Financial Times

The potential for Ceylon tea

The series of international tea events held in Colombo last week has drawn attention to the potential as well as the plight of the Ceylon tea industry, which can boast of a history of almost 150 years - much older than the beverages that dominate today's consumer markets. The events were kicked off by the 15th Session of the Inter-Governmental Group on Tea of the Food and Agriculture Organisation, held here for the first time.

One of the key decisions to emerge from this meeting was the need for producer countries to withdraw poor quality teas from the world market, which is already saturated.

There were dire warnings of what would happen with countries like Vietnam and China increasing production and flooding the market with cheap teas.

Vietnam, it is feared could do to tea what it did to coffee, where producer prices are at historical lows while brands such as Starbucks have never had it so good.

Real value prices of tea exported as a commodity had fallen in recent years while retail shelf prices of branded products never fall.

Plantation Industries Minister Lakshman Kiriella called for the aggressive promotion of the health benefits of tea drinking and to reinvigorate the tea drinking habit, especially among youth.

Tea planters were facing hardships and producer countries under pressure owing to falling prices and demand not keeping pace with increases in supply.

"It is of significant importance to target the youth all over the world and addict them to tea drinking," he told the opening ceremony of the meeting.

Tea producing countries should concentrate on manufacturing better quality teas, rather than merely expanding production which could result in a large volume of poor and plain teas available in the world market, Kiriella warned.

This is what has happened resulting in depressed prices at all auction centres.

Tea producers must remember that they are not in competition with each other but with other beverages like coffee, carbonated drinks, juices, alcohol, beer, mineral water, and milk for a 'share of the throat'.

However, there is hope.

Speakers at the convention said different types of tea products such as specialty teas and ready-to-drink teas were growing at a very fast pace in major consumer markets such as the United States and, coupled with the news of the health benefits of tea drinking, has great potential to grow even further.

While much attention has been focused on how tea is sold and consumed abroad, the organizers of the tea convention must be congratulated for also focusing on the need to generate more awareness of such a vital industry locally.

The nationalization of the estates led to a period of decline and stagnation out of which the industry is only now emerging and the convention had arranged several presentations for youth - undergraduates and schoolchildren - in an effort to educate them on what is essentially Sri Lanka's best known brand name and to entice them into a seeking a career in the tea industry.

The message to emerge from the meetings was that the industry should focus on its strengths - of quality and diversity.

It needs to go up-market, into branding and the production of speciality teas if Ceylon tea is to survive in a global marketplace increasingly flooded with cheap teas from other producers whose costs are far below ours and whose soils are almost virgin compared to those on this island.

Given the regular reports of the health benefits of drinking tea, which started as a herbal medicine before it became a popular beverage, the industry can take heart from the belief among the experts of the consumer markets that the potential is enormous. In marketing slang, tea can indeed be the 'killer' beverage of the 21st century.