Tea, tourism to drive Sri Lanka growth

SRI LANKA is set to launch a global campaign to promote the quality and diversity of its premium export teas to a consumer market which is increasingly health-conscious and adopting tea as part of modern lifestyle . . .

FOLLOWING the re-election of Ranil Wickremasinghe in August as Prime Minister of Sri Lanka, a number of Government policy initiatives which had been on hold are being implemented in key sectors of the national economy. Tourism and tea are high on the list.
One in every 10 of Sri Lanka’s 22 million people depend, directly or indirectly, on the Sri Lankan tea industry, which last year contributed US$1.64 billion to the national economy. Smallholders account for 70 per cent of production, which last year totalled 340 million kg.
Premala Srikantha, Director (Promotion) of the Sri Lanka Tea Board, says that while the Board has traditionally supported exporters in their promotional activities by subsidising participation in international trade fairs and supporting brand advertising, it is now planning a broader Rs4 billion global campaign to promote high quality Ceylon tea.
“We have identified 25 target markets and will be focussing on 12 of these in the first phase of the campaign, which is to be launched by the end of this year,” she told ATI.  “We have finalised selection of advertising agencies.”
The initial campaign will cover Russia, Japan, the UAE, the US, China, Iran, Germany, Turkey, Saudi Arabia, UK, Australia and India, Srikantha says. Currently, Russia is Sri Lanka’s single largest buyer, taking 15% per cent of total exports, but depreciation of the Russian ruble (from 32 to 61 rubles to the US dollar) has hurt the Sri Lankan tea industry at a time when the Sri Lankan rupee is appreciating.
The Tea Board has overseas promotional
offices in Moscow and Dubai (the Middle East region absorbs 50 per cent of total exports) and has just opened an office in Beijing.  “China is a growing market for us,” says Srikantha.
Sri Lanka’s main competitor in the export market is Kenya, the world’s leading tea exporter. “I think we are well ahead in the premium
segment,” she says, “but Kenya is number one
exporter overall because its product is more
suitable for tea bags.”
Srikantha, who has been with the Tea Board for 23 years (five of those based in Moscow),
estimates that one-third of all Sri Lankan production would be assessed as premium tea, with 40 per cent of all exports  value-added as packaged teas.
“We produce 340 million kg of tea and maybe we can go to 370 million kg, but it is the quality of tea that we are focussing on – we are trying to increase that segment,” she says, adding: “We have restrictions on available land, so there is very little new planting, but  we are concentrating  on replanting.”
In Europe and some other markets, Sri Lanka is emphasising distribution through specialty tea shops to reinforce its standing as a producer of premium tea.
“We cater to almost 150 export markets,” says Srikantha. “In Europe, we have two segments, the premium market and the mass market, but we would like to see growth in the premium segment.” Sri Lankan high quality specialty teas can command a premium price in this market.
The US, she says, is a potential market for speciality Ceylon Black tea, and Ceylon tea exports there are expected to grow.
“In developed markets, organic foods and beverages are increasingly becoming a part of lifestyle. We have a good track record in ozone-friendly Ceylon Tea, fair trade labelling, rainforest alliance and ethically-produced teas. These points appeal to consumers, and will be used in promoting Ceylon Tea in these markets.
“People are also becoming more health
conscious. Ours is the cleanest tea, because we do not use much in the way of agro-chemicals, and there are no residues – facts that will be used in our generic promotion in the first year. In the second year, we will be more directly assisting and encouraging the brands, promoting Sri Lanka’s Lion logo, which symbolises high quality pure Ceylon teas packed in Sri Lanka.”
Heading a delegation of five exporters to the Fine Food Australia exhibition in Sydney, Srikantha said there had been a lot of inquiries, with the hospitality sector in particular interested in specialty teas. “Sri Lankan tea is more suited to that sector,” she says.
A number of markets, including Australia, have been identified as ideal for the establishment of specialty tea shops.
“In Sydney, if anyone in the private sector is interested, certainly we would support them in promoting their brands,” says Srikantha, adding that the Sri Lanka Tea Board along with the private sector will be participating in next year’s Fine Food Australia in Melbourne. (The Tea Board also sponsors Sri Lanka’s national cricket team).
“Australia is a saturated market for tea,” she says. “We have maybe 16 per cent by volume and 21 per cent by value of the total Australian market.” Australia ranked 22nd on Sri Lanka’s list of top export markets in 2014. In the first half of 2015, Australia imported more than one million kg of Sri Lankan tea.      
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