Value addition will boost tea industry

There is 36 percent value addition in Sri Lanka's tea exports. Opportunities for development are over 65 percent. If the tea industry is to be vibrant and competitive it has to focus on value addition, Chairman, Sri Lanka Tea Board, B.A.C. Abeywardena said.

He said we need to brand our tea and venture into foreign markets. We need to promote Sri Lankan brands and not foreign brands. We are exporting tea in bulk to other countries instead of branding it. What we get is a little over US $ 2.5 per kilogram of tea. If we are to increase our sales and promote Sri Lanka's tea we must introduce our brands to foreign buyers.

The marketing strategy should be to introduce more brands and use the media to promote them. This may be an expensive venture but it is inevitable if we are to increase exports and develop the tea industry, Abeywardena said.

Exporters are quite complacent with the money they get from exports. They are not keen to improve the quality of the product. The industry must get them to market their products with value addition.

To improve the quality of the product there needs to be energetic and creative people who could contribute to the welfare of the industry. People who are market oriented and persevering are needed.

The Tea Board will open new companies in Pakistan, US and Europe to promote Sri Lanka's tea brands.

Today the cost of production is very high. The cost of production may exceed profits if proper planning and implementation is not done, he said.

Managing Director Dilmah Tea Sri Lanka, Dilhan Fernando said branding and value addition of Sri Lanka's tea are not up to the mark. This will have an adverse impact if timely action is not taken. India, Vietnam and Kenya are developing their brands and ancillary industries. If we are to be the market leader in the tea industry we need to focus on quality rather than prices.

Fernando said branding and value addition of Sri Lanka's tea are neither good nor bad because exporters are focusing on prices rather than quality. It is not the price but the quality that develops the tea industry. It requires structural adjustments at industry and company level.

The government has provided adequate incentives to the tea industry. It should be used to improve factory standards, equipment, human resources, quality of product and research. Global standards must be adopted for printing, packaging and brand promotions.

Though standardisation is costly the tea industry must produce quality tea that would be in demand in the world market. The competition from Vietnam, India, Russia and Kenya is growing and it is vital that the tea industry takes serious note of this fact and re-assess its position, he said.

Today Vietnam is a strong competitor in tea exports since it is developing its packaging industry. We need to focus on packaging as well as on improving the quality of our tea. If we go by prices as the criteria to promote tea we will have to incur losses. It is time the industry pays attention to improve the quality of tea, Fernando said.

Fernando said insufficient promotion of Sri Lankan brands is a major problem affecting the tea industry. The tendency among exporters is to promote foreign brands.

(LF)