Sri Lanka Looks for Media Firm for $10mn Ceylon Tea Promotion Campaign

15th November 2010, www.lankabusinessonline.com

Sri Lanka will call for expressions of interest internationally to hire advertising and media firms to handle a 10 million dollars a year Ceylon tea promotion campaign, a senior Tea Board official said.

The global marketing campaign to promote Ceylon tea will be launched next year with funds from a new levy of 3.50 rupees a kilo on exports that came into effect in November.

The island exports about 300 million kilos of tea, its main export commodity, a year and the new levy will raise about a billion rupees or 10 million US dollars annually.

"We're going to float an international tender to identify professional advertising, marketing or media organisations who will have to do the promotion campaign," Tea Board director - promotions Hasitha De Alwis told LBO in an interview.

The industry has to decide whether to hire one agency for the entire global campaign or separate firms for different regional markets.

The main markets for Ceylon tea are Russia and other Commonwealth of Independent States, and the Middle East.

Other important but smaller markets are the Far East, Europe and North America.

"That step (hiring an advertising agency) we hope to do very fast," De Alwis said.

"Probably we'll float the tender by the end of this month or the latest by early December."

The Tea Board will police the use of the funds raised from the new promotion levy but how the money will be used will be decided by a committee dominated by exporters and other private sector tea industry interests.

De Alwis said that already, advertising agencies have been sounded out about the Ceylon tea promotion campaign.

"We told them there will be a global tender and they will have to apply when the EOI is announced."

Sri Lanka Tea Exports to Top $ 1.5bn. Designs Emblems for Niche Brands from Regions

08th May 2010, www.dailynews.lk, By Harshini Perera

Tea export revenue is expected to reach US $ 1.5 billion as a result of the rising trend in tea prices and production.

The improving economic condition and tapping new markets have resulted in an increase of Ceylon tea exports for the first quarter of this year, Sri Lanka Tea Board Chairman Lalith Hettiarachchi told Daily News Business.

He said Sri Lanka Tea Board has encouraged regional tea production. They expect to promote tea internationally going by the region.

“We have already designed emblems for the regions and submitted information to the National Intellectual Property office. Sri Lanka Tea Board is expecting local registration soon and it will be submitted to the World Trade Organization for international registration,” he said.

The Tea Broad Chairman said the classification of tea according to the region of its origin will attract different tastes of the people internationally. The new marketing strategy will increase tea exports further.

Among Sri Lanka’s exports, 58 percent is bulk while 42 percent is value added tea. He stressed the need to increase value added tea exports.

He said that as a means of promoting value added tea, few more incentives will be given to producers.

“There are more than 700 HACCP certificates issued for industrialists and 21 industrialists have already applied for this year. We can expect an increase in the number of industrialists who will apply for HACCP certification in the future,” he said.

He said the authorities should grant necessary funding to issue the HACCP certification for industrialists. Currently, the SWITCH ASIA project provides necessary funding providing free consultancy for industrialists.

Tea Export Targets
* US$ 1.5 billion this year
* 58 percent bulk tea exports
* 42 percent value added tea exports
* 21 new applicants for HACCP

Sri Lanka Tea Output to Rise as Rain Eases Dry Weather

22nd February 2010, www.bloomberg.com, By Anusha Ondaatjie

Tea production in Sri Lanka, the world’s fourth-biggest grower, may increase this year as rain in the main growing areas eases dry conditions that damaged the crop last season, according to the nation’s tea board.

Output may exceed 300 million kilograms, compared with 290 million kilograms in 2009, said Lalith Hettiarachchi, chairman of the Sri Lanka Tea Board, in a phone interview today. Warm weather and a wage dispute reduced the previous crop.

A global tea shortage may widen this year and extend into 2011 as a rebound in production in Africa, Sri Lanka and India trails demand growth, McLeod Russel India Ltd., the biggest tea grower, said last month, predicting the deficit may be as much as 130 million kilograms by April.

“The rise in production is not significant to bridge the global deficit,” said Hettiarachchi. “The biggest suppliers like China and India are increasing local consumption so the exportable surplus is getting reduced.”

Shipments from India, the largest grower, dropped to 191.49 million kilograms last year from 203.1 million kilograms in 2008, after the driest monsoon in almost four decades damaged crops of tea, sugar cane and rice, according the country’s tea board.

“The weather has been conducive and we should reach at least 300 million kilograms provided there is no labor unrest over any unscheduled wage hike this year,” Hettiarachchi said.

Average prices at the Colombo tea auctions reached a record 405.77 rupees ($4) a kilogram in the third quarter of last year. In January, 26.4 million kilograms sold for as much as 440.41 rupees a kilogram, the board said on its Web site.

‘Buoyant Demand’

“Prices should hold through this year or go beyond,” said Hettiarachchi, helped by “buoyant” demand from Russia and the Middle East, Sri Lanka’s traditional markets.

Still, Sri Lanka, the third-biggest supplier of black tea, may earn $1.2 billion from exports this year, little changed from 2009, according to the board. Tea is the country’s second- highest export earner after apparels.

“Although prices compensate, Sri Lanka’s export growth is limited by our production levels,” Hettiarachchi said.

Production last month was 26.9 million kilograms, compared with 17.9 million kilograms a year earlier, the board said.

The board is in talks with plantation companies to increase re-planting programs and grow more high-yielding variety.

“With the production costs high, companies aren’t willing to inject more capital into the business,” Hettiarachchi said.

Labor makes up about 60 percent of total costs, more than double than in other tea-growing countries such as Vietnam, he said. Productivity, gauged by the kilograms plucked per person in an eight-hour period, is less than half of India’s “in a similar terrain,” he said.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net.