Sri Lanka’s premier branded Tea, Heavyweight tea merchant Dilmah is spending Rs. 2 billion on branding and promotions according to the company’s latest financials.
Ceylon Tea Services PLC Chairman Merril J. Fernando says Dilma Tea invests approximately two billion rupees per year in advertising and promoting “the hundred per cent pure Ceylon tea”, and that every cent of the investment only benefits the country’s tea industry in general.
He says competitors take advantage of it by exploiting Dilmah and Ceylon tea in supplying their own Ceylon tea brands substantially below the actual cost.
According to Fernando, the practice is another serious method of undermining the quality image of Ceylon tea. In the latest annual review of the company, he further points out that Generic advertising of Ceylon tea today will only benefit hundreds of brand names declared as Ceylon tea and not the fully Sri Lankan owned brand, packaged and exported direct from its origin.
“It is very unfortunate that our authorities don’t act against the real threat, unintentionally of course. In the absence of real marketing procedures, such poor and harmful decisions will continue to prevail,” Fernando says in his review.
Fernando laments that in the background of nationalization of plantations, such decisions are trivial and the greatest tragedy of Sri Lanka’s tea industry is that there are hardly any open critics while there are many who advocate the demise of the industry, unwittingly and unwisely.
“The most vociferous demand for a tea hub is from brokers and suppliers of tea and not from marketers of tea,” Fernando points out while adding that Tea suppliers’ interests are not those of tea marketers but very much the opposite.
While all the importers’ labels which are competing with real Ceylon tea today were created by suppliers, Fernando stresses that their objectives were therefore harmful to Sri Lanka’s tea industry.
He also emphasizes that prevailing regulations are flouted by some exporters and auction prices are not reflected in their export FOB prices. While auction price of tea is around Rs. 400- 500 per kilo, their export price for fully packaged tea is said to be at Rs. 400 or less per kilo and this undermines realistic pricing of others, according to Fernando. He further notes that Waste tea, as previously identified, has now become BM Fannings and a large volume of this tea is exported by a few, bringing disrepute to Ceylon Tea.
Fernando in his review points out that an independent body made up of three expert nominees from government and four from the private sector – all persons of known achievement and integrity, must be tasked with reviewing, radically revamping and replacing the current structures governing the tea industry.
“It must frame rules and regulations designed to protect the industry and evolve strategies towards regaining Ceylon Tea’s past glory,” he notes while adding that importantly potential investors should be handpicked based on their commitment to tea and their ability to provide all necessary funds and expertise