Global tea in challenging times
The global tea industry had faced one of the most challenging times in their history last year but had been able to produce some of the best quality teas both in India and Sri Lanka.
During a webinar dialogue on tea on the topic “Restart Asian Economies: Ideas and Actions for the tea industry” hosted by the Friedrich Naumann Foundation and held on Monday, Dilmah Tea CEO Dilhan Fernando and Luxmi Teas Managing Director Rudra Chatterjee detailed the key concerns, challenges and overcoming them to cater to the growing demand for quality teas.
Mr. Fernando highlighted that they were fortunate that the government adopted a practical approach during the lockdown due to the COVID-19 last year; as they faced an “unorthodox situation” and were compelled to focus on ensuring that the agriculture, plantation and manufacturing levels were protected.
He detailed how as a company they had been involved in going beyond their call to reach out to their workers living on the estate in a bid to ensure that they receive adequate supplies of food and that they were not be impacted by the COVID-19 pandemic.
Mr. Chatterjee of India’s Luxmi Teas pointed out “this will (2020) always be a year we will always remember” and noted that during that difficult year their company had increasingly focused on quality. “We made better tea that year and managed to reach out to customers – it was a challenge,” he said.
India faced a tougher time with a hard lockdown last year with no production of tea and by the time things reopened the “second flush was also wiped out,” the MD explained.
“We didn’t have to worry about the people working getting affected, except for people coming from outside,” he said.
However, agriculture does not stop and start so the supply of tea was down 15 per cent, he noted. But with no dearth of teas to consumers around the world the question was raised how the companies coped with the supply during these challenging times.
Mr. Chatterjee pointed out that the excess supply of tea is the biggest challenge of the tea industry particularly since they were of average quality.
This gave rise to ensure that companies manufacture premium quality teas and “that meant that there was a focus on making better tea – we really need to understand that the issue is that we need to think of the entire consumer chain and ensure demand keeps pace with the supply.”
Dilmah Tea CEO Fernando also explained that the global market has an “abundance of mediocre teas” and pointed out that consumers were incapable of selecting between the good and bad teas.
Commenting further on some of the key challenges faced by them, Mr. Fernando explained that shipping out the teas faced blocks as space on containers was hard to find and containers were also stuck around the world.
Mr. Chatterjee however explained that another interesting trend observed last year as a result of the COVID-19 outbreak was that most people ordered online and were able to understand the nuances of the product.
He also noted that the reason for the drop in quality in tea today was due to the fact that there was no effort made to ensure quality tea is produced while there was a compulsion for the production of higher quantities.
Mr. Fernando speaking on the changes that took place in Sri Lanka said that the online auction system was a “reaction to circumstance” adding that technology is a great enabler.
He also explained that while rising wages is not a challenge, the problem they faced was the market and prices. “How to command a better price for the amount we can afford,” are key concerns.
Improving the quality of tea that would fetch better prices will be the only way the industry can increase wages, it was pointed out.
Both were enthusiastic of the idea to establish South Asia as a hub and re-introduce to the world the real places from where these teas originate by reinventing the branding image of the teas from Sri Lanka and India.
Dilmah CEO Fernando said, “Collaboration is an excellent idea” adding that the “hub is a fantastic idea but it should be segmented to allow for premium producers and volume segment as well”.
Mr. Chatterjee agreed with the fact the teas from the South Asian countries should rebrand its identity by exhibiting the place of origin and this would ensure that “South Asia and the rest of the world should also drink our brand and the rest of the world as well”.