The export of Ceylon tea is seen ending on a high note this year with an improvement in the weather setting the stage for the manufacture of quality teas and the erosion in the value of the rupee leading to better demand from key markets.

The quality of teas made during recent days has improved following a general improvement in the weather, Asia Siyaka Commodities said.

"Conditions conducive for the manufacture of quality teas have set in," they said. "These invoices will be on offer from early January."

The northeast monsoon conditions prevailing over the island have brought cold dry winds blowing from north India over the tea growing areas on the eastern slopes of the central hills.

Tea prices rose at last week's auction, the one before the last for the year, brokers said.

Brokers said the latest snap devaluation of the rupee helped boost prices at the Colombo auction, the world's biggest, as it would have made Ceylon tea comparatively cheaper compared with teas from other auction centres. It would also help increase tea exports, they said.

"The further increase in the parity rates would have contributed to the improvement in prices in the penultimate sale of the year," John Keells said. "Yet, the very strong demand displayed in all sections of the catalogue is indeed remarkable," they added. There was good demand for ex-estate teas from Pakistan, one of the biggest markets for tea, and the U.K.

"A fair weight of tea is now selling at over Rs. 160 per kg and a few invoices are above Rs. 200 per kg," John Keells said.

A new record price for a medium Grown BOP was set at last week's auction when a Kenilworth BOP SP grade went for Rs. 323 per kg.

Forbes and Walker Tea Brokers said the sale average at the auctions the week before last was much higher than the corresponding sale of the year before. The average for the sale of December 5-6 at Rs. 145.39 per kg was Rs. 12.55 higher than the same auction the previous year. (19/12/2000))
The Daily News

Its fragmented nature is partly to blame for the current depressed state of the tea industry, says G.P. Goenka, chairman Federation of Indian Chamber of Commerce and Industry (FICCI), and chairman, Duncan Goenka group. "It's time tea was treated as an industry, not agriculture" is his recipe for revival.

It is alleged that South Indian tea has lost some of its quality-and it may be one factor explaining its present status. But the Sri Lankan imports, by and large, are the primary reason behind the decline of the tea industry in South India, he feels.

The import of limited amounts of tea from Sri Lanka allowed by the NDA government has forced the South Indian gardens to sell below their cost of production. "Cheap imports are also taking their toll on the industry, especially in the South. Kerala and Cachar will be the first to suffer. Filler grade tea is being imported at Rs.40 per kg. from Bangladesh, Indonesia and Sri Lanka. These countries have no home consumption will have to sell what ever they produce", he said.

Sri Lanka today exports almost 21 percent of world teas. While different growing areas produce different flavours and colours, the principal specialties are the Ceylone Blend, Dimbula, Nuwara liya and Uva.

"Quality improvement and getting yields up substantially should be high on all producers' agenda. A change in the mindset of producers, therefore, is imperative. Each producer should chalk out survival plans for himself. "in tea, there should be good years and not so good years, but definitely not a bad year. Some serious introspection is the need of the hour," Goenka says.

Another knotty problem is that tea statistics are always accurate. "We are yet to come to a conclusion as to whether or not there really has been a drop in consumption, and if so, by how much. The data available is not accurate all the time, though this could be ascribed to the very nature of the industry." He added.

The perception across the industry, though, is that if there has been a drop in demand, it is due to the burgeoning soft drinks markets. There is thus a case for adequate spending on promotion.

Goenka is also much against government intervention, especially as far as exports are concerned. "While production is corporatised, marketing is not" he said. According to the Tea (Marketing) Control Order, 1984, 75%of the tea produced by any manufacturer is required to be sold through a public auction in India after excluding exports and the tea sold in packets. Of the tea consumed in the country, some 40% is sold in packets and the balance in loose form.

While tea prices are on the decline, social cost of the industry has been escalating all the time. " Labour accounts for around 60% of the cost of production and hence costs can only go up" said Goenka. The industry directly employs over a million workers, and indirectly looks after three million dependents, with ancillary and associated activities supporting almost two percent of the country's population.

Moreover, the industry spends significantly on infrastructure, mostly inadequate, as gardens are located in remote, rural areas. Roads and communication are poor in Assamese Estates, while in North India, security precautions add substantially to the cost.

(19/12/2000)

Business Standard -India (19/12/2000)

The Tea industry yet to shake off the gloom that's kept it over cast since the weather-afflicted 1999. A huge crop shortfall caused by unprecedented drought conditions in North India, coupled with lower prices and exports took its toll, and 1999 finally closed with a total Indian crop of 805 m Kg. - lower than the 1998 record yield by 65 m kg. or 75 percent.

There are also fears that consumption too may have dropped. Some estimates consumption slipped by 1.8 percent last year from the earlier 3-4 percent. "The four percent annual increase in consumption is not happening" said S.K. Dhall, chief executive-plantations, tea estates India division, Hindustan Lever Ltd. (HLL).

Salvation, according to Dhall, lies only in active promotion of the beverage. "Youngsters have moved towards the more vibrant colas. To regain lost ground and its market share, tea must be promoted as a fun drink. The health angle too must be highlighted".

Under the aegis of the Indian Tea Association, the industry has planned a generic tea promotion campaign slated for launch by the year-end. Around Rs.25 crore has been earmarked for the purpose. The money will be spent over three years. The industry is also seeking financial help from the commerce ministry through the Tea Board.

The campaign will highlight the health aspects of the drink. Dhall feels producers have an important role to play. They "must talk to consumers, find out their requirements and try and incorporate what they want rather than thrust it upon them" he said.

He also stressed the importance of packaging. "The producers are all trying their best, but a lot needs to be done in the area of packaging. Sri Lankan packaging is far superior to its Indian counterpart".

The packet tea business is no better off either. "Packet tea suffers when the prices of loose tea plunge. Prices are rising internationally - in Mombasa for instance - prices in India are falling." HLL has already slashed its price for packet teas in the lower segment. As if that's not enough, the export market is suffering because of low-priced exports from countries like Indonesia and China.

(19/12/2000)

Business Standard -India (19/12/2000)

The Indian tea industry is planning a massive restructuring operation to increase its share in the global market.

To give the beverage its much needed face lift, the industry is planning to blend itself with international taste by adding new flavours like vanilla, strawberry in the commodity.

Apart from the conventional and already famous Nilgiri varieties and Darjeeling flavours, the industry is in the process of introducing newer flavours. This would give the much needed value addition to the commodity apart from making it popular among the younger generation, N Dharmaraj, chairman of the tea committee of United Planters Association of Southern India (Upasi) told Business Standard.

Exports and domestic consumption of tea has nearly come to a standstill since the past few years.

Out of an average total production of 800 million kgs, the exports are decreasing from the standard 200 million kgs along with a stagnant domestic consumption.

The Indian tea industry is now looking at product and process innovation and is planning to tap the niche markets of United Kingdom, Middle East and Europe, Dharmaraj said and added that value-addition in the beverage to flavoured and functional tea products like vitaminised tea had stolen the thunder from the Indian tea cup which is very conventional.

The industry is aiming at repositioning tea as the new age drink with a modern image, he said. The south Indian tea market is also planning aggressive marketing of iced tea in the foreign and domestic turf.

Iced tea has already become a rage in the United States and has a lot of potential in the Indian market in the ready-to-drink segment. It can be sold in handy bottles as tea colas, he added.

As part of the restructuring, the industry also has plans to cut down its labour force. Currently, around 11.38 lakh workers are employed in plantation across the country.

(19/12/2000)

Business Standard -India (19/12/2000)