Aug 12, 2009 (LBO) – Sri Lanka™s largest branded tea exporter who was hit by a slump in demand says an upturn may be around the corner but warns that weak balance sheets in large plantations pose a long-term threat to the industry. MJF Group owned Dilmah tea – available in over 90 countries – is one of island’s most visible international brands.
Shamindra Kulamannage, from ETV’s Lanka Business Report show, discussed the impact of the global financial crisis with Malik Fernando, who is a director of MJF group, founded by his father, Merrill J Fernando.
He started the interview by asking how the Dilmah brand has fared in the face of the global economic downturn.
A: We were affected pretty badly, in that there was massive devaluation in all of the key markets that we were operating. That impacted us very badly.
Tea is not an expensive product, it’s not that people will stop drinking tea but the biggest issue we faced in markets like Russia, Ukraine, then in Australia was the substantial currency devaluation. Dilmah as an imported product competing against brands packed in that country makes us very expensive.
LBR: Are you hedging against there currency risk? Is that an option?