Tea exporters must strive for larger global share
Research shows that the majority of successful Sri Lankan business
houses have been launched by local visionaries who had the courage to
take calculated risks and most importantly a majority of those start-ups
had plantations and tea as the foundation, Chairman, Tea Exporters
Association (TEA) Rohan Fernando told the 15th Annual General Meeting of
the Association at the Cinnamon Grand last week.
Plantations Industry Minister Mahinda Samarasinghe was the chief
Excerpts from the speech.
"The Tea Exporters Association (TEA) will not make use of the forum
to complain or ask for concessions, but to showcase what our tea
exporters are capable of when it comes to nation building.
However, there is one nagging worry haunting all our members. That
is, on the deployment of the promotional and marketing levy deducted
from tea export revenue since 2011. It is not an exaggeration to state
that every rupee collected from the exporters as P and M levy goes out
as a cost to the exporter and is not even tax deductible.
Hence our only aim is to ensure the scheme you proposed recently for
allocation of funds which was agreed upon by all stakeholders, is
implemented promptly. On this assurance I am sure our membership will
remain patient and with much hope of taking Sri Lanka to the top of the
global tea market as the number one supplier of branded products.
It is no secret that the delay in launching the global marketing
campaign will have a great impact on the plantations as the demand for
value based quality tea could shift to other origins and supply hubs.
The theme we selected for this year's AGM is 'Tea, the spirit of
entrepreneurship'. If you define the word entrepreneur, it is someone
who organises, manages, and assumes the risks of a business or
Research shows that a majority of successful Sri Lankan business
houses have been started by local visionaries who had the courage to
take calculated risks and most importantly a majority of those start-ups
had plantations and tea as the foundation.
It is also a fact that almost all tea export companies in Sri Lanka
are tightly controlled, family businesses. Hence, the spirit of
entrepreneurship is entrenched among our members.
During the turn of the 18th century, when the vast coffee estates in
Colonial Ceylon faced devastation, the bankers in London panicked and
wanted an exit from the plantation companies.
That's when young Thomas J. Lipton saw the enormous potential in a
failed crop economy and boarded a steamship to Colombo to gain first
hand experience of the potential he imagined. Somewhere around 1890 he
purchased his first estates under the Downall Group in Haputale and
branded Lipton tea as 'direct from the tea garden to the tea pot'.
The entrepreneur spirit of Thomas Lipton saw the potential in
branding Ceylon tea and made a fortune out of it and the legacy
Around the time when Lipton was harnessing the potential he stumbled
upon in Ceylon, an Indian gentleman from the south of India ventured out
to Burma in search of greener pastures.
The gentleman in this story is none other than our keynote speaker's
great grandfather A. M. Murrugappan, who went on to build a successful
business in Burma, Singapore and Ceylon and founded the Murrugappa group
Today after four generations, the Murrugappa group is a multinational
business powerhouse with an annual turnover of US $ 4 billion and ranked
as the 16th largest business conglomerate in India.
The only difference in the two stories is Lipton has since passed on
and the business he built was bought by the Unilever group whereas the
Murrugappa group has remained a strong family-owned business.
At almost all AGMs in the recent past it has been customary to submit
a long list of complaints in the hope the top government officials or
the subject Minister will give a sympathetic hearing and effect the
changes prayed for or deliver the goodies.
In response, the top bureaucrats paint a rosy picture of the economy
and elaborate on the generosity of the government in doling out
concessions and diplomatically reprimand the association for neglecting
the vast business potential the government has consciously created.
In deference to most others, the tea exporters have never gone to the
government with a begging bowl and in fact have not received any
concessions or for that matter recognition for their efforts in building
global brands. It is in the interests of the Government in power to take
us in to confidence.
As an organisation representing over 85% of the total tea revenue of
this country we can mobilise positive energies among our members.
During the most difficult of times before 2009, we as one unit stood
strong with the government and extended our fullest support in numerous
If a productive dialogue is established we the tea exporters can
certainly assist the government in their revenue targets.
Today, tea exporters are strong enough to stand on their own and have
ventured into even difficult territories to sell their products taking
extraordinary risks. This is at a time when most markets are in
political or economic turmoil.
The resilience of our exporters and the spirit of entrepreneurship
they possess have made the tea export companies look outwards and
explore other avenues of business with tea as the nucleus.
In 2010, when the Export Development Board (EDB) launched the vision
for Sri Lanka we were confident in stating that tea exports will target
to reach an annual turnover of US $ 5 billion by 2020.
It was treated with the same lukewarm response as the one billion
target we projected to cross several years ago. But today, the policy
makers are confident of the possibility of US $ 5 billion. The potential
of our members if properly harnessed is much more than the figure we are
The industry we are engaged in, for reasons known to some is
clustered as the tea industry without giving any credence to its
evolution over the years as tea plantations and tea exports.
It probably shows the way the policy makers look at us, perhaps as a
traditional industry with not much contribution expected of it.
A vast number of our exporters are now setting up operations in
centralised locations close to the large markets and this will certainly
boost the value of these companies and accrue strong brand value like
the way some of the multinational companies have progressed.
By the turn of this decade more local companies will become
multinationals and it will be a pride to our nation to witness some of
our tea brands being recognised through international stock options.
Tea companies have started to diversify while maintaining its core
tea business. Hence, the power of the tea economy should also be viewed
from a different perspective with their diversified strengths. Today, it
is evident that tea has provided the springboard for several high value
segments to branch out.
Tea based beverages which were made popular by multinational
companies are now being developed in Sri Lanka.
The largest beverage manufacturer of soft drinks in Sri Lanka,
recently introduced a line of tea drinks which will bring to light
another dimension of this magic brew.
Tea tourism has taken shape giving a boost to create wealth at the
The health aspect of tea is now a well established fact and several
curative products from tea are already in the market and before long the
range will expand even to capture spas and health resorts.
If Research and Development is recognised as an essential part of
innovation, tea will be the first industry to benefit and double its
potential within a short period.
Our earnest appeal to the policy makers is to look at tea from a
different perspective. It is an accepted fact that the vast numbers of
tea farmers need State assistance and any government in office will not
shirk this responsibility.
Tea exporters must strive to go after a larger global share which is
growing year-on-year surpassing most other human essentials.
I have provided you with thought provoking options to discuss with
your cabinet colleagues the power of the magic brew to boost the
national economy, several folds.
You may want this subject discussed at breakfast but I will not flout
protocol and you are one of our strong pillars on which we can lean on."