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Sri Lanka unit of Tata tea forges ahead in local market
20 Jun, 2007 15:55:32
June 20, 2007 (LBO) – Sri Lanka's Watawala Plantations has said it now holds over a quarter of the local market for branded teas following an aggressive promotion campaign.
The company, increased after tax profit to 222 million rupees in the year ended March 31, 2007 from 204 million the year before despite the disruption caused by last year's estate strike.

Turnover rose 11 percent to 3.2 billion rupees from 2.9 billion rupees.

Watawala Plantations chairman G. Sathasivam said it has rapidly increased it tea market share through an "aggressive" marketing campaign for its premium Zesta brand and the mass market brand, Watawala Kahata, which in 2006 doubled sales volume.

The campaign enabled Watawala Plantations to improve the cumulative market share steadily in excess of 25 percent and secure the second biggest branded tea category position among local branded teas, in just six years, he said.

However, he told shareholders in the firms annual report, the highest potential still lies in the category of conventional of unbranded bulk teas.

The firm has achieved success in trying to change consumer habits and get them to switch over from loose tea to packeted teas.

It has had "encouraging results" in trying to improve rural penetration by marketing Ran tea, new product, to low income groups, Sathasivam said.

Increasing fuel costs have prompted the firm to look at the possibility of switching over to driers powered by firewood and hot water generators and also of generating its own electricity with the use of hydro power.

The company's tea production last year fell 16 percent to 7.6 million kg from 9.1 million kg the year before mainly because of the go-slow and strike followed by a slow recovery coinciding with prolonged drought, Sathasivam said.

Tea estate workers launched a strike last December to back demands for higher wages.

Sathasivan said the wage hike cost the firm an extra 118 million rupees in the last five months of the financial year under review.

Watawala's export revenue reached 861 million rupees, contributing 27 percent of company revenue.

Company profits were also boosted by strong natural rubber prices which are expected to remain in the range of 225 – 275 rupees per kg.

But, he warned that the market continues to remain volatile with disruption of harvesting due to adverse weather and shortage of skilled tappers being major problems.
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