Comments /2243 Views / Thursday, 10 March 2011 00:38
Sri Lanka’s tea industry, the third largest foreign exchange earner for the island, has always been known to aggressively export and market Ceylon tea brands in the Russian Federation. Why? Because Russia and the CIS are the single largest and most important market for Ceylon Tea.
As such, 2010 alone saw over 77.2 thousand metric tonnes being exported to these countries, which alone amounts to 25% of the entire country’s total tea exports each year.
Dramatically, at present, most Russians also prefer the rich and strong taste of Ceylon teas (at a pinch, Indian tea) to the subtle and exquisite flavour of teas from China or any other tea exporter in the world.
It is in this fruitful atmosphere that Riston Tea – a Sri Lankan owned brand – is now in a unique position, ranking with the four key players in the Russian market, namely; Orimi Trade (Brands – Greenfield, Tess, Princessa Nuri, Gita, Yava), May Tea Company (Brands – May Tea, Curtis, Lisma), Unilever (Brands – Lipton, Brook Bond, Beseda) and SDS Foods (Brand – Ahmad).
What began with an initial investment of US$ 25 million to establish this brand has now become the leading Sri Lankan tea brand in the modern trading segment in the Russian Federation and plans are being formulated to grow the investment to more than double that figure in the medium term.
According to recent figures released by AC Nielsen, Riston is in the foremost position – ahead in terms of market share with 6.4% value share in the modern trade analysis of 24 cities – over and above all other Sri Lankan owned tea brands being sold in the Russian market.
UK Beverages (Pvt) Ltd. is the local counterpart servicing the Riston brand as the supplier of Ceylon tea, and its owner, Nisantha Perera, is a Sri Lankan by birth, even though he lives and operates companies in Russia as well as Sri Lanka.
UK Beverages was incorporated with an initial investment of $ 2.5 million. The company, which exported 1.5 m kg of tea in 2010, records a turnover of Rs. 1.4 billion per annum. Its capacity amounts to 440,000kg/month (five million kg per annum) and export target for 2011 has been set at three million kg (approx 2.5 billion rupees).
The company’s focus areas for 2011 are expansion of warehouse space and new machinery and expanding into other territories where Riston is currently not available. It is also focusing on product quality and updating its processes, with the intention of obtaining ISO 22000 certification this year.
UK Beverages, which has a factory at Peliyagoda with a capacity of shipping 20-30 high quadrant 40ft containers of tea per month, has all the infrastructure including a tea bagging and packing plant, warehousing and an experienced team of personnel to handle the local end of the supply chain for the Riston brand.
With over 40 persons employed within the local operation, the Riston Tea group additionally employs over 450 persons (nearly all Russians) in Russia as well. Their collective skills range from marketing, technical specialists in tea, production, logistics and finance to general administration and management.
“Riston is packed both in Russia and Sri Lanka,” stated Perera. “To be a key player in any large market it is imperative to have production facilities in close proximity to the market place and so we also operate our own state-of-the-art factories in Russia.”
Riston even operates its own distribution channels and owns the distributor company Premium Brands Ltd. in Russia and all these arms of the Riston tea business are owned by Perera. “No other Sri Lankan brand delivers its products to the market in Russia without the intervention of foreign third parties,” he adds.
The achievement of the Riston brand in Sri Lankan tea singularly stands out in that it has a relatively short history of 12 years, compared with all the other Sri Lankan players in the market.
“Riston almost exclusively (over 95%) uses Pure Ceylon Tea in its range of products,” revealed the Chairman, adding that with this key selling point, Riston’s turnover in the previous year exceeded US$ 67 million and the forecast for 2011 is US$ 80 million.
The annual marketing budget of Riston over the last few years has averaged over US$ 7 million, with the ATL and BTL budgets for 2011 alone exceeding US$ 8 million, a huge investment which entails the story telling of an ‘unsung hero’ – a Sri Lankan brand, which though relatively unknown in its own home is creating the warmth of Ceylon Tea in Russian homes.
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