Invest more on tea branding and value addition

The tea market in Sri Lanka stabilized with tea prices increasing in December and this would improve further in January onwards, said the President of the National Chamber of Exporters (NCE) and Chairman, HVA Lanka Exports (Pvt) Ltd, Rohan Fernando. At the last tea auction on December 16 and 17, 2008, the average prices for high grown and low grown tea were Rs.208.88, 188.64 and 224.76. However, market sources said that the market trend cannot be predicted, based on these prices because the next auction will be held on January 6 and these is a long period in between. Therefore, there was a high demand at the last auction.

To face the challenge in the international markets due to the global economic crisis, the government should support the tea exporters to build Sri Lankan tea brands and export more value added products, he said. Unfortunately, the authorities attempt to invest in the other end of the industry by supporting the growers and factory owners, he said.

Fenando said that the government should not take decisions by looking at street protests or the voters in this time of crisis. If Sri Lankan tea can capture and maintain the cast international market the whole industry including the factory owners, growers, smallholders, and the workers will be sage and the industry would be sustained. Therefore, pumping money to the wrong end would not help the industry. Fernando said that the government should invest the cess fund which is over Rs.1 billion an year for marketing, making brand images and value addition of Ceylon Tea. The industry has a legitimate right to demand these funds, he said.

He said that the industry including factory owners and growers should be able to hold on during this difficult situation. The prices were low only two months and if the industry cannot hold on during such a short period, the tea industry in the country is not sustainable. All the stakeholders in the industry capitalized from the long boom in the industry and high price, Fernando said. According to Fernando, the value of Sri Lankan tea exports was US $1.1 billion in 2007 and the industry targeted Rs.1.3 billion in tea exports last year.

If Sri Lanka exported value added tea this value would be nearly US $5 billion and therefore value addition is vital for the industry. Fernando denied reports which said that Vietnam is capturing our main markets. However, Vietnam is looming as a strong competitor and it is the second largest orthodox tea exporter in the world.

Sri Lanka has not yet seriously felt the impact of the global economic crisis. However, the next two three months would be more difficult as a result of the contraction in the global commerce, he said.

Tea crisis easing off

Demand for tea has risen after auctions resuming for the New Year. The crisis in the tea industry is easing off with a significant increase in the prices of low and high grown teas.

The national auction average was Rs.301 per kg last week which is short of Rs.23 to reach the corresponding average price of last year. Chairman, the tea brokers association, Sarath Sirisena said tea prices are stabilizing since commencing of auctions this year. The national average price last week for the low grown rose to Rs.319 per kg from Rs.310 in the previous week.

Demand for tea from key markets dropped drastically following the global financial crisis which is having an adverse impact on many countries. Russia, which is the largest importer of Ceylon Tea, reduced the quantum of imports.

Following reduced inventories and the rise in demand for tea Russia has increased buying tea. The Middle East is the second largest importer of Ceylon Tea. The tea brokers played a vital role during the height of the crises in the tea industry last year by providing financial assistant to producers to sustain the manufacture of tea, he said.

The brokers invested four billion rupees in October last year to support the industry during the crisis. Around 55 to 60 percent of the national production of tea is funded by brokers which underlines the dependence on the brokers.

Sirisena said the association welcomes the timely intervention of the government to support the tea industry at a time of crisis with a relief package.

Ceylon black tea

The most famous brand of tea from Sri Lanka is known as Ceylon Black Tea. Generally all local market is consisting of black tea. Why its called black tea is the color. Original black tea is more black in color with brown shades, but it is not completely black.

Most of the time black tea is prepared with milk or with a ginger blend. This is the oldest form of tea tasting. Now there are many varieties of black tea with many flavours, but most of the time it is tasted originally pure black tea.

Ceylon Tea Market

Tea plantation industry is one of the main and oldest export market item and it makes a huge effect on the economic and culture of Sri Lanka. A sub culture is formed around the tea plantations because of the workers came from South India. Now they become a Sri Lankan peoples and playing an important role in tea industry. Main profit from tea is coming from export market. Ceylon tea export all over the world and Europe is one of the main regions that have a huge demand for Ceylon Tea. USA is not a big market for tea generally because peoples in this region are used to drink coffee rather than tea.

Tea is not a traditional plantation in Sri Lanka. The tea culture is introduced by English peoples who ruled Sri Lanka for several decades. They knew the central hill country in Sri Lanka has the superior climate for tea plantation and soon Ceylon Tea became the top brand name all over the world. From central to south and south-east parts of the country is growing tea plants. The quality and the taste of these different parts are also different. Generally the highest quality tea produced in the hill country in Sri Lanka.

Tea in local market is often not quality as the exported teas. Because of the price, the local mass market has the demand only for low quality teas and most people are used to drink tea with milk. There are some grade of high quality tea packs are available in the local super markets. But superior quality teas are available only in luxury shopping malls and special tea centers only at local.

There are few main brand names for quality tea. Among then Dilmah, Lipton, Watawala are very famous.

Tea Brands

Sri Lanka was the best tea producer in the world till very recent, and eventually India become another giant in the quality tea producing. Ceylon tea is famous in the world as the best tea for more than a centuary. But coffee is more famous than tea. Drinking tea is very famous among Europe but in USA that replaces by coffee.

There are many local tea brands in Sri Lanka. One I most like is comes under the name of Lipton. Ceylon Lipton tea was one of the oldest tea manufacturer and exporter in Sri Lanka. This tea brand is very populay among the local tea drinkers. The main reason is this is very old and cheap than the other brands and also the quality is much same or higher than the other tea brands.

Not lipton tea is not much doign advertising on the mas media, because this brand is already created the milestone in the general public. There are more than 10 local tea brands widly availble in the local market. These local market tea is not that much quality like the original ceylon tea that is made for exports to other countries. But it is good enough for local peoples withe the price that is available.

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Tea export documentation go online

Sri Lanka's economy is in transition. Te transition take place fast and the economy moves forward. But still we can not be happy because we are far behind our potential, said the secretary to the ministry of trade Dr. R.M.K. Ratnayake. He was addressing a seminar organized by The Sri Lanka Tea Board to promote the online tea export documentation system.

Dr. Ratnayake said trading should be fast and cost effective and this has become a must to survive. Online documentation will apply to all import and export business within a couple of years. Whatever new technology we introduce the confidentiality of the information is guaranteed and no individual information is released to others, he said.

The Sri Lanka Tea Board together with eService Lanka Limited, Sri Lanka Customs and the BOI has initiated the online export documentation system for tea exports. The Tea Board will now go for total online tea export documentation.

The seminar was organized to educate tea exporters on the new online documentation process and demonstrate the success of the process started one year ago. Tea Commissioner N.Uyangoda said that this was introduced to 30 tea exporters and today 10 regular tea exporters successfully use the online documentation and gain in many ways.

Uyangoda said that there are 300registered tea exporters in the country but only around 50 exporters are active. The Tea Board expects to connect all tea exporters online.

Under the online documentation system the exporters get the online payment gateway and lodgment number, online submission of Blend sheet to Tea Board and acknowledgment, online approval of CUSDEC's by the Tea Board and online registration and assessment of CUSDEC's by Customs and the BOI (Board Of Investments).

This process reduces the documentation related lead-time and exporters need not visit The Tea Board or the Customs. Athukorala said that this initiative would expands to cover all import and export sector to make Sri Lanka a logistic hub in the region.