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Thu, 23 May 2013 19:18:08
Debate brewing over Sri Lanka tea blending plans
15 Jul, 2012 16:50:26
By Amal Jayasinghe
COLOMBO, July 15, 2012 (AFP) - Sri Lanka's tea industry is deeply divided over plans to boost earnings by importing cheaper leaves for blending and re-export, over fears the changes could water down the "Pure Ceylon" brand
Pure Ceylon -- using the country's colonial-era name -- is to tea what single malt is to whisky, according to some aficionados, with single-origin Sri Lankan tea costing as much as twice that of a multi-origin tea.

The country has long been a leading exporter of the commodity, but now the Tea Exporters Association (TEA) wants to import leaves from countries like Kenya, Vietnam and Indonesia, and blend them with higher quality local produce.

TEA members, who make up more than 80 percent of Sri Lanka's tea exports, say the island should harness its local blending expertise and reclaim its role as a tea hub, a position being eroded by competition from Gulf nations.

They argue that the high quality and the correspondingly high prices have placed "Pure Ceylon Tea" beyond the reach of the lucrative mass market, even if the industry enjoys an enviable brand reputation.

"We lose out because our tea is too expensive," says Niraj de Mel, head of TEA. "We don't have a (cheaper) tea that can compete in the mass market."

De Mel argues that Sri Lanka could almost double its exports of 300 million kilos (660 million pounds) annually by taking a "realistic" view of the world market and blending its tea with cheaper imports.

Debate brewing over Sri Lanka tea blending plans by Amal Jayasinghe =(PICTURE+VIDEO)= Sri Lanka does not currently allow tea imports for blending, but in May the official Sri Lanka Tea Board (SLTB) said a panel was investigating options.

The announcement sparked an intense debate with "purists" and "realists" fighting it out in the press and on social media.

SLTB chief Janaki Kuruppu told AFP that no final decision had been taken and that a balance needed to be stuck.

"We are carefully studying the proposals and the objective is to increase overall revenue while protecting our brand image," he said.

Purists, such as leading Sri Lanka tea maker Herman Gunaratne, fear blending with cheap teas will undermine the industry in the long term and say the island must focus on the luxury end of the market.

"We are known for our top quality tea," says Gunaratne. "Why should we dilute our image?"

At a tea plantation in the southern village of Ahangama, Gunaratne makes an exotic range of tea that can fetch up to $2,000 a kilogramme, some of which ends up on the shelves of the top-end Mariage Freres tea emporium in Paris.

"The way forward is not blending, but manufacture. We must make more expensive tea," he says.

Gunaratne worries that blending with East Asian teas could damage a reputation built up over 150 years.

Tea is not indigenous to Sri Lanka, but after a Scotsman named James Taylor planted the first tea bush -- the Camellia Sinensis in 1849 -- tea became a primary export and the nation's main foreign exchange earner.

Sri Lanka conducts the world's largest weekly tea auction where five to six million kilos change hands, but turning the high-quality tea into humble and affordable tea bags is mostly done abroad by foreign companies.

Sri Lanka's stance prompted Unilever to drop plans in the late 1990s for a factory in Sri Lanka and it instead set up its Lipton tea bagging plant in Dubai where they blend teas from East Africa and Asia -- including Sri Lanka.

The factory currently produces 1.1 million bags of tea an hour and is set to be the world's biggest plant by 2015.

Sri Lanka's export lobby argues that the country's refusal to import leaves is only helping to further establish Dubai as a tea hub.

Sri Lankan tea brand Dilmah, which competes head-on with Lipton and other multinationals, is one of those fiercely resisting any moves to relax government policy.

"The quality of Ceylon tea and its image as the world¹s finest tea will be irreparably tarnished if free importation of black tea (for blending) is permitted," says Dilmah director Malik Fernando.

As things stand, millions of kilogrammes of Sri Lanka tea are blended abroad and many argue that the island could have better control over the product if the blending were done at home.

"We want to get the benefit of a large tea industry in Sri Lanka," says Rohan Fernando, chairman of HVA Lanka Exports.

"If we ban imports and don't allow the industry to develop, then it will go somewhere else."

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READER COMMENT(S)
3. Rohana Perera Jul 18
This article also misses the great irony in this debate. That is Dilmah was (and still is) a big importer of tea into the country. A big name (now) in the industry made their early profits thanks to a shady blending operation along the road to Katunayake.

If Sri Lanka’s tea exports can be doubled, all the better. The demand for off-grade Ceylons will go up if the blending operation is done here in Sri Lanka itself. Tea growers will no doubt cheer the decision to allow imports if they are given the truth, the whole truth and nothing but the truth.

It is interesting to note that Mr. Fernando has climbed down from Pure Ceylon tea to Ceylon Tea. This is probably because the “Pure Ceylon Tea” packed in Poland is not pure after all…

2. Malik J Fernando Jul 17
The article misses the critical point that 100% of tea growers are dead set against the proposal.

Also that a key negative of the proposal is that the foreign brand packers who are behind the proposal want to replace the ceylon tea content in the packs they currently export with foreign teas that are half the cost of ceylon tea. This will result in a severe drop in demand and prices for ceylon tea which is already at the borderline.

The proposal is designed to address the marketing limitations of traders and reposition Sri Lanka from a premium growing centre to a commodity trading centre, which will devastate growers and the reputation of Ceylon Tea, which is the only leg we can stand on to build global brands.

Dubai doesn't grow tea. It hence allows imports just as we allow fabric imports for apparel since we don't grow cotton.

The fact that a Dutch commodity/bulk trading firm is leading the charge is significant.

Freedom is good but not if it imprisons the tea producer and Ceylon Tea.

1. free market kid Jul 15
Cmon guys, if you build a powerful brand and stay true to what your brand stands, then it does not matter if you blend or not. For example, if dilmah wants to stay true to its single origin tea branding, then they should do it with out jeopardizing other companies' freedoms. This is good for the lankan tea industry, it will be better for dilmah since they can really differentiate themselves through a powerful marketing campaign and win consumer confidence.