tea parties, which will be hosted in the relevant time zones by the Heads of Missions of Sri Lanka. The CTTA is also supported in this venture by Sri Lanka’s oldest confectioner Maliban Biscuits, which has produced a biscuit with the 150-year logo in a special flavour of Earl Grey and also of ginger, especially for the global tea party. 

 

A charity auction of tea and tea memorabilia, in which the eight main operating brokers of the Colombo Tea Auction will be presenting five tea-related sterling silver items, such as a teapot, a model of the oldest tea roller, a tea-tasting scale and a gavel, a model tea-tasting set etc., will be auctioned. The funds collected from the charity auction will go towards activities to improve the quality of life and provision of health benefits of the estate workers. 

 

The tea industry will also release a publication on the history of its 150-year existence with interesting and beautiful illustrations of Sri Lanka’s tea country. The launch of this publication will take place on the same day as the charity auction, on 20 July. Furthermore, two stamps and a first day cover as well as a Rs. 10 coin which will be in circulation will be issued in celebration of the 150 years of Ceylon Tea. This commemorative coin too will be ceremonial released for public circulation in July.

 

The grand finale of the 150th anniversary will be the Tea Convention, which is expected to be attended by more than 200 overseas delegates. Eminent global speakers will discuss topics ranging from tea to motivation, packaging and mechanisation etc., towards empowering the future of the tea industry in Sri Lanka. The many events planned to commemorate the sesquicentennial of Ceylon Tea will reflect the importance of the industry that has immensely contributed to the economy of Sri Lanka for 150 years and strategies for its sustenance in the future, too. 

 

Date- 15th June 2017, Daily FT

PRE-PUBLICATION REVIEW OF THE COMMEMORATIVE BOOK


The book "Ceylon Tea: The Trade That Made A Nation", in commemoration of the 150th Anniversary of the Ceylon Tea Industry, will be launched at the BMICH on July 20th, 2017. A pre-publication review of it by Mr. Mahen Dayananda. Authored by Mr. Richard Simon and illustrated by Mr. Dominic Sansoni, it is priced at Rs.11, 000/- with slip cover and Rs.10,000/- without slip cover.  

 

CEYLON TEA – THE TRADE THAT MADE A NATION 

 

Having been a junior tea taster at Mackwoods Ltd. in the year 1966, I was privileged to be an integral part of the Colombo Tea Traders’ Association (CTTA) celebrations commemorating ‘A Hundred Years of Ceylon Tea’. I do recall that the Tea Convention itself was held at the Lionel Wendt Auditorium in the heart of Colombo. The CTTA event had attracted an international gathering of senior personalities from several countries extending from Japan in the Far East to the United States of America (USA) in the West. Apart from any other positive emotions, I was greatly impressed by the attendance at the gathering, which, by mid 1960 standards, could only be described as awesome from my own point of view. In fact, I do not think that there are more than a handful of participants/delegates from the One Hundred Year Celebrations who are still around. Hopefully these individuals will be an integral part of the forthcoming events planned to celebrate the 150th Anniversary later this year. 

 

We had access to an attractively presented book, authored by D. M. Forrest, entitled “A Hundred Years of Ceylon Tea”, which was essential reading for anyone connected with the tea industry during this period. The book itself was based on facts and anecdotes relating to the first 100 years of tea in Ceylon, as the island was then known. The present publication authored by Richard Simon under the auspices of the CTTA is indeed a commendable initiative. It goes without saying that the effort made by the author to present a period of 150 years of Ceylon Tea deserves serious commendation. 

 

The evaluation of our tea industry from the early primitive efforts to grow tea after the disastrous failure of coffee is captured in very readable language by the author. We must not forget that the original pioneers worked under extremely difficult conditions in relation to weather, transport and accommodation. 

 

At this stage of my review, I wish to refer to a priceless quote of an adventurous planter:

“If the accommodation was bad the food easily matched it”. 

 

Bread if available at all, was often ten days old by the time it reached the “Thottam”, mouldy and covered with ants. These tough individuals were undoubtedly cast in a different mould with a single minded pursuit of creating a new plantation industry from the depressing days of the coffee disaster. It was individuals such as James Taylor who snatched victory from the jaws of defeat and created an amazing industry, which is still an important segment of our economy. Quite apart from the early planters we must also recognize the immense contribution made by recruits from South India who made the extremely dangerous and difficult journey from the Malabar Coast to ports such as Mannar in Northern Sri Lanka from where they continued their journey on foot into the hill country, enduring terrible privations of frightful proportions all along the way. Sadly many of them did not make it to their final destination and were either buried or cremated along the way. 

 

For the record, A.M.Ferguson estimated the death-rate among estate labourers during the mid 1850’s at 250 per 1000. To make matters worse, the living conditions of these workers according to H.W. Cave were “For the most part, the inhumane nature of labourers’ treatment at the hands of the system was barely recognized”. The first four chapters of the publication provide the reader with a wealth of information and detail in relation to what we could rightly classify as the period which laid the foundation for the subsequent success of our tea industry.

 

Commencing from chapter five, we read about the absolute ruin of the original coffee planters and the collapse of numerous banks and Estate Agents who operated in Ceylon during this calamitous period. 

 

We must repeatedly pay tribute and make reference to the personality and determination of a Scottish planter, James Taylor, who raised a crop of tea plants from Assam seeds. Subsequently, he commenced making tea from the leaves of these plants without any prior knowledge or experience. What is unique is that he had taught himself the method of manufacture entirely by a process of trial and error. By 1872, he had built his own “Tea- House” complete with a rolling machine, which he himself had designed. We now know that Loolecondera Estate was the original 19-acre field which represented the birth of tea in Ceylon under the total commitment and able management of the said James Taylor. 

 

Richard Simon then proceeds to describe the commercial sale of tea through the medium of the London Auction held in Mincing Lane. Moving on the author covers important events relating to the tea industry in Ceylon, including the birth of George Stuart & Company, which was formally incorporated in 1843. The strict hierarchy then prevalent on the plantations is also covered in great detail, including the systems, which gave birth to the nomenclature of Superintendent or Periya Dorai, Assistant Superintendent or Sinna Dorai, Visiting Agents not forgetting Kanganis who also originated from South India. 

 

Next in order of importance is the development of the Colombo Tea Auction, which provided an alternative channel of sales supplementing Mincing Lane in London. The success of the auction system in relation to tea is that a voluminous quantity of tea, ranging between 5.5 million kilos to 7.5 million kilos, is traded on a weekly basis. The Colombo Tea Auctions under the aegis and supervision of the Ceylon Chamber of Commerce (CCC) and the CTTA has developed over the years into a major auction centre. It is a fact that overall supervision by the Chamber and the role of the CTTA in conducting the auctions in strictly implementing the related by-laws have helped in no uncertain measure to secure and maintain the reputation of the Tea Trade in Colombo for absolute transparency and probity. 

 

The establishment and development of Plantation Clubs in districts such as, Dimbula, Dickoya, Kandy, Nawalapitya, Uva and Uda Pussellawa are also covered in fair detail. However, we must not forget Plantation Clubs in the low country districts such as, Tebuwana, Ratnapura and Talduwa, which provided social activity and sporting facilities to a host of planters in the low country districts of the island. 

 

What is most interesting and suitably covered in a serious manner is the establishment and operations of the Planters’ Association (PA), which still continues as an important segment of our plantation industry. 

 

Reference is also made to a Trade Union formed by the planters themselves i.e. The Ceylon Planters’ Society (CPS), which in turn and over a period of time spun off various benevolent funds and societies. The origins of the Tea Research Institute (TRI) and members of its technical staff also provided the reader with very interesting background details and knowledge to those of us in the tea industry. Richard Simon takes the reader through a period when tea prices slumped to unimaginable levels following a period of great prosperity. It must be remembered that tea prices, as did other commodity prices, flourished significantly just before and during World War II. Here again, the author provides a plethora of interesting detail with continuous reference to the overall effects on our local tea trade. 

 

The author has not failed to capture the political background in Ceylon prior to and after Independence, which was ultimately granted on the 4th of February, 1948 to “the pealing of temple and church bells and the sound of joyful drums”. The tea economy in the island was impacted by the numerous political changes ever since Independence and these events, including the seriously negative effects of nationalization, are also covered and provide for interesting reading. 

 

It is of interest to refresh our memory with the significant changes in the tea industry, which were initiated from the mid ‘60s onwards. We witnessed two major initiatives to modernize and improve the structure and operations of the tea industry – one by the State, the other internal. The internal changes were managed by the CTTA and involved the entire trade to improve and standardize the entire process of decisions and procedures associated with the Colombo Tea Auctions. It is important to note that Messrs. Turquand Young & Co. was entrusted with this project over a period of several months. The CTTA Committee received regular progress reports during this period. 

 

The author describes in detail the impact of external forces on the industry around this time. A State Commission on the tea industry was appointed in May 1967 and a comprehensive report was produced by Sir Arthur Ranasinha. The industry’s system of sales and marketing was examined and commented on in detail by the Commissioners. The report also noted the duality of functions performed by certain Agency Houses and their subsidiaries. The reaction of the individual players in the trade to the report of the 1967 Tea Commission provides a wealth of information. The reader is also privy to an overall commentary of the significant political changes covering this period including the JVP insurrection of April 1971. 

 

The formation and establishment of the State Plantations Corporation (SPC), Usawasama and the Janatha Estate Development Board (JEDB) provide a background to the far reaching changes which were to follow. The reaction of the private sector to these changes documents very interesting background reading including the creation of the Sri Lanka Tea Board by an Act of Law on the 1st of January 1976. Furthermore, the decline and ultimate closure of several hitherto existing Agency Houses wielding immense power is carefully documented. The reader is privy to the increasing importance of our markets in the Middle-East; eg. Iraq, Kuwait, Egypt, Syria and Iran, not forgetting Russia (the former Soviet Union). 

 

The unfortunate ethnic riots of August 1977 and the consequent disruption to life in Sri Lanka are covered in the context of a historical background. The publication proceeds to describe the eventual journey towards the privatization of a significant segment of our plantations with specific reference to management. The land itself continues to be owned by the State. 

 

In conclusion, there is absolutely no doubt whatsoever that the CTTA publication is a comprehensive and well documented treasure trove of significant events of relevance, covering a period of 150 years. It must be recorded that the publication, whilst both detailed and comprehensive, is also extremely readable and rich in connected folk-lore. 

 

*********************

This Pre-launch Review was carried out by Mr. Mahen Dayananda. Mr. Dayananda has been a member of the Tea Trade since 1965 and went on to be the Chairman of the Colombo Tea Traders Association. He has the unique honour of subsequently being elected the Chairman of the Ceylon Chamber of Commerce. He is the only person to hold both positions other than the first Chairman of the CTTA who was nominated by the Ceylon Chamber of Commerce to that post when the CTTA was inaugurated in 1894. Mahen Dayananda has been conferred Honorary Life Membership of the CTTA.

 

Kelani Tea Factory achieves all-time record price for BOPSP grade

 

01

Kelani Tea Factory, situated in Yatiyanthota – Sabaragamuwa region achieved an all-time record price of Rs. 880 for a BOPSP grade at the weekly tea auctions held on 20 June. This line of tea was purchased by Jafferjee Brothers Ltd. and marketed by Forbes & Walker Tea Brokers Ltd. Kelani Tea Factory is managed by Kelani Valley Plantations PLC 


Date - 23rd June 2017, Daily FT


 

Dilmah and Expolanka Lead Private Sector Support for LKI Research

article_image

 

L to R: Mr. Malik Fernando (Dilmah), Hon. Dr. Harsha de Silva, Dr. Dinusha Panditaratne of LKI, and Mr. Ahmed Javed (Expolanka)


The Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI), Sri Lanka’s leading foreign policy think tank, recently signed a Memorandum of Understanding with the MJF Group, the group of companies that manufactures, exports, and markets the Dilmah brand. The MoU establishes a 3-year partnership between the MJF Group and LKI, to support LKI’s Global Economy Programme. Expolanka Holdings PLC, one of Sri Lanka’s best known conglomerates, has also committed to facilitate quality research by enabling essential research databases for LKI’s research team.

 

The establishment of the Global Economy Programme at LKI reflects the increasingly key role of economic diplomacy in Sri Lanka’s foreign policy. The programme will focus on international trade, foreign investment, and tourism, and its research aims to ensure that Sri Lanka’s economic diplomacy reflects sound research and innovative insights, as well as the potential and priorities of Sri Lanka’s private sector.

 

The programme will be headed by Dr. Ganeshan Wignaraja, who will join LKI as Chair of the Global Economy Programme (supported by Dilmah). Dr. Wignaraja’s experience over the last twenty-five years spans the private sector, international organisations, and academia in the UK and Asia. He has held senior roles at the Asian Development Bank, Maxwell Stamp PLC, OECD, the Commonwealth Secretariat, and Oxford University. Dr. Wignaraja’s expertise covers trade and competitiveness, supply chains and SMEs, infrastructure connectivity, development finance, and macroeconomic policy.

 

Hon. Ravi Karunanayake, Minister of Foreign Affairs and Chairman of LKI, commented on these developments stating, “Commercial diplomacy is vital to Sri Lanka, as a middle-income country that wants to progress to the next frontier of development. It is inspiring to see Sri Lanka’s private sector step up so generously, to support research that can identify new possibilities for Sri Lanka’s trade, investment, and economic growth.”

 

Hon. Dr. Harsha de Silva, former Deputy Minister of Foreign Affairs and new Deputy Minister of National Policies and Economic Affairs, also expressed his thoughts at the media briefing he chaired at LKI stating, “This is the first time that the Foreign Ministry of Sri Lanka has established a partnership with our own globally recognised brands such as Dilmah and Expolanka to promote economic diplomacy. I’m appreciative of the fact that Dilmah and Expolanka responded immediately to my request for financial partnership in this endeavour.  I hope to see other global brands also join in promoting our efforts in economic diplomacy.”

 

LKI’s Executive Director, Dr. Dinusha Panditaratne, welcomed these recent developments, stating, “LKI is deeply appreciative of these landmark commitments from the MJF Group and Expolanka Holdings, which enable LKI to build an exceptional research team with access to international research databases.” She added that, “LKI is grateful to the Hon. Dr. Harsha de Silva, M.P. and Former Deputy Foreign Minister, for initiating the call for research support from the private sector. The funding will enable LKI to scale up their research activities, and add compelling new voices to shape Sri Lanka’s foreign policy.”

 

Dr. Panditaratne observed that the generosity of Dilmah and Expolanka for research builds on contributions by other highly respected corporates for programmes and communications at LKI, including from Hemas Holdings PLC, John Keells Holdings PLC, and J. Walter Thompson Sri Lanka. Together, all these companies are pushing the frontiers of corporate citizenship in Sri Lanka, and showing how the private sector here can – like their counterparts elsewhere in the world – support research, programmes, and communications on issues of global importance.

 

The Lakshman Kadirgamar Institute (LKI) is a think tank focusing on Sri Lanka’s international relations and strategic interests, to provide insights and recommendations that advance justice, peace, prosperity and sustainability. The Institute reflects the vision of the late Hon. Lakshman Kadirgamar by promoting the country’s intellectual profile in foreign policy research and engagement.

Date-04th June 2017, THE ISLAND

Ranaya achieves all time record on maiden sale

IN-2


Ranaya Tea Factory achieved an all time record price of Rs. 695 for a BM grade in the Off grade category on its very first appearance at the Weekly Tea Auctions held on 6 June. This line of tea was purchased by M/s Van Rees Ceylon Ltd. and was marketed by M/s Forbes & Walker Tea Brokers Ltd., the sole broker for this mark. Ranaya Tea Factory is a state of art facility which commenced operations in April 2017. This factory is situated in the Uva planting district in Attampettia at an elevation of 1,250 m above sea level. Ranaya Tea Factory is owned and managed by Wasantha Jayasekara. 

 

Date - 12th June 2017, Daily FT

150 years of Ceylon Tea: 1867-2017

 

01


The future should not be an extension of the past

 

 

While we celebrate a significant milestone in the history of Ceylon Tea this year, it is timely and critically important for Sri Lanka to consider whether we can afford to carry on managing its affairs and concerns in the same way we have been doing in the past century and a half. I quote from a book written by D.M. Forrest and published for the centenary year of Ceylon Tea, published in 1967. He makes an apt remark 50 years ago:

 

“It is only when one gets down to eye level, so to speak, that one realises the truly extraordinary thing which the human will has imposed on this great landscape-the fanatical thoroughness in fact with which the pioneers subdued and planted it. Tea grows now (and Coffee grew before) on slopes as inhospitable as Iceland’s, on precipices you would hardly expect a human being to stand, let alone to plant and prune and manure tea bushes and pluck them for 75 years or more! Those engaged on the job take it all for granted and think nothing of planting afresh, where their predecessors seem crazy to have planted it at all. To me it is not more wonderful that men are on the verge of flying to the moon.”

 

Man set foot on the moon in 1970 not long after that paragraph was written and we have seen great progress in all spheres of human endeavour since then, but the changes in the way we continue to do tea has relatively not undergone any significant change that we can boast of, though we continue to remain optimistic about greater results in our bliss of ignorance and continue doing tea the same old way as before. 

 

The only development we can boast of in our tea plantations is the early breakthrough in gender equality. It is now women who stand where men previously stood on those inhospitable slopes to prune and pluck. The stagnant export earnings year on year would have painted an even more dismal picture had the men who were originally introduced to do the job continued. The high dependency on human hands is the root cause for many of the challenges we are presently facing. The youth are increasingly unwilling to work with their hands any longer.

 

The need to market rather than trade

The world has seen tremendous changes in the last 50 years in the way tea is cultivated, harvested, marketed and consumed. Rapid developments have taken place as evidenced by the multitude of innovative tea products, e.g. cosmetics, toothpaste, biscuits, confectionary items, etc., which have all been well received by the consumer. These differ from market to market but everywhere without exception the ways in which tea is consumed and marketed are continuously subject to change. 

 

No serious attention has been paid to marketing our tea as opposed to just selling it. The absence of research both in terms of innovation, product development and markets has been conspicuous. In fact there are very few marketing specialists engaged in the tea industry and trade.

 

We have not really studied the potential of the modern trade channels to capture greater value or unleash the power of brand marketing to gain value up-stream. Local companies need to be positioned and re-structured to take this leap into global marketing. It is beyond the scope of traders either as individuals presently constituted or as export businesses, freely licensed, who largely pack the tea away from our shores in bulk to foreign owned business houses overseas. Those who capture the greatest value of the global tea supply chain upstream have no loyalty to Sri Lanka or to Ceylon Tea any longer. 

 

Marketing tea is no exception to any other product and requires a multidisciplinary approach. Expertise in the techniques of marketing and communication are an indispensable requirement to succeed. If the export of tea is left in the hands of everyone who comes forward to engage in it, then it should no surprise that we earn a weak brand image for ‘Ceylon Tea’. The lack of marketing expertise in the formulation of strategies to derive greater value from our tea should be a matter of great concern.    

 

Ready-to-drink beverage

03

In the world of tea globally, with rapid advances in technology, research and development, a myriad of tea products have entered 03the market place. Amongst the younger generations especially and in some developed countries tea has wide acceptance as a ready to drink beverage. The question we need to ask ourselves is, have we kept abreast of these changes and explored and exploited the opportunities which lie out there in the market place after proper study and research?

 

 

In fact some of these tea-based drinks do not compete with other teas but with other beverages on vending machines. The majority of consumers of the tea we produce are unaware from where the tea is sourced. Should we believe that our tea is so special having such unique selling propositions, then it is up to us to come up with creative strategies that are able to meet this challenge and transmit the message effectively. 

 

The ground-breaking changes which have occurred which we should take note of is that firstly tea is less and less a sip by sip experience and secondly that quality and taste are not all dependant or achieved at the point of origin only, or at the factory which manufactures the black tea. With laboratory techniques and market research, teas can be tweaked to deliver according to the tastes of the customer by the application of modern technology which is being used widely today.

 

Only a marginal quantity of the tea we produce should be marketed as Pure Ceylon Tea, so promoting Ceylon Tea globally at this stage is like “putting the cart before the horse” and telling people of the uniqueness of our tea without telling them where they could find it. 

 

It would be unrealistic to expect positive outcomes commensurate with what is proposed to be expended on the much-awaited global campaign. The appropriate target we should aim at this stage are organisations and companies in the businesses of buying tea and not the consumers whom we cannot claim to be close to. 

 

Changes in ownership 

 

and management and lessons learnt

In our own country vast developments have taken place in the structure of the industry in the last half century. These have been more for political reasons rather than market driven. The relinquishing of British interests in the seventies following a policy of land reforms, nationalisation of sterling and public owned estates from the mid-seventies, the lessons learnt of State-owned management right up to 1992 and the resultant calls on the General Treasury to frequently bail out the Government owned plantations out of financial crisis during those periods should have left indelible footprints and learnt lessons in the history of our experience with managing our tea assets. 

 

The conversion to private management first, later evolving to extended leases of land under Regional Plantation Companies to a great extent put a stop to the drain on the Government budget but we still do not appear to have the sustainable model to go forward. Fortuitously, we have refrained from making a grievous error even with the extreme socialist policies e.g. land reform which prevailed in the 1970s, to fragment the tea lands into acreages which would have rendered them uneconomical beyond redemption. 

 

Stakeholder interests

Though we need to address the stakeholder needs of the worker and introduce an inclusive model which will not only improve productivity and yields but also restore social equity to a long suffering people, the dangers of fragmentation cannot be overemphasised. In China around the same period, nearly every family in the tea growing regions of China were vested with two and a half acres of land each, a decision which the PRC cannot ever consider reversing now as it is a socially sensitive matter. 

 

With fragmented tea lands, to reorganise tea for export out of China is proving extremely challenging as reorganising the industry to meet international standards sans traceability is near impossible. So they have shelved the issue. The contribution tea makes to GDP in China is marginal, a mere 0.2% now. Though China was the country which introduced tea to the world from times immemorial, the exportable surplus of tea is not a factor for the country with the size of the growing domestic market for tea and it is noteworthy that despite China’s gift of tea to the world it has yet to establish an internationally acceptable brand of tea of its own. The focus on high tech manufacturing and services of a host of sophisticated products in China has relegated tea into the background. 

 

Our situation comparatively is quite different where a large proportion of our workforce is still dependant on tea as a means of livelihood. A peopolised model of broad-based ownership of shares in the RPCs with freehold rights simultaneously granted to the companies or an extended lease to the existing period may be more appropriate to ensure sustainability.

 

Absence of stakeholder consensus

And now in this sesquicentennial year of Ceylon Tea we read that the main stakeholders in the industry have widely opposing views and do not have a regular dialogue with each other on these matters of great collective importance to their future. Those responsible for policy making are therefore in a conundrum to make any progress by taking far reaching decisions on their own responsibility in the absence of a degree of agreement amongst the stakeholders. There has been a prolonged stalemate and a lack of consensus on how we move forward which has resulted in delays with consequential losses.

 

The auction system

The market for Ceylon Tea despite its good name has long remained a buyers’ market the way we offer it to the world with increasing exportable surpluses. Tea being subject to seasonal variations and offering a multiplicity of types and grades does not lend itself to bulk disposal or a “futures market”. This Mincing Lane model of a regular public auction at which almost all of our tea is sold by sample has continued uninterrupted and unabated since the British introduced it in 1883. At that time 95% of the tea produced in Ceylon was for London and Arthur Moris when ordered by the Governor to report on the suitability of growing tea in Sri Lanka in the 1860s wrote; “If Ceylon is to compete it can only be with an article made with the approval of London tea tasters and purchasers.”

 

Tea export business continues as B2B business

For want of a better method of selling tea, though the influence of London tea tasters have long since diminished almost to the point of extinction, the producer still opts to dispose his teas resorting to this time-tested mechanism in which a Colombo-based shipper buys at the auctions largely to supply another business overseas (B2B- business) which demand reflects the requirements of the consumers in that market only indirectly and demand is really represented at the auctions by the overseas buying companies tea tasters’ selection and their R&D counterparts who have no loyalty to tea of a particular origin. 

 

Demand at the weekly Colombo Auctions is represented by a wide cross section of markets spread across the globe and not dominated by a single country or any group of countries any longer. While this global spread of demand has sustained the auction system the supply side is determined by the crops which in turn are largely dependent on the weather.

 

The vast majority of ultimate consumers on the other hand have rarely the opportunity to exercise a choice in regard to the place from which the tea originates. They buy based on a brand name and the messages they receive in the promotional and advertising media in relation to the brand name where the origin may in rare instances be denoted if at all, as a sub brand at best. 

 

So buyers (not consumers) and weather dependant crop determine price

 

When the crops are plentiful the prices at the auctions are not favourable to the producer who quite often has to sell below costs of production. The producer is then at the door of the Government seeking relief. Because tea gradually deteriorates with age the government regulator does not employ methods to hold buffer stocks to control supply when the harvest is plentiful. The reverse side of the coin is that when auction price levels are on an upward trend as presently experienced, the Colombo buyers are threatened with loss of business under pressure from their overseas counterparts seeking to source teas from other origins. 

 

Imports for exports

The buyers have been making a strong case for liberalising the importation of teas of other origins transforming Colombo into a hub for the business of value addition which will inure to the credit of our own economy rather than to any other. They argue that in any event our tea suffers this fate outside our shores and we have no control over those operations. Producers on the other hand argue that this measure would impact on demand for locally produced tea at the auctions. Opposing arguments have not been fully met and no compromise has been arrived at.

 

There are a few bold and visionary entrepreneurs who claim that they have built their businesses using the Ceylon Tea image. These owners of Ceylon Tea brands who market their tea successfully using the slogan “Ceylon Tea” only as a sub brand strenuously argue that opening our borders to carry out blending and packing operations to compete in the large generic but branded markets of the world would tarnish the good name of Ceylon Tea. 

 

A response to these purists and adherents embracing the classical view of a bygone era and still exclusively committed to Ceylon Tea would be, that while each of the few of them only account for utilising less than 3% of Sri Lanka’s production each, as a maximum percentage, how does Sri Lanka control the vast quantities of bulk leaving our shores ending up as packs sub branded as “Ceylon Tea” without restriction or limits being placed in the markets they are being sold in. Can we in this background justifiably claim that Ceylon Tea still enjoys that pristine position? Market Research findings run contrary to this claim.

 

Missing links in Ceylon Tea supply chain and the unknown consumer

Value and price for nearly all the tea produced in the country is determined by the weekly demand and supply as reflected at the auctions. The system does not take into account two main criteria 1) The requirements and tastes of the consumer who ultimately pays for the tea we produce and drinks it 2) The value available in the links of the global supply chain outside our shores right up to the consumer. 

 

The B2C model of business is again conspicuous by its absence. The links outside our shores are much more lucrative than the values retained by the links of the supply chain within our control. This is where we miss out and where the central focus of the discussion on solutions to our predicament should really be, to secure greater earnings from tea for Sri Lanka.

 

Some thoughts and personal views

Having prefaced this article with the declaration that “the future should not be an extension of the past” and outlining the areas which in my view need to be addressed, I feel obliged to proffer what I consider to be some of the steps that may be taken to re-chart our course for the future of this industry. 

 

Receiving higher values to sustain the industry

Until we find a better mechanism to replace the auction system in place, we are left with no alternative but to use the principles of supply and demand which largely determine price, to enhance the value we can derive for the bulk of the tea we produce by selling at the auctions. 

 

In our recent experience we saw that a reduction in the quantities (approx. 10%) offered for sale had a very favourable effect on prices fetched. This phenomenon which prevailed was not attributed to any managerial or regulatory intervention but due mainly to the vagaries of weather patterns and restrictions placed in the application of weedicides.

 

In an industry that is still regulated and producers are dependent on prices fetched at the auctions there is a strong case for an independent state controlled authority to intervene in the supply side and hold back teas of poorer quality when auction quantities are excessive and are likely to have an unfavourable impact on prices. This measure has been employed in the past and to my recollection at least on two separate periods in the last 50 years. My impression on why the mechanism did not deliver the expected results at that time was not because the concept was flawed but due to poor execution and implementation. 

 

This may be an outlet for much of the substandard tea being produced and ease the supply side at the auctions. Another alternative to control supply to convert a portion of our tea to concentrates (base tea) for release at appropriate times. Application of technology is an indispensable requirement for this measure.                

 

Factory owners, small holders, RPCs and generally speaking a majority of the “producers” are convinced that tea being imported to be blended with our tea to end up as branded products overseas to compete in the generic markets for tea will adversely impact on the prices for their produce. However, if the principles of supply and demand are not disputed taking out a quantum of the tea produced to a demarcated zone for processing and value addition for export will only enhance the price levels at the auctions giving producers a better deal than they get now when crops reach peak levels. Other regulations to protect and prevent tarnishing the image of Ceylon Tea would be more feasible than when the operation takes place outside our borders where we have zero control.

 

In the ultimate analysis, higher values from tea will only accrue to us if we go beyond our shores, travel up the value stream and market our teas rather than just selling it via an auction system merely connected to a Colombo based export arm. Traders must transform themselves to marketeers.

 

Creation of the marketing businesses of tea

The global marketing of tea requires companies broad based in ownership with access to the size of funds required and managed by personnel with multidisciplinary management and marketing skills. Funds are required for product innovation, research and development, marketing and promotion, distribution and selling and a host of activities to secure and grow market shares. 

 

My personal view is that not all who wish to can play in this league. When we examine all the financial assistance being made available to us for the development of the tea sector what stands out like a sore finger is the lack of support to develop the marketing of tea globally. All the schemes by these generous hand outs are for activities within the boundaries of our country related to production and supply though where the potential really lies to improve our situation is outside. 

 

Financial institutions, e.g. development banks, exim banks, capable of facilitating these bold levels of entrepreneurship are still not visible though they have been much spoken of.

 

Promoting Ceylon Tea 

 

as a brand

The Ceylon Tea Brand was created by the British. The Empire Tea Bureau in the UK was established after the war in 1945 with its aim, in a time of food rationing in the UK, being to offer a better tea service for the public. The origins of propagating Ceylon Tea can be traced back to this period when the Bureau transformed itself into a Ceylon Tea Centre in 1946. In fact the author D.M. Forest of the book ‘One Hundred Years of Ceylon Tea’ was employed as a journalist for the purpose of writing up Ceylon Tea soon after the war.

 

We must be fully conscious now that until around the mid-sixties the British had the largest interest and were the biggest beneficiaries of Ceylon Tea promotion during that period. Nearly all the tea that was grown in Asia with the exception of China had predominantly British interests up to the 1960s and competition between countries of origin was less pronounced. Tea was promoted commonly by all the tea growing countries together contributing to a common fund. 

 

That situation took a dramatic turn with Ceylonisation and now we are left with very marginal interest from the UK consumer who has been gradually converted almost 100% to consumption of tea in bags which contain little or no tea from Sri Lanka. Ceylon Tea earned an edge for itself due to its unique character attributed to nature’s contribution to enhance the flavoury qualities of its tea in season in those days. Now technology has given us solutions so that we need no longer entirely dependent on weather and natures ways to make good tea.

 

In my view the challenge is to formulate a marketing strategy for Ceylon Tea which should take precedence over and above the much talked about promotional and advertising campaign which should really come later. Expecting to generate results by embarking on the latter before the former and not properly determining the target audience to talk to before the product is accessible to those who are targeted does not appear to be logical or sensible. In fact it could be wasteful as promotion and advertising is appropriate only when products are available to consumers and the success of a campaign is really measured by the increase of revenue attributed to the spend.

 

Synopsis

In view of the length of the article I felt it necessary to highlight the main points I have tried to convey for those who may not have the time to spare to read through it all.

 

The need to manage supply and demand and not leave supply entirely to the vagaries of nature and the weather.

The importance of marketing tea rather than trading in it.

The need for marketing expertise and specialists to be engaged.

The high dependency on human hands and its correlation to productivity.

To transform workers to stakeholders.

The application of available technology across the supply chain.

Focus on innovation, market research and R&D.

Recognise that tea is in competition with other beverages.

No longer a “sip by sip”. Fast turning into a “glug glug” (RTD)

Exploding the myth that all Ceylon Tea is supreme.

Teas from Sri Lanka still very much B2B business.

The folly of targeting consumers by advertisement and promotion before the product is available to purchase. 

Absence of dialogue between stakeholders.

Date - 07th June 2017, Daily FT 

Tea auctions this week

01


By Forbes and Walker Tea Brokers

At the end of the fifth month in 2017 prices at the Colombo tea auction continue to realise record levels in both Rupee and USD terms primarily due to the deficit in availability. Sri Lanka tea production is likely to be further impacted as the country experienced its worst disaster from torrential rain since 2003 last week. 

 

The worst affected are s the Southern and Sabaragamuwa Provinces. The death toll, from the floods and landslides rose to 194 as of last afternoon with 100 missing and 575,816 people from 149,678 families displaced. Needless to say, the current scenario would adversely impact the tea production particularly in the Low Grown sector.  

 

This week’s total offerings were 7.5M/kgs of which 1.3M/kgs comprised of Ex-Estate teas. There was good demand for well-made Low Grown/Leafy teas teas whilst the poorer sorts recorded a significant decline. High and Medium Growns small leaf – better teas were often easier following quality whilst it was encouraging to witness strong demand for teas at the lower end of the market.

 

In the Ex-Estate catalogues quality of teas on offer showed no significant change and consequently a greater weight of offerings comprised of fairly average quality teas. Best western BOP/BOPF declined Rs.20 per kg. In the below best category BOP/BOPF declined Rs.10-20 per kg. Plainer BOP declined Rs.10-20 per kg whilst corresponding BOPF were firm and Rs.10-20 per kg dearer particularly on last week closing levels. 

 

Nuwara Eliyas witnessed a sharp decline and could be attributed to the overall decline in quality. Uva/Udapussellawa BOP declined Rs.10 per kg and more following quality. Corresponding BOPF, Udapussellawa – firm on last week levels whilst Uva – clean leaf teas were Rs.20 per kg dearer whilst the others were mostly firm. CTC BP1’s were firm and upto Rs.20 per kg dearer. Corresponding PF1s – High Grown – mostly firm on last week closing levels. Medium and Low Growns Rs.10-20 per kg dearer.

 

Interest from UK and the continent continued to be selective. Japan, Hong Kong and China were less active whilst shippers to CIS were fairly aggressive on a wide cross section of teas.

 

At this week’s sale Leafy/Tippy catalogues comprised of approximately 3.2M/kgs. There was good demand. In the Leafy catalogues BOP1/OP1s were generally firm to dearer barring a few high priced teas which were irregular following quality. OP/OPAs too were mostly firm with the below best/bottom end teas gaining Rs.10-15 per kg. PEK/PEK1s too followed a similar trend. 

 

In the Tippy catalogue select best FBOPs were irregular. Others particularly the clean below best teas were fully firm. FF1s too met with good demand and were mostly firm. In the Premium catalogues better teas attracted good demand and were mostly dearer. Others were fully firm. There was good demand from shippers to CIS, Turkey, Dubai, Iraq, Kuwait and Saudi Arabia.

 

Date - 02nd June 2017, Daily FT

 

‘Land of the Great Wall’ mesmerised by Ceylon Tea auction system

IN-1

The ‘cradle of tea civilisation’ is China and nobody in the global tea fraternity disputes this fact. However, what happened a few days ago in Beijing, the ancient ‘Forbidden City’ was truly remarkable. The Sri Lanka tea industry which celebrates its 150 years’ anniversary in 2017 from a small beginning in 1867 through 19 acres for tea plantations in Loolcondera Estate utilising the plants (tea cultivar) brought originally from China, presented it to their ancestors. A ‘Ceylon Tea Week’ full of activities and events was organised in Beijing through a public/private initiative by Sri Lanka Tea Board and Colombo Tea Traders Association. The focal point in Beijing was the Embassy of Sri Lanka while several Chinese organisations under their Ministry of Agriculture, Ministry of Commerce and Ministry of Cooperatives unhesitatingly joined hands to make the historical attempt, truly memorable.

 

The ‘Ceylon Tea Week’ rallied around a few major projects. The Ceylon Specialty Estate Tea of the Year Competition, Award Ceremony for the Factories which produced the winning teas and a Charity Tea Auctions where five kilos each of the winning teas were sold to the Chinese audience at a hotly contested bidding system. The preliminary rounds of the tea competition were held in Sri Lanka and 98 samples of the best teas under the seven main agro-climatic regions as well as Ceylon Green Teas, CTC Teas and Innovative Teas/Hand Made Teas were taken to china for the final. The grand finale was concluded at the National Agriculture Exhibition Centre in Beijing amid the 9th International Chinese Tea Exhibition. The first charity tea auction took place at the Event Hall of the exhibition location during the following day. An amount of RMB 104,300 was raised at the first ever tea auction Sri Lanka organised for Ceylon Tea in China.  

 

The second charity tea auction was held during the subsequent day at the Beijing Exhibition Center (Russian Centre). While all the gold winners were auctioned, only a few selected Silver and Bronze winners were identified for sale. An amount of RMB, 41,600 was realised through the second auction. 

 

The total sum realised from both auctions amounted to RMB 145,900 which is approximately SL Rs. 3.2 million.

 

‘Shenzhen Shenbao’ a major buyer of Ceylon Teas who continue to patronise the importation of teas from Sri Lanka turned-out to be the highest bidder at the First Charity Tea Auction by securing the Nuwara Eliya Region Gold Award, Lovers Leap Garden Mark FBOP, at a price of RMB 10,000 for the five kilos package (approx. SL Rs. 44,000/kilo). The Pedro Estate under Kelani Valley Plantations own this garden marks. Fuzhou Bailitong was identified as a buyer of the largest number of winning tea lines at the Charity Auction. The Chinese importer was an active participant at the 1st ever Ceylon Tea Auction in China and strongly patronised some of the best teas from Sri Lanka while out bidding others to secure the lots.

 

The other largest Chinese Tea buyer was recognised at Baijing Chayuan Co. They also injected strong impetus to the Auction by purchasing four of the best lots.

IN-1.1

China is the world’s largest producer and consumer of tea and also the second biggest exporter of tea after Kenya. The nation has been also identified as the country with the fastest growth for Ready to Drink (RTD) Teas although USA and Japan are considered as the two largest global customers in this category. From a traditional green tea consuming society for centuries, the elite, the new burgeoning middle class and the younger generation is moving gradually but steadily towards product innovations and novel differentiations even in the tea beverage. 

IN-1.2

Thus, imported black tea has been caught in this current. Sri Lanka is ideally placed to take the advantage of this new trend as the globally reputed supplier of quality orthodox black tea. Since 2010 to 2016 period, the growth of Chinese tea exports to the world has been calculated at an annual 1.4%. In direct contrast, the annual increase of foreign tea imports to China during the same period has been registered at 14.3%. This implies that, China is bound to import a larger volume of black tea during the years to come. 

 

Sri Lanka who exported only just over one million kilos to China in 2010, has supplied 8 million kilos of Ceylon Tea in 2016. Further, Sri Lanka is the leader in the Chinese tea market in respect of the imported tea segment effectively relegating Vietnam and India to the second and third positions. Today, the Sri Lanka’s share in the Chinese tea imports has grown to 38% by end of 2016 and optimism are high for a rapid rise.

 

Date - 29th May 2017, Daily FT

 

Delmar does it again


01

Delmar estate established yet another all-time record price of Rs. 750 for a Pekoe grade at the weekly Tea Auctions held on 23 May in the Uva/Udapussellawa elevational category. This invoice was purchased by Union Commodities Ltd. and marketed by Forbes & Walker Tea Brokers Ltd.

 

Delmar added another feather in its cap this week as it bettered its previous record price for the Pekoe grade and now achieved all-time record prices for OP, OP1, BOP1 and Pekoe grades in its elevational catergory.

 

Delmar Estate is situated in Halgranoya, at an elevation of 1524 meters above sea level and is certified under ISO 9001:2008 and ISO 22000:2005 Management System Certified for Manufacture of Black Tea Food Sector. This estate is managed by Sudath Liyanage and comes under the purview of Udapusselawa Plantations PLC. 

 

Date - 26th May 2017, Daily FT

 

About F&W

Forbes & Walker was set up in 1881 as a partnership between James Forbes and Chapmen Walker. Although there is no actual record of the date on which it was established the very first cash book, still in the possession of the Finance Director, indicates the brokerages were earned from 1st August 1881. In Sir Thomas Villiers' book “Mercantile Lore” the date of establishment of Forbes & Walker has been put down      Read More...

©  2018 TeaPortal All rights reserved | BenWorldwide