Fresh Cuppa

The Tea Association plans to re-haul criteria used to fund new Ceylon tea brands, when it takes over some of the Tea Boards functions this month.

Every year, the Tea Board doles out a quantum of money to exporters keen on establishing a brand and who meet the selected criteria.

“For example, the Tea Board evaluates this to see if it has pure Ceylon tea, whether it has the Lion logo, or whether it has been supported by the Tea Board before and so on”, a Tea Board official explained.

Over the past 25 years, the Tea Board has helped float over 50 Sri Lankan tea brands. But only a handful has made any kind of dent on the worlds branding map.

The best-known example is Dilmah Tea, with others like Zesta, Mabroc, Impra, George Steuarts Riston, and HVAs Heladiv, well on their way.

But there are brands and brands, and industry officials say the funding doled out by the Tea Board to help fledgling efforts, is too sparse to make a difference.

Funding per exporter is capped at a maximum US$ 30,000 of a total budget of US$ 400,000 from an industry cess fund.

“This is barely enough to cover 50 percent of their total budget”, CEO of the Tea Association of Sri Lanka (TASL), Niraj de Mel says.

This year, some 50 firms had sent in proposals for brand promotion, and though 36 of them were approved, many of them had sent in more than one application.

“So in effect, there are actually 18 firms vying for the US$ 400,000, from which each will get a share”, de Mel tells Lanka Business Online.

Tea Board criteria will continue this year, but following a review of past performance, de Mel hopes to limit the number of eligible firms to about five per year, from 2005.

“We want to identify about three to five projects for assistance, so that a few projects can then benefit significantly by a larger amount of funding”, he adds.

Funds for branding efforts and tea promotion comes from an industry cess. Rs. 2.50 on each kilo of exported tea is pooled into an industry cess fund.

About US$ 750 mn is raked in on the average 300 mn kilos that is exported, which is split unequally among the Tea Board, the Tea Research Institute and the Tea Smallholders Association.

The Tea Board is being whittled down into a regulatory body, with other promotional functions, both lquote generic and lquote uni-national, to be eventually handed over to the TASL.

Generic promotions try to sell Ceylon tea as a national product, branded much like French wine or even the speciality Darjeeling teas of India.

The way generic promotion happens now, Sri Lanka sends out a specific quota of funds to an apex association in an identified market, that is used to promote Ceylon tea,

The extent of funding depends on Sri Lankas market share in the target country, vis-‘e0-vis other competitors.

“We have not had a single tea promotion strategy for the country, on our own, in the past ten years and there have to be some radical changes in the way promotions are done”, de Mel says.

Uni-lateral promotions are where the bulk of the activity is, which includes trade fairs where the whole industry participates as well as local promotions.

“The government thinking is that we will hand over only brand promotion for the moment. We will monitor this until 2005, and evaluate the progress of that” the Tea Board official said.

“After that, we will look at handing over generic promotions and the rest. There are issues still to be resolved. Such as, whether a private organisation can use the cess funds under the Tea Board Act”.

“It also depends on how long the TASL will take to gain recognition and for its capabilities to be determined”, he added.

The TASL was set up in October 2002 as an apex body for the industry, primarily taking over quality assurance and marketing functions for the sector.

Its stakeholders include the Plantation Ministry, Planters Association, Tea Exporters Association, Tea Small Holders Association, Brokers Association and the Tea Factory Owners Association.

-Zainab Ibrahim: zainabi@vanguardlanka.comrn