Business Times

Unilever focuses on expanding in Branded Tea Market

By Natasha Gunaratne

Tea is the second most consumed beverage around the world after water with 3 billion kilograms consumed annually. Managing Director and Head of the Tea Division at Unilever Sri Lanka Avi De Silva told the Business Times this week that the company is looking into promoting its popular Ceylonta tea brand, relaunched as Brooke Bond Ceylonta, in the Far East in countries like Hong Kong, Taiwan and the Phillipines where Ceylon tea is popular.

Russia and the Middle East, more specifically Iran, remain the main export markets of tea from Sri Lanka but Mr. De Silva said Ceylon tea is catering to a niche market. Sri Lanka produces around 300 million kilograms of tea annually which is still a small percentage of the annual worldwide consumption.

Mr. De Silva said tea prices internationally have already begun to slide and that a lower price market will bring more stability. He said that with tea currently being sold at around US$4 per kilo, the price could drop by around 25 cents by the end of 2010. He pointed out that there is increased consumption in tea drinking markets which could negate the price decrease. Sri Lanka’s tea exports are driven purely by the good name of Ceylon tea which sells at 80 cents to US$1 higher that other tea.

Mr. De Silva added that up until three years ago, global supply was in excess of demand but said that in the current scenario, consumption will outstrip supply. Unilever Sri Lanka currently exports around 15 million kilograms of tea annually.

The company is hoping to expand its tea business in the branded market of which it has a 32% market share compared to a 68% market share in the unbranded (loose tea) market. With 400 players in the local branded market, Unilever is looking to take advantage of opportunities in the North and East which have so far remained untapped and is dominated by the unbranded market. Unilever’s Marketing Director of Homecare and Foods Asanga Ranasinghe said the North and East could contribute 10% to 15% of market share for a fast moving consumer goods (FMCG) company like Unilever.

Mr. Ranasinghe said 92% of Ceylon tea is exported and that demands are cyclical and can vary. He added that Unilever can understand what the cyclical demands are and provide consistently high quality tea to consumers.

Following months of research and development, Unilever launched Brooke Bond Ceylonta which differentiates itself from other tea brands by having particles of real fresh green tea leaves mixed with the powder. At the launch this week, Unilever said the packaging has been revamped, making it more appealing to consumers, and that a special inner silver foil has been inserted into the packaging to preserve the freshness of the leaves. Brooke Bond, formerly an independent manufacturer in the UK, was acquired by Unilever in 1984.

This is the first time Brooke Bond has entered the Sri Lankan market. Unilever said Brooke Bond is popular around the world over for premium, rich blends of tea determined through taste, colour, leaf size, changing conditions and seasons and is always consistent.

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