Roman has spoken and Fernando responded

Reflecting on the remarks made by the guest of honour at the TEA AGM last week and the response of Malik J. Fernando in a Letter to the Editor published in the Daily FT, I am prompted to offer a few comments myself as the contribution to the revised target of $ 5 b from tea to be included in the National Export Plan which is in the making, is bound to demand the inputs of all stakeholders and tea interest groups in the coming weeks.

I find remarks by both Scott and Malik in line with my own thinking in the way they are conducting their own individual businesses in tea and I agree that exporters of tea do not have to wait for Government to intervene to do what they need to do as far as their product offerings are concerned. That would be the case if only we want to continue to sell tea in the same old way as we have done before which is not going to take us very far and certainly nowhere near the goal of $ 5 billion earnings from tea.

Both commentators have branded their business products and have invested sufficiently to position themselves in the markets they are in. Both have gone upstream in the value chain where the guest speaker’s tea outlets actually serve tea to the consumer cup by cup and the other sells a branded product in the modern trade channels in selected markets.

However, I agree that to be competitive in tea one does have to use teas of other origins too, especially if we aim at the bottom of the pyramid where the volume markets are. We do have premium tea in this country but not all 340 million kilos of it can be classified in that category. The sophisticated consumer is not going to pay the premium and take all of the 300 million kilos we offer for sale outside our shores. Tea is the only home grown product we have on the scale necessary to market and profit in the international arena.

To preserve the good name that Ceylon Tea enjoys, if we decide that it is necessary not to freely allow the importation of teas of other origins into Sri Lanka what we should do is to create production centres in the large consuming markets to compete with the tea products being sold in those markets. 

What we need to recognise is that at the bottom of the pyramid it is not the taste or the quality of the product that finally sells it but the efficiency, speed and service with which it is delivered to the end consumer. If we take the example of a hamburger, I feel sure that most of us can produce a hamburger or a pizza better tasting than what we get at the popular branded hamburger outlet. But why is it a success? The secret obviously is in the marketing? Selling tea is no different to the large volume markets.

The real challenge for Sri Lanka then is to create greater value from this 300 million kilos for which we do not earn sufficient dollars presently. How do we do this?

The battle is in the market place and we need to have the powder and the shot and strategies in place to fund the kind of money required to invest in global marketing of tea to win this war. This is just not possible by the export trade alone as presently constituted. 

The cultivation of mid and high grown tea is in the hands of RPC’s which are all public companies but in the export sector at the point which this country markets her tea the structures are very sparingly capitalised. Dilmah even though a family owned enterprise stands out as the only Sri Lankan public company I can count who markets tea internationally. Most of the others are privately owned family entities.  We may need Government intervention to facilitate the creation of large marketing companies to invest globally in marketing our tea to reach the goal of $ 5 billion.

Mohan Mendis