In his review to the company’s annual report 2011/12, CTEA Chairman Merrill J. Fernando, who created the world-renowned tea brand Dilmah, noted that the 150-year-old industry should not fall into the hands of adventurers who may, both wittingly and unwittingly, destroy Sri Lanka’s great tea industry.
Further commenting on the current debate about making Sri Lanka a tea hub and Ceylon tea a commodity, Fernando noted that it is an age old wish of a few tea traders.
“Vested interests, both local and foreign, are bringing pressure on politicians to pursue this adventure once again,” he stressed.
Fernando added that it should be a warning to everyone who advocates the removal of restrictions placed on the import of orthodox tea, as they are treading on dangerous ground, filled with assumptions and illusions.
“Their assumptions are far from realities in the market place. Demand for this flows from traders who built brands of foreign companies who, with time and well-known purpose, moved to more convenient locations,” Fernando said.
According to him, tea traders, in their failure to build Sri Lankan brand names, owing to their drive for quick profits in the role of suppliers, instead of marketers, are now looking for a trading platform.
“We produce about 325 million kg of tea per year and we sell all of it at the highest prices in the world. Average Ceylon tea fetches in the market between Rs.150 and Rs.200 per kg or more, than tea from every other country,” he further said.
Fernando is amused but not surprised at the advice and solutions offered in the newspapers by marketing consultants and economists that Sri Lankans have no hope of building brand names with Ceylon tea and therefore, state that we should make it a commodity.
He opined that theory, as in many instances, is very different to realities in the market place. All the proposals and advice offered by them are meaningless in the practical context.
“If we act on expert advice which is available in abundance, the penalty for it will be paid by future generations of Sri Lankans and when disaster strikes, there will not be a single person who would say, “I supported the import of orthodox style tea”,” CTEA Chairman stressed.
He went on to state that the conclusion drawn by those favouring the import of tea for blending - that multinationals maintain an exclusive right and ability to manage brands - must be tempered by the fact that in every market the reason for the failure of these proponents of cost reduction is evident in the fact that their branding is in the form of teas that are amongst the cheapest on shelf from any origin.
“If not their own brands, their efforts are directed towards offering the cheapest contract packing option for international brands which have no loyalty to Ceylon tea apart from using the reputation of our teas to build their brands,” he said.
He added that it does not take a genius to understand that a product that can justifiably claim to be the finest in quality should also be presented as such in terms of price.
“That is the only sustainable option and a premium product at a premium price is a formula that consumers will accept, if properly communicated and maintained. It should be clear to anyone that trying to sell a premium product at a cheap price must end in grief or in this case an attempt to compromise the premium product at the expense of the millions that rely on it for their survival,” Fernando observed.