Negative growth for Sri Lankan tea
But local brands get a boost
By Feizal Samath
Sri Lankan tea is heading for a different record this year - negative growth
for the first time in nine years, industry officials say.
Tea production is likely to end up at below 300 million kg compared
to 305.8 million kg in 2000 due to a combination of drought, strikes and
work disruptions on estates and erratic output.
"This would be the first time since 1991 that production is seen falling
from the previous year. It has always been on the rise," noted Anil Cooke,
director at tea broker, Asia Siyaka Commodities (Pvt) Ltd.
Production in September also fell to a nine-year low of 17.2 million
kg from 23.3 million kg in September 2000. The lowest figure recorded prior
to this was 14.4 million kg during the infamous El-Nino year of 1992. October
output is also seen lower this year.
After annual production fell to 179 million kg in 1992 from 240 million
kg in 1991 mainly due to El-Nino weather patterns, output has been rising
every year after that by an average five million kg.
Tea prices are also on the decline, falling - in real dollar terms -
to an average US $ 1.5 per kg last month against US $ 1.8 in the same month
in 2000 at the Colombo tea auctions.
Production may be falling but tea as a brand got a tremendous boost
ten days ago when Dilmah Tea Ltd became the newest sponsor of Sri Lankan
cricket across the globe.
Dilmah said it is planning to maximise its brand in the world through
cricket and a whole new range of promotional activities.
One of the main items on the agenda is to lift current sales of branded
tea at 7-8 million kg to 12 million kg at the end of the third and final
year of the US $ 3.3 million cricket sponsorship package. The company plans
to spend "over and above" the sponsorship figure in the new promotion,
a spokesman said.
Another issue being closely examined by the company is the availability
of its brand in Sri Lanka, where promotion is limited to an outlet at Odel,
sales in supermarkets and hotels.
"We are in a dilemma here. Do we go into mass market for an upmarket
range and price? We are looking at all options and will try to strike a
balance between the two and make sure Sri Lankans also have a taste of
our tea," the spokesman said.
The promotion plans that would run parallel with Sri Lankan cricket
is now being put together but the company hopes to create a specialised
department of two to three experts to handle this new phase in promoting
the Dilmah brand. "We need to brainstorm on clever and innovative ways
of taking this brand to every possible market."
Dilmah is Sri Lanka's best-known brand overseas and now sells in more
than 80 countries including some exotic markets. The spokesman said Dilmah
tea via Sri Lankan cricket would substantially raise the profile of the
product with a strong possibility of the UK - a new market for Dilmah -
outstripping demand in Australia, Dilmah's biggest western market so far,
in the next three years.
"While reinforcing the brand in traditional markets like Australia and
Russia, our biggest buyer, we aim to step up the image in countries like
India, South Africa or Nepal," he said.
The Sri Lanka Tea Board is also helping Dilmah with some promotional
funds in this exercise.
PB, Western Union tie up expedites remittances
The People's Bank (PB) is providing Sri Lankan expatriates a quicker way
of remitting money home through a new tie up with Western Union, which
gets underway this week.
The bank will be providing this service initially through 50 selected
branches and then expand it to other branches in the near future, its Deputy
General Manager (DGM) T. Karunasena told The Sunday Times Business Desk.
Western Union, which operates in 190 countries, is one of the most popular
instant money remittance networks in the world. It already has a presence
in Sri Lanka through Seylan Bank and Mountain Hawk Ltd but PB's involvement,
banking sources say, would tremendously widen its reach due to the state-owned
bank's massive branch network.
The PB has the biggest branch network of 320 branches and 200 pawning
centres across the country with a 450,000 customer base.
The bank accounts for more than a 30 percent market share of inward
remittances, he said.
This year the government is expecting Rs. 100 billion as remittances
against Rs. 87.7 billion in 2000 from local expatriates who work in the
Middle East and other parts of the world. Last year, remittances to the
country from the Gulf alone totalled Rs. 55 billion.
Karunasena said the Western Union service is much faster than any other
currently available systems in the bank thus enabling customers to encash
remittances in double quick time.
As of now, the cash remittance service takes at least three hours to
be processed and sent to outstation branches from the main branch, he said.
Inflation indicators imperfect - IPS
Consumer price indexes currently used in Sri Lanka are outdated and no
longer reliable inflation indicators, says the Institute of Policy Studies
(IPS) in a report.
The report on the difficulties of measuring the cost of living in Sri
Lanka, authored by R.M.B. Korale, a retired director of the Census and
Statistics Department and a UN consultant, said there should be just one
index instead of the current three.
"Only one state agency should be responsible for the compilation of
the CPI (Consumer Price Index) and all aspects relating to data collection,
compilation, processing of data to the release and publication of the CPI
should be subject to confidentiality and statistical legislation," the
report said.
While the need for a new CPI has been accepted in principle, there is
and has been opposition from politicians and trade unions over any new
index, economists noted.
Korale said the new CPI should serve as a general inflation indicator
where the reference population is the entire population, unlike at present
where it represents Colombo and Greater Colombo. "The Department of Census
and Statistics should set up a time table towards revising the CPI." (See
Page 2 for more comprehensive details of the IPS report)
Econ growth down to 0.6 % this year
Sri Lanka's top Chamber of Commerce says the economy (gross domestic product)
is estimated to grow just marginally by 0.6 percent this year, from 6 percent
in 2000.
According to projections by the Economic Intelligence Unit (EIU) of
the chamber, growth in agriculture, forestry and fishing sectors will contract
by 1.5% while there would be 1% growth in industry and 1.3% growth in services.
A chamber statement said agriculture is seen falling owing to the drought
while industry and services and output growth are expected to fall due
to the impact of the LTTE attacks at the Katunayake airport and a slowdown
in the global economy. These projections were prepared prior to the US
attacks on Afghanistan and the announcement of elections in Sri Lanka,
the statement said.
The EIU also projects the 12-month treasury bill interest rates to end
the year around 16% per year, down from over 19% in mid-year. The reduction
of the repo and reverse repo rates by the Central Bank and the slowdown
in economic activity will dampen pressure on interest rates. Similarly
EIU estimates inflation to be around 14% by the year-end.
Anthrax: Use e-mail instead of letters!
By Hiran Senewiratne
Rising concern over the Anthrax threat has led to many local firms taking
precautions like resorting to e-mail instead of letters.
"This could be spread to Sri Lanka if we do not screen, especially foreign
letters, with widely-accepted precautionary measures," a spokesman for
a Colombo company said adding that US and British companies here were the
first few to take the threat seriously.
McDonald's, a US-based fast foods chain, is taking novel but sensible
precautions. "We are using e-mail as much as possible while Abans (which
owns the McDonalds franchise) is screening our mail," according to a spokesman.
Three people have died from Anthrax while 12 other cases have been reported
in the United States. US leaders have repeatedly said there is still no
evidence to link the Anthrax threat to the September 11 bombings in the
US.
Col. Abdul Nahir, Chief Security Manager of the Ceylon Tobacco Company
Ltd, said his company has taken precautionary measures against the Anthrax
threat.
He said workers who handle mail are provided with masks, gloves and
special boxes and the screening done outside the main office complex. Local
as well as foreign letters go through this process.
"Being a British company we have to be cautious, said Col. Nahir, adding
that the company was also conducting awareness programmes for staff to
learn how to handle this threat.
Caltex Lubricants Lanka Ltd is conforming to standard practices laid
down by the World Health Organisation on this issue. Its safety manager
Vajira Hewawasam said they have advised staff to be vigilant in handling
mail.
Citi Bank CEO Kapila Jayawardena said the bank being a US bank was one
of the first institutions to be proactive on the likely threat of Anthrax
coming in the mail. "We are in a high state of preparedness although the
company has not received any such letters," he said.
At Reckitt Benckiser Ltd, a British-based pharmaceuticals company, officials
are educating their employees through dialogue and discussion on the crisis.
Mail-sorting workers have been provided with masks and gloves as well as
training on how to identify any suspicious letters or boxes. Letters received
by the American Chamber of Commerce are screened by the Hilton Hotel where
the chamber's office is located.
Mind your Business
Business bug
Purse remains perverse
The general expectation is that the greens will emerge victorious at the
poll - at least among the city types and this assumption has filtered down
to the boys at the Treasury as well.
So, they sounded out their boss about their prospects in the event of
a green win, querying what their fate would be.
But the boss airily dismissed their concerns saying simply that even
if the greens win there is no way the lady will part with the purse strings
because it is she who finally decides on who gets whom. Therefore it looks
like the real fun and games will begin only after the poll.
Mad mudlarkers
The mud-slinging campaign may have been politically motivated, but it is
doing more harm than good.
Some of the companies mentioned as having got 'illegal' quotas have
had queries from their principals and others have demanded legal action.
In the long run then, the repercussions of this ill-advised effort may
be felt long after the dust has settled on the polls.
Who laughs last?
Some people may be laughing about breaking the gas distribution monopoly,
but their smiles may be short lived.
The buzz is that a third party with strong blue chip connections is
prospecting this lucrative trade and are very keen to make a proposition
to the powers that be. Their problem right now is just that: they do not
know who the powers that be will be in a few weeks time!
Heart renting storey
Who said banks are doing well? A local bank with a sporting hero on its
staff recently moved out of the posh twin towers in the city to Duplication
Road apparently because it couldn't afford the rent. |
