• Q|A Roshan Rajadurai

    Sri Lanka is facing its worst economic crisis since gaining independence. Following the pandemic, many industries on the island ceased to exist due to political and financial difficulties. However, the island’s tea industry continues to battle on. Tea Biz correspondent and PMD Tea MD Dananjaya Silva discusses with Dr. Roshan Rajadurai, the Managing Director of Hayleys’ plantations how Hayleys’ plantations have adapted and continue to produce tea, given the economic hardships.

    Caption: Dr. Roshan Rajadurai, the Managing Director of Hayleys Plantations, left, discusses with Tea Biz correspondent and PMD Tea MD Dananjaya Silva how organizational discipline and adaptations enabled tea production to continue during the pandemic and recent economic hardships.

    Listen to the Interview

    Dr. Roshan Rajadurai, MD, Hayleys Plantations
    Founded in 1992, there are 25 estates in the valley covering 13,000 hectares. Photo courtesy Kelani Valley Plantations

    How Sri Lanka’s Tea Industry is Coping with Continual Crisis

    By Dananjaya Silva | PMD Tea

    Production is down and export volume declined compared to last year but auction prices are at a high mark and Ceylon tea remains in demand. I traveled to Sri Lanka to assess the condition of a resilient tea industry following an unsettling spring marred by high unemployment in the aftermath of the COVID pandemic. For several months tens of thousands protested the inflation-driven cost of food and shortages of basics, including fuel, cooking gas, and electrical power. The upheaval led to the resignations of both the prime minister in May and the nation’s president, who fled the country in July.

    Dananjaya Silva – How did the COVID pandemic restrictions show Sri Lanka’s plantation sector to be resilient and adaptive?

    Roshan Rajadurai – The plantation sector has a legacy of 150 years of very well-organized, centralized management structure, so when this pandemic situation suddenly came up the government imposed a three-day curfew which we had to abide by. But on the fourth day onwards, we quickly got on board, and made things as normal as normal could be.

    The moment we caught wind of this pandemic situation, we put in place a series of measures at our 60 tea and rubber plantations. First, of course, we made our people aware of what this is all about.

    There was an influx of people from Colombo and outstations, flowing back to the estates. So, we made sure their names were recorded, and if they showed signs of infection, we had isolation quarters. We isolated them for 14 days, and kept the medical and other authorities informed when they returned to the community. The organized sector has one million people living in a village-style setups in close confines. The measure we took were effective. Up to about the end of last year, we didn’t have a single casualty arising out of COVID. That is because we identified and limited exposure to the people who were coming from outside.

    In addition, we did fumigating and provided simple medicines. And most importantly, we ensured that people didn’t have to congregate and that they didn’t have to go to bazaars and townships.

    We organized distribution with the large food suppliers, like the government warehouse system, and brought in food in lorries. And we had stocks for two or three months. We delivered food packets practically to their doorstep. What is important is that we ensure that the workers did not spread this COVID.

    There was also a group of people who had no other means of earning more income. Although last year was not a good year financially, we ensured that their wages were paid. And as a means of helping the people in this situation, we opened our industry to those who arrived from Colombo and elsewhere, and gave them work in areas that we could not manage with our regular workforce. So, their family unit had more opportunities to earn more when sons and daughters returned.

    We already had in place a revenue share model, so we expanded it. There were a lot of people who didn’t want to be registered workers but they still got into the earning pool for their family and were able to enhance their family income.

    So we had a very, very tough and a very well disciplined control system and to the credit of workers, I must say they cooperated fully.

    They listen to the management; they follow the advice of health departments. So that’s an example of success and how after long years of practice the plantation sector was able to manage a crisis like this.

    Dananjaya Silva – How did adaptations forced by the pandemic help Hayleys prepare for the political turmoil of 2022?

    Roshan – After COVID came the financial crisis. There was no work to go back to in the construction industry as it had crashed, and also the eateries and small hotels. So, all the people came back to the estates and we made available opportunities for employment. One example is paying workers to remove weeds. We said we will pay you by the kilo and that was a very good intervention as people who don’t want to return to sort of plucking or harvesting work, they go to the field, remove the weeds and we pay them. This was essential because of the limitations on fertilizer. We convert the weeds to compost. Soil augers were given to each division and placement of holes tracked. Once the compost is made, we filled the holes and incorporated the bulk material and the compost into the soil so that it enhances the soil fertility.

    Dananjaya – What you’re saying is that this 150-year-old industry, that has been the backbone of the Sri Lanka economy, continues to be that because workers who are from plantation backgrounds who’ve worked in hotels, construction, they once again come back to live on the estate.

    Roshan – Actually, Dananjaya employment is only part of the solution that we provided, because there was an influx of workers. And it’s actually stretched our services. But we made sure that we accommodated them, that we looked after them in terms of food supply, because there was no food because the COVID curfew and restrictions. So our managers went out and bought curfew passes, they really did a great job on the ground. I mean, they volunteered – they could have waited and said, look, we don’t want to expose ourselves. But every company, every manager, every planter, took it upon himself to look after his community on the discharge of food, medicine or the wherewithal. Everything was provided and absolutely no breakdown. And ours is the only industry right now maintaining the industry as it was before a lot of challenges, a lot of stress, a lot of issues, but we still maintained the industry as it was.

    Dananjaya Silva – Fertilizer was banned last year then the government subsequently reversed the policy. How is this affected Hayleys estates?

    Roshan – Well, on the whole, banning of fertilizer was a shock and surprise to all of us due to the ill effect and the consequences of this hasty, unscientific and illogical strategy. We made significant protests, voicing opposition in media and TV talk shows and whatever but to no avail.

    We are a large organization and we stock sufficient fertilizer for one or two applications ahead. Last year I did not plan for the banning, but I thought that we learned some lessons on logistical problems, with fewer ships coming, curfews on crews and the slowed movement of goods. So we gave instructions to our managers to store fertilizer for six months, anticipating a breakdown of logistics. Then, in the meantime, they banned the fertilizer, and therefore we had some stocks. Uncertain supply and high prices completely changed the way we apply fertilizer now because we know that for a year or two, we might not get cost effective fertilizer.

    In the past we used to broadcast fertilizer but we quickly reverted to a system called placement where we dig a hole and put in a measured 24 grams of fertilizer per bush. In this way, you’re reducing the wastage from volatilization, and leaching while improving efficiency by a significant level. We are also stretching the fertilizer as one application done in this manner means we can sit out two or three future applications. Fortunately for Haley’s group, although we didn’t plan for the ban, we had planned for something else. It also gave us sufficient fertilizer and for food crops raised by workers, so they could infuse some so that they are not going to go without food.

    Tea factory at Tallawakelle Tea Estate. Photo courtesy Hayleys Plantations.

    Dananjaya – When you talk about ensuring food for workers, that’s a stark contrast to the situation for someone living in an urban area, isn’t it? People there don’t have the opportunity to stock food, and are relying on retail supply. There is no guarantee for them, as they might find themselves standing in a queue for days, and not be guaranteed any food at the end of it.

    Roshan – The plantations you know, care for not only the direct workers, but all dependent family members. So if someone has got COVID, we say, don’t worry, we have given the family food over the year in some cases, we can recover it. So by that action, people have confidence in the management that we have looked after them in a very, very critical time. And when they were sick, we made sure that the government medical authorities or personal care management were involved. We offer a holistic total system of care for our people.

    In towns, as you said, we all have to stand in queues, and those who do are not sure there’s stocks, but in our case, we bagged provisions and dry rations and brought it to their home so that they don’t have to come and interact or mix with people and spread COVID. So that way, I think we got a huge boost in terms of human resources. When we gave very tough guidelines and instructions, they followed the advice like keeping a distance while working whereas traditionally they were together in a row. We said you have to separate immediately and without any protest they showed wholehearted obedience and support for us.

    Dananjaya Silva – Fuel shortages have crippled and decimated many sectors of the country what provisions and adaptations Hayleys have made to ensure the smooth running of operations.

    Roshan – After the crisis came on, definitely we have taken radical measures to reduce the running of unnecessary trips and vehicles. We have mapped out all the roads in each division and compared distances and identified the shortest routes to make transport more efficient.

    We also introduced some innovations like ziplines. These were built before the crisis, but came in handy. We can save about 90 kilometers a day on trips to the factory because the tea otherwise has to be driven along a circuitous route. It’s eco-friendly and does not use fossil fuel. We have instituted several eco-friendly practices. Now our managers and assistant managers are provided with good Push bicycles, and they have resorted to more walking,

    “ We are maintaining the tea industry as it was before in spite of a lot of challenges, a lot of stress, a lot of issues.”

    – Roshan Rajadurai

    Dananjaya – One area that you touched on was moving tea from estates down to Colombo, there has been some disruption. How are you working through that situation because because the logistics are provided from from outside of the estate.

    Roshan – Normally, we manufactured and made arrangements to send our produce to Colombo, and to ship it out. What we do is provide measured fuel to take the tea down to Colombo and even for firewood suppliers because we need firewood to run our dryers. So we assist them in some form. Because of the fuel shortage we are trying to harvest wood that is already grown on the estate for this purpose and adding branches cut to reduce some excessive shade. 

    All those initiatives and energy efficient measures add up. We are relying more on hydropower and we are trying to put almost 60 to 70% of our roofs in solar. So all those things can happen after the crisis. These are interventions that happened before COVID and the financial crisis, which have a beneficial use for us right at this moment.

    Dananjaya Silva is the managing director of London-based PMD Tea and a third-generation tea man whose family business, P.M. David Silva & Sons, dates to 1945 during the Plantation Raj in Ceylon’s Maskeliya Valley.

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  • Stubborn Inflation Nudges US Economy Toward Cliff

    Tea News for the week ending September 16

    Podcast Episode 84

    Tea Sales Slow Online

    Tea brands should brace for a downturn as core inflation increased this month, undermining consumer confidence.

    | Starbucks Announces a Retail Renaissance
    | Orthodox Tea Exports Fall Short of Demand
    | PLUS Hayleys MD Roshan Rajadurai discusses how Sri Lankan plantations adapted and continue to produce tea during the country’s worst economic crisis.
    Listen to the interview

    Caption: At left, Dr. Roshan Rajadurai, managing director Hayleys, agents for Kelani Valley, Tallawakelle, and Horona plantations, sits with Tea Biz correspondent Dananjaya Silva, MD PMD Tea.

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    Seven-Minute Tea News Recap
    Complete Survey for Free Access
    Hear the Headlines (Archive)

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  • Q|A Niraj de Mel

    Sri Lanka is in turmoil politically and financially; the country of 22 million is struggling as widespread demonstrations continue. Unrest is tied to food inflation exceeding 50%, with critical shortages of cooking gas, fuel, and reliable electricity. The country has defaulted on its foreign debt, and its currency devalues with a credit rating that discourages outside investment. Government bankers are at an impasse in negotiating a bailout from the International Monetary Fund that will depend on difficult reforms, including higher taxes and governance changes. Tea producers are confronting all the above challenges, yet the Ceylon tea brand remains resilient. Last year, the industry generated $1.32 billion in US foreign currency, exporting 300 million tons of tea, of which 270 million was high-value orthodox tea.

    Export earnings increased 6.72% during the 2021 calendar year compared to 2020. Every subcategory reported growth, with exports of tea bags growing 84%, tea packets up 10%, sales of bulk tea up 2.5%, instant tea sales of 19.5%, and green tea up 22.8% through December, according to the Export Development Board.

    Industry veteran Niraj De Mel was named Chairman of the Sri Lankan Tea Board in June 2022, his second appointment to a position that he previously held in 2004. In this discussion with correspondent Dananjaya Silva, Managing Director at PMD Tea, de Mel explains the challenges and solutions facing Sri Lanka’s tea industry.

    Listen to the Interview

    Sri Lanka Tea Board Chair Niraj de Mel discusses challenges for the tea industry.
    Niraj de Mel with Bigelow Tea CEO Cindi Bigelow and Prasanna Panabrooke. Photo via Bigelow Blog

    Sri Lanka Relies on a Resilient Tea Industry

    By Dananjaya Silva | PMD Tea

    During his 45 years in tea, Niraj de Mel has worked as a taster, broker, exporter, and educator. He is past chairman of the Tea Exporter’s Association and the Colombo Brokers Association and served as vice chairman of the Colombo Tea Traders Association. He is the founder and director of The Mel’s Tea Academy in Colombo.

    Dananjaya Silva – Tea professionals globally say they are happy to see a safe and steady hand on the tiller as you return to steer the Sri Lanka Tea Board. Given the current political situation, how secure is your position?

    Niraj de Mel – Well, to start, let me tell you a bit about the developments before my appointment [on June 20]. Come the middle of May, the industry got together, and because they thought it was time, we told the authorities what we knew best and what was best for the industry. 

    So, arising from that, they also decided on the people best suited best-suited for the positions at the TRI [Tea Research Institute] and the Sri Lanka Tea Board. I was asked to step back into my previous role as chair for obvious reasons. The immediate past chairman went along with this delegation and met the minister [Minister of Plantation Industries, the Hon. (Dr.) Ramesh Pathirana] to discuss these things and told him that after the debacle as a result of a wrong decision on fertilizer, it’s time that we get the feedback from the experts. Plus, the industry will tell them exactly how things should be run. We have been doing this for the last 155 years, and it’s arising from that conversation that I’m in this seat today. 

    Dananjaya – Now that a new president has been named, will changes in the cabinet likely means a new appointee to the Minister of Plantation Industries post?

    Niraj – I sincerely hope that he [Dr. Pathirana] will be reappointed to the position. Of course, there is no issue whatsoever because he and I will get on. 

    He’s a minister who sizes up things quite well. He’s a learned man being a medical doctor himself. If there is going to be a change in ministers, the Associations will take up with whoever who’s appointed to the position of Minister plantations that you know that I should remain. Be that as it may, I’m here to do the job.

    First and foremost, we need to steady the ship. 

    Dananjaya – The ban on importing chemical inputs, including most fertilizers, was halted in October, but the effects of the setback linger.

    Niraj – Mistakes were made, but circumstances that led to that decision have changed. The big development is a result of the Russian-Ukrainian war, a conflict between some of the world’s largest fertilizer suppliers. Fertilizer has since become scarce and prices went sky high, impacting Sri Lanka at a time when our currency itself also depreciated, compounding matters for the average tea farmer. It’s now virtually impossible for him to afford this kind of price.

    To address that, the Sri Lanka Tea Board considered an initiative that has been knocking on the door since January. I see from the minutes a request for funds from the promotion levy to be used to facilitate a loan scheme so that farmers get fertilizer to start feeding these bushes, which have been starved for nutrients.

    The board has since delivered fertilizer to nearly 100 factories to offer to smallholders and regional plantation companies. They are working to ensure that the estates will have sufficient fertilizer within about one and a half months.

    Editors Note: The Hindu reports that India, on July 17, delivered 44,000 metric tons of urea under a credit line extended to Sri Lanka, as part of New Delhi’s ongoing efforts to support the island nation’s farmers and help bolster bilateral cooperation for food security, the Indian High Commission in Colombo said.

    Dananjaya – It seems we’ve returned to the days of old during the colonial period when the Planter’s Association essentially told the Governor of Sri Lanka what was good for the country. Because what was good for the planters’ community was good for the country.

    Niraj – Absolutely. Absolutely. It’s time actually that all the private sector did that, not only tea. The private sector has long been the engine of growth in this country, be that planting, manufacturing, exports or brokering. All that is well handled by the private sector and the government sector, such as the Tea Research Institute of Sri Lanka, does the research.

    Dananjaya – The crisis not only impacts the rural tea sector. Service providers report difficulties obtaining financing, fuel, and reliable electrical power in Colombo, Sri Lanka’s hub for blending, packaging, and shipping. Will you describe how the tea board is addressing these concerns?

    Niraj – I think there needs to be some clarification on this. The private sector basically handles it, but we are trying as far as possible to assist. I have tried to instill into the minds of the officials that we have to be an enabling outfit.

    Going back to your question No. 2, there’s one item that was missed: the fuel factor. Actually, that has taken precedence over fertilizer now because the collection of leaves as well as bringing the manufactured tea out is essential to run your factories. Exporter functions, particularly the tea bagging sector, where the machines have to be run continuously, all require an uninterrupted power supply. Power cuts that have been prevailing in this country for the last 4-5 months are an encumbrance to the people, as a result of that, now compounded by the fact that there’s fuel scarcity, particularly diesel. So given the availability of fuel we are trying our best to contact all concerned with the right message to ensure that the producers get their fuel quota.

    They cannot have it the way they used to have, because the country itself is, you know, is importing fuel ship by ship. The private sector importers, in particular, have stepped in, which is very magnanimous on their part. To fast-track this process, the government has said, well, if you can produce the foreign exchange, you can certainly get the fuel across. So, the private sector exporters banded together to give off whatever they could.

    Dananjaya – As new problems have arisen over the course of this year, from power cuts to rationing fuel, the tea industry has drawn on a battle-hardened core of tea professionals who are able to react quickly and make provisions to see that the industry continues to operate.

    Niraj – That’s right. That’s right, reaffirming that Sri Lanka tea has for 155 years been one of the most resilient industries in this country. 

    There will be little disruptions here and there, but the fact of the matter is we are managing, though it’s challenging. There is great unity among the stakeholders, particularly now with these current issues which they had to face together. We started at the beginning of the pandemic back in 2020. Everybody came together in two and a half weeks to quickly convert to an electronic platform to conduct the auctions, which was great. That carries on to this day. The Colombo traders are very, very confident that there will not be a return to the old outcry system. I started life as a broker and enjoyed the outcry system, but the fact-of-the-matter is we have to move with the times. The platform has enabled us to quicken the process, giving buyers, producers, and brokers time to spend on other things.

    Cricket is an apt metaphor… Cricket is the only game that stops for Tea, the country might be 74/8, with a bumping pitch and blinding light, but the Tea sector continues to bat on at the crease.

    “Play up! Play up! and Play the Game! “

    – Niraj de Mel

    Dananjaya Silva is the managing director of London-based PMD Tea and a fourth-generation tea man whose family business, P.M. David Silva & Sons, dates to 1945 during the Plantation Raj in Ceylon’s Dimbula Valley.

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  • India: What has Changed?

    India produces 20% of the world’s tea. Production, however, has stagnated for years. Costs are up, and prices and exports are flat. Professional tasters report a decline in quality. Marketing tea to domestic consumers is a promising way to move past the doldrums. Tea is found in every household and Indians drink an average of two cups per person per day, consuming 90% of the tea grown there — but mainly purchase lower grades. Per capita consumption is modest at 840 grams due to a preference for tea in blends. Until recently, India exported virtually all its best teas. Tea discovery there is discouraged as imports from China, Taiwan, and Japan are expensive due to high tariffs, but rising affluence is overcoming these obstacles.

    • Caption: Jagjeet Kandal, country head, IDH, The Sustainable Trade Initiative
    Aravinda Anantharaman speaks with Jagjeet Kandal at IDH, The Sustainable Trade Initiative
    Tea by the Lake Mirik
    The Goodricke Lounge by Lake Mirik

    Realigning the Marketing of Indian Tea

    By Aravinda Anantharaman

    State Seal of India

    “When you look back, let’s say 30, 40 years, what has changed in the tea market? That’s the question we need to ask. And to me, there has been no great, no major earth-shattering change. Yes, we went from dabbas to paper boxes, tea bags, then poly packs… stuff like that. But the image of tea has not changed at all. And that, I think, is the basis of many problems,” says industry veteran Jagjeet Kandal, now country head, IDH, The Sustainable Trade Initiative.

    Indian legislators are currently considering a draft Tea (Promotion and Development) Bill to remove colonial-era provisions regulating tea and re-direct the Tea Board of India’s resources to expand existing markets and promote tea domestically.

    In this report, Tea Biz explores the challenges and opportunities of marketing Indian tea by examining:

    • A legacy of marketing tea as a blended, heavily spiced low-cost commodity beverage for the masses.
    • The rise of hundreds of direct-to-consumer (DTC) tea brands that rely on e-commerce as a promising and accessible retail platform.
    • Expanding choices available to tea lovers and how consumer preferences have moved beyond chai.

    Price as a factor

    “I think marketers need to take some of that blame because what they’ve done is made tea a common man’s drink. It has been marketed as the cheapest drink. When you market anything as cheap, it’s going to be very difficult to take that perception people’s mind and then tell them to come and pay more for it. So it was a short-term strategy or whenever this whole marketing stint started, but that’s the basis of what needs to change,” says Kandal.

    Price became a factor in sales, trumping taste. Brands fought on price. Across the country, orthodox tea is not consumed by the masses. South India, in particular, favors dust-grade teas. But every producer and every brand owner talks about how the per cup cost between a mediocre tea and a higher quality tea differs by only a few rupees. The point is convincing, but that message has not been communicated to consumers.

    New to tea

    A century after exports surged, generating substantial wealth, India was still not a big tea market. Seventy years ago, few Indians had ever tasted tea. In contrast, the Chinese have kept tea in their homes for 5,000 years.

    Like other plantation colonies, tea was cultivated in India to cater to demand in Europe. Wars and economic slumps disrupted trade, leading to a glut of tea that forced England to find new markets. The British turned expertly to India’s domestic population, marketing aggressively and creating a tea culture. It was phenomenally successful as tea is now an Indian legacy with deep cultural connotations.

    India was largely rural in 1960, with 82% of the population of 370 million housed away from cities. Household consumption as a percent of India’s gross domestic product peaked that year at 87.4% percent. Manufacturing was focused on domestic needs, and exports consisted mainly of raw goods. Tea was a vital source of foreign income.

    In 1960 India exported 195 m.kgs of tea and consumed 115 m.kgs. Ten years later, exports remained flat at 200 m.kgs, while domestic consumption had increased to 212 m.kgs. Today Indian consumers drink 90% of the tea it produces totaling a billion kilos in 2020.

    One would expect that this has reduced the producers’ dependence on the export market. It has not. But given how the COVID-19 pandemic, climate change, marketing costs, and now, war, have impacted trade, freight costs, and exports, the need to cultivate and nurture the domestic market has never been more urgent. There’s a need to nudge consumers towards better quality, higher-priced teas and even specialty tea. What producers seek is 1) convince consumers to look beyond CTC and chai, and even if they must stick to CTC, purchase a better-quality product at a marginally higher cost; and 2) how to increase per capita consumption by at least 100g from its current 750-850g per year.

    There has been news of change brewing, with the Tea Board of India finally saying that they will no longer be a regulator but instead become a body that will market and promote tea. It’s a return to the Board’s original mandate, lost along the way and resurfacing now due to producers’ continuous demands. The Tea Board’s challenge will be to address India’s complex market. 

    Lessons from the past: The rise of packaged and branded tea

    In the 1980s, television emerged as a mass media platform financed by consumer interest in packaged goods. That same decade, Tata Tea, helmed by Darbari Seth and Krishna Kumar, transitioned from bulk sales to branded tea from company gardens. Tata spent large sums marketing Tata Tea, Chakra Gold, and Tetley.

    In 1984, Brooke Bond, India’s most popular and – certainly the oldest brand was acquired by Unilever. They had already diversified and merged with Liebig in 1968, generating $1 billion annually in sales. In 1984 PG Tips held 28% of the UK tea market by sales, and Tetley held 8%. Unilever, then the world’s largest packaged goods company, had acquired Lipton in 1977 but had no UK brands. In October 1984, Unilever spent $480 million to acquire 150 million shares, concluding a protracted and unfriendly takeover of Brooke Bond. Subsidiary Hindustan Unilever Ltd., (HUL) based in Mumbai, reported $5.3 billion in annual revenue in 2020.

    Privately held Wagh Bakri, founded in 1919 and based in Ahmedabad, Gujarat, sold loose tea in wholesale and retail outlets until 1980 when it began distributing packaged tea. The company invests 10% of revenue on advertising has since grown to become India’s third nationally distributed packaged tea brand  

    In 1985, Atul Asthana, currently Managing Director, joined the Goodricke Group. The group was formed in 1978 and now owns 29 gardens in Darjeeling, Assam, and the Dooars. Some of the most prized teas in the world come from the Goodricke portfolio, including Margaret’s Hope and Castleton in Darjeeling. “Goodricke had to diversify,” says Asthana. At first, the company started packaging tea in 250g and 500g packets, with each of their gardens keeping aside a percentage of production to go into retail. Their focus was on serving the north and east India markets.

    “It is different from buying other teas. When you buy from auctions, the tea is already 4-6 weeks old. From there it goes to the warehouse and then on to the blenders. When we pack our teas, it’s fresher, it’s more immediate and it reaches consumer quickly,” said Asthana.

    Gardens have a fantastic advantage for retail, when going direct to consumer: By bypassing the auctions, they could bring consumers a fresher tea. Already leveraged by brands like Lipton, whose tagline was “direct from tea garden to the teapot,” it is surprising that more gardens did not take this up and aggressively brand and market their teas. The reason is that the wholesale market was robust, Asthana explains. In the 1980s, a heyday for the tea industry, demand outstripped supply. As Asthana says, everything that was being produced found a market. The Soviet Union absorbed all the tea produced in India. Few gardens found a need to retail to a domestic market.

    With the disintegration of the Soviet Union, the tea industry, which had expanded to produce large volumes of tea, now struggled. As the share of exports declined, the domestic market discovered tea. Inexpensive and widely available, tea was a daily beverage that was easy to make and reasonably addictive. Before packaged teas, vendors sold loose-leaf in broken grades as blends customized to suit customer preferences (and local water conditions). Packaged blends delivered consistent taste, were cleaner and remained fresh in storage. Packaging was more appealing and convenient. Sales increased during the 1980s and 90s as the preference for branded tea grew. Ultimately a combination of factors, including higher disposable income, the proliferation of television, and other forms of advertising, along with the move toward trade liberalization. The only hitch was that this market was still extremely price-sensitive.

    Chill Out with Chai
    Ad for new iced tea range from Goodricke

    “The wholesale market was robust in the 1980s, a heyday for the tea industry, demand outstripped supply. Everything that was being produced found a market. The Soviet Union absorbed all the tea produced in India. Few gardens found a need to retail to a domestic market..“

    – Atul Asthana, Managing Director, Goodricke Group

    Next

    • We end the two-part series with the questions needed to solve the mammoth task of rebranding the industry and realigning the domestic market toward quality tea.
    Margaret's Hope at Sunset
    Sunset at Margaret’s Deck, Kurseong, a tea lounge operated by the Goodricke group

    How Tea Came to be Swadeshi

    Swadesh was the call for independence – it translates roughly as our ‘own country.’ Mahatma Gandhi promoted swadeshi products to build national pride and self-reliance.

    By Ramya Ramamurty 

    Tea was planted by the British in India to ensure an optional country of origin for their favorite beverage. China was the leading tea producer at the time. Tea plantations in India were an astute way for the British East India Company to de-risk this commodity in case the balance of trade with China was threatened by war or insurgency. 

    As the chapter on ‘Snacks and Biscuits’ in my second book Branded in History mentions, tea was seen as a ‘drug food’, and planted in India in Assam, West Bengal, and Tamil Nadu. Optimal conditions, conducive for the growth of tea, meant adequate rainfall, the right pH of the soil, and cool temperatures by Indian standards. The tea plantations were fairly oppressive under the colonial powers – indenture was common as a way to supply low-cost labor to the expanding plantations. But there were a few brands that came up in India with indigenous tea bushes or entrepreneurs.

    In 1823, Robert Bruce, a Scot who was wandering in the upper Brahmaputra Valley, near Rangpur in Assam, came across some wild bushes that changed the tea industry forever – it was the first discovery of indigenous tea. The Chinese imports had not taken as well as the British had hoped because of the summer heat in India. A couple of years later, 12 chests of Assam tea were sold for the first time at London auctions, paving the way for the foundation of the first tea plantation company in India: Assam Company India Ltd., (ACIL). The company was founded in London in 1839 and although they focused on tea, the management, which included dignitaries like Charles Alexander Bruce and Prince Dwarkanath Tagore, wanted to keep options open to trade in other commodities like lime, coal or oil so the word tea was not referred to in its name. The company is still around, with its registered office in Kolkata, off Bentinck Road, named after Lord William Bentinck who was the Governor General who set up the first tea committee in Calcutta.

    Another company that was born in colonial India and survived the various political upheavals and is still going strong is Wagh Bakri. Its founder Narandas Desai owned 500 acres of a tea estate in South Africa. His experience of racism there forced him to move back home to India with nothing more than a few valuables and a reference letter from Gandhi, in which Desai was hailed as an honest and experienced tea planter in South Africa. Desai started the Wagh Bakri Tea Company with a retail shop in Ahmedabad in 1915 with a logo espousing their values of equality. It showed a wagh (tiger symbolizing the upper class) drinking tea from the same cup in harmony with the bakri (goat) lower class. These are just two of the brands that launched in that era. Clearly tea took off as India is now the second largest tea producer worldwide, with 13,000 tea gardens, employing more than two million people.

    Back in the pre-independence era, tea drinking became more acceptable in certain strata of society, and in those pockets, it replaced alcohol as a social lubricant. By the 1940s, as calls for Indian independence reached fever pitch – tea was seen as synonymous with colonial oppression. Notably, Gandhi discouraged Indians from drinking it as he felt it legitimized British presence in the country. British tea brands like Lipton, Twinings or Tetley that were being patronized by the British in India were replaced by the local Assam and Darjeeling teas that became more popular as we moved to Swadeshi.

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  • Protecting Sri Lanka’s 150-year-old Brand

    In 2021, Sri Lanka launched a ?4.5 billion global promotion to increase the export volume and value of Ceylon tea, a billion dollar brand. The campaign targets 12 markets, including the UK, EU, Asia, and North America. In parallel, the board is pursuing a Protected Geographical Indication by the European Union. GI status affords global trade protection under the World Trade Organization and officially recognizes the authenticity of the Ceylon brand.

    • Caption: Jayampathy Molligoda, Chairman of the Tea Board of Sri Lanka
    Jayampathy Molligoda, Chairman of the Tea Board of Sri Lanka

    Why Sri Lanka is Seeking GI Status for its Ceylon Brand

    By Dananjaya Silva | PMD Tea

    A Protected Geographical Indication (GI) is a seal of authenticity awarded products that have a specific geographical origin and possess qualities or reputations that are due to that origin. Correspondent Dananjaya Silva sat down with Sri Lanka Tea Board Chairman Jayampathy Molligoda to discuss why the tea board is pursuing GI status and what this means for prices for producers, exporters, and for the nation’s tea.

    Dananjaya Silva: Will you explain how geographical indication protects Sri Lanka’s multi million dollar investment in promoting Ceylon tea in foreign markets?

    Jayampathy Molligoda: The World Trade Organization [WTO] TRIPS* agreement is the trade related aspects of intellectual property rights. So, the law relating to geographical indications originally emerged from the TRIPS agreement under WTO. Everything stems from that.

    Geographical indications are exclusively for unique offerings like Ceylon tea, or Ceylon cinnamon which identify the product as originating in a Sri Lankan region: quality, reputation, or any other characteristics of Ceylon tea are essentially attributable to its geographical origin.

    Ceylon tea is a registered trademark owned by Sri Lanka Tea Board in Sri Lanka. But what is important is that globally 95% of our tea is being marketed in 140 countries. At least 50 to 60 countries take about 90% of our tea. So, it’s a reputed name globally. Unfortunately, over a period of time we have lost some of the markets Pakistan, Egypt even Russia, their market size has come down drastically for the tea. As a result, we have been selling around 28 million kilos out of our 280 million kilos.

    One important point I will explain in detail the Ceylon tea is associated with the Lion logo. To qualify for the Lion logo, one has to pack in Sri Lanka 100% pure Ceylon tea so that’s the problem. Ceylon tea, although is a registered certification, it’s not registered legally in other than a few countries.

    As a result, there had been some misusers of the name. We were unable to take legal action on some of the infringements, so depriving our genuine exporters’ ability to service and increase their market share in Ceylon tea products.

    Ceylon tea is unique, we all know Ceylon tea is unique. Our tea masters know how to prove that through the testing methods, but that is not acceptable to European Union countries. We have to scientifically prove that this Ceylon tea originating from Sri Lanka has unique characteristics because of its geographical origin and reputation. So that is why we are trying to get this GI registration under intellectual property rights.

    Dananjaya: In addition to the legal protection it affords, will you discuss how Protected Geographical Indication status also speaks to the unique qualities of Sri Lanka’s tea-growing regions. GI status establishes a strong, distinguishable, and marketable reputation.

    Jayampathy: The GI status is a marketable reputation for producers because the producers follow farming traditions. It’s the cleanest tea in the world so that is the brand story for Ceylon tea. If you go back to the TRIPS arrangement under WTO, the original purpose behind geographical indication was to give recognition to the producer, the farmer.

    “Our objective is not only to stabilize but to obtain even better prices in terms of U.S. dollars and to get more market share.“

    – Jayampathy Molligoda

    Dananjaya: Will obtaining GI status help stabilize prices?

    Jayampathy: Our objective is not only to stabilize but to obtain even better prices in terms of U.S. dollars and to get more market share.

    If you carve off our 300 million kilo per annum production, basically 285 million of that is what is known as Orthodox Ceylon tea. So that orthodox type of Ceylon tea is not ideally suited for tea bags and that may be one of the reasons why we have lost share in the mass market.

    Since CTC is different than Orthodox, we have to find a niche market. Our brand marketing strategy rests on three pillars. First, Ceylon tea is an authentic product, as we explain. Next we demonstrate our sustainability credentials compared to other competing countries and products citing, for instance, the fact that our farmers, our regional plantation companies practice environmental sustainability and attend to the social wellbeing of the people under the Tea Control Act. Finally, there is the wellness factor. Because of these three pillars we are getting a premium price for our tea.

    As a matter of fact, at the auction level and the wholesale level, we command $3.50 per kilo converted to U.S. dollars at the Colombo auction. The Mombasa Auctions and Calcutta they get less than $2, roughly say $2, according to information provided by ITC [International Tea Committee] as well as FAO, the Food and Agriculture Organization’s Intergovernmental Group findings.

    Recently domestic prices have gone up. In order to get more dollars, the authorities have taken the right course by allowing the rupee to fluctuate, but it has to be carefully managed float in my personal view.

    There is a tipping point our exporters must address to sell tea at a very high price. The tea board then works to ensure those FOB prices are trickled down through the factories to the farmers. It is more important getting this money to the farmer, not to give benefit to the exporters or the big time players to earn more money.

    So we pitch our Ceylon tea in that particular niche as a differentiated product. So how do we differentiate? It’s only through certifications and indications. Once we have obtained GI logo, it can be combined with other quality standards and the traceability can be assured so they know where the tea comes from.

    That’s the game plan. We just use the global tea promotion to explain the benefits of differentiated tea.

    London-based Dananjaya Silva is managing director of PMD Tea and a fourth generation tea man whose family business, P.M. David Silva & Sons dates to 1945 during the Plantation Raj in Ceylon’s Dimbula Valley. The company was founded on Brunswick Estate in the fertile Maskeliya Valley as a small independent Tea shop for tea plantation workers to gather, relax and enjoy a quality cup of tea.

    Related

    The GI mark of authenticity defines the origin boundaries and enhances legal protection for food products.

    Overview: The TRIPS Agreement

    The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement is the most comprehensive multilateral framework for protecting intellectual property. It was enacted in January 1995 to establish a public register of rights that is accessible globally. It bolsters protection afforded by the issuance of CTMs (certification trade marks). The advantages of a Protected Geographical Indication include additional protection when a CTM is not accepted in a jurisdiction; the ability for GI holders to obtain reciprocal protection of a mark mandate under EU Regulation 2081/92; and the fact that GIs describe with legal precision the product’s direct links with origin.

    In addition to geographical indications including appellations of origin, TRIPS covers copyright and related rights (i.e. the rights of performers, producers of sound recordings and broadcasting organizations); trademarks including service marks;  industrial designs; patents including the protection of new varieties of plants; the layout-designs of integrated circuits; and undisclosed information including trade secrets and test data. Learn more: TRIPS Agreement

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