Tea industry’s top global producer calls for caution on over-production
Browns Group has firmly established itself in the global tea industry, emerging as the largest producer of tea worldwide. Through bold strategies, international expansion and forward-thinking management, the group continues to thrive in a traditionally volatile sector.
Today, Browns Plantations produces approximately 100 million kg of tea annually with around 17 million kg in Sri Lanka and 85 million kg overseas across Kenya, Tanzania, Rwanda, and China, LOLC Holdings PLC Group Managing Director/CEO Kapila Jayawardena, told The Sunday Times Business during an interview at the LOLC Head office in Rajagiriya.
Mr. Kapila Jayawardena.
Brown’s foray into the tea sector began in 2008 with the acquisition of 50 per cent of Pussellawa and Maturata Plantations from Free Lanka Capital Holdings, later listed in 2012. The remaining 50 per cent was acquired in 2015. The following year, in 2016, Browns took over Agalawatta Plantations from Mackwoods Plantations, but in 2017 both Pussellawa and Agalawatte plantations were divested. “But we retain our interest in the plantations sector through Maturata Plantations, even though it was then a loss-making entity,” Mr. Jayawardena said. A significant shift came with the introduction of the revenue–share model, which transformed the traditional estate worker dynamic. “Under this model, villagers, workers and ex-workers are allocated plots annually and are encouraged to maintain them and sell their leaf to the company at agreed prices,” he said adding that today this model has boosted both company performance and worker income, with some workers earning around Rs.200,000 a month.
“We were able to convert the Maha Uva estate from a Rs.28 million loss to a Rs.25 million profit in just one year,” the GMD/CEO explained. This led to Maturata Plantations becoming one of the most profitable companies in the plantation industry. Mr. Jayawardena explained that by pegging the cost to the income they were able to resurrect the company – a move that breathed new life into the operations. This success propelled Browns Plantations back into expansion mode. In 2021 the company acquired Hapugastenne and Udapussellawa Plantations from Finlays. The major breakthrough for Browns Plantations came in 2023 when Finlays decided to exit Kenya. Browns then presented a comprehensive growth strategy that aligned with Finlays expectations for responsible succession. Browns was selected to take over operations – not simply as a buyer, but as a strong and capable partner aligned with Finlays legacy. A similar process followed with Lipton’s exit from Rwanda, Tanzania and Kenya with Browns emerging as the chosen successor. The acquisition of Finlays and Lipton contributed to the addition of 85 million kg of made tea to the company’s annual production, making Browns Plantations the largest global producer of tea.
While scaling up globally, Browns Plantations also focused on deepening their presence in Sri Lanka, Mr. Jayawardena said noting that “Ceylon Tea remains the pinnacle of global tea.” This led to the company acquiring the Tea Smallholders Factories PLC from John Keells, and Pussellawa Plantations back from Damro. He said the company has set a measurable target: to reach 150 million kg of total production globally within the next few years with about 200-250 million kg seen as the sustainable upper limit for the Sri Lanka tea industry.
Mr. Jayawardena stated that Browns is prioritising sustainability and long- term value. He noted that the largest tea consuming countries today are those that do not demand ESG standards. Meanwhile, the markets that do require strict ESG compliance are often unwilling to pay a premium for meeting those standards. While global demand for tea remains steady, the real challenges for Sri Lanka’s tea industry lie within. “The industry is not threatened by falling global consumption,” Mr. Jayawardena clarified. “The concern is more local – land used for tea is shrinking gradually due to population pressures and competing land use.” In fact, he referred to the glyphosate and fertiliser bans imposed a few years ago – policies initially feared to be harmful. “In hindsight, the bans were good for the industry. Tea prices surged due to reduced supply, improving profitability” explained Mr. Jayawardena.
Oversupply of tea would inevitably depress prices and with Ceylon Tea continuing to hold its flavour and value with global consumers it is not easily replaceable.
In this respect, it was pointed out that to retain value, the company must align production with market demand. “Sri Lanka should ideally limit tea production to 200 million kg per annum,” Mr. Jayawardena said. “Sri Lanka’s drop in production from the peak 340 million kg in 2013 shows improved sale prices which remain strong”, he further added.
“It’s okay to lose some market share if your topline and bottom line are strong,” he said. In 2013, Sri Lanka produced 340 million kg of tea but earned less export revenue than it does today, despite current production being only 225 million kg.
Kenya, on the other hand, produces more than twice the volume of Sri Lanka, yet generates lower export income. This highlights the risk of overproduction — a path Sri Lanka has wisely avoided. As a significant player in the Kenyan tea industry, Browns is engaging with relevant stakeholders to address this issue and explore how the Kenyan market can adopt a more value-driven approach, following Sri Lanka’s example to enhance export earnings rather than focusing solely on volume.
In Africa, Browns Plantations is evaluating real estate development by converting underutilised plantation properties. Land must be allowed to be used for its maximum benefit, and they need to look at what’s the best use of the land, Mr. Jayawardena said adding that underutilised land is not good for any country. At present no structural changes have been made to the recently acquired Lipton and Finlays plantations. However, the company believes in evaluating land use holistically – a balance between agriculture and responsible, economically viable diversification, where appropriate. Browns Plantations will continue to expand across Asia, Africa and South America in the tea industry, Mr. Jayawardena said while consolidating and strengthening operations within Sri Lanka.
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