Sri Lanka’s tea is still world acclaimed as the best or one of the best tea varieties available in any given market even after more than a century. Apart from the unique taste of the product the competitive and comparative advantage of the Sri Lankan tea industry lies in the following factors.
• While establishing the country as an origin of quality (orthodox) tea it has become the largest producer(95%) and the exporter of the (orthodox )tea
• Country’s ability to produce tea through-out the year
• Diversity of its tea production originating from six major tea growing regions each providing with specific aromas and flavors, synonymous with quality. i.e. Nuwara Eliya, Uva,Uda Pussallawa, Dimbula, Kandy and Sabaragamuwa
• The cleanest tea in the world in terms of pesticides and residues. International Standard Institution has acknowledged this. All Sri Lankan tea exports have to adhere to the ISO 3702. A number of companies already possess ISO, HACCP and GMP certificates.
• Exports of more than 50% in value added forms particularly in the form of tea bags and tea packets out of which 10 to 12% are under local brand names.
• Ability of some Sri lankan Companies to Compete with established Brand names in the global tea markets e.g. in Newzeland ,Australia, Middle East and Russia (Dilma, Allgazaline, Impra) and create specific niche markets under Sri Lanka brand names i.e .Gift Tea market(Melsna )
• Colombo tea auction, which auctions more than 6 million Kgs per week is not only the leading tea auction of the world but also considered as the highest price fetching auction.
Sri Lanka’s present value added product range includes Green tea, flavored tea, organic tea, instant tea and ready to drink tea (RTD) in packets bags or other forms. Tea based soap, bath gel, shampoo and cosmetic products are some of the latest products introduced in this range.
Some Marketing Challenges
Currently more than 48 % of the tea is exported in bulk form in favor of multinationals, who are engaged in bulking, blending and packaging operations abroad. This provides an opportunity for them to determine the global prices making the country a mere price taker.
Preponderance of the bulk tea exports, also, makes the country subject to commodity based price swings. In addition, global supply shortages and over production associated with the climatic conditions play a major part in the price determining leading to continues price fluctuations.
Despite the domination of Sri Lanka brands in the Middle East region except one branded tea player none of the Sri Lankan tea companies could establish an impact in the overseas branded tea markets, which enjoys the maximum margins in the tea value chain.