Financial Times

HVA eyes American iced tea market
The HVA Group, which sells value added teas under the Heladiv brand, has begun test marketing its flavoured iced tea products in the United States and plans to aggressively promote the packs in the domestic market as well. The company exports iced tea tetrapacks to Japan, Australia and New Zealand and is eyeing the US market where demand for iced tea is growing at the rate of around 20 per a year, marketing manager John Perera said. The world growth rate for iced tea is around 15 percent a year and only three percent for hot tea.

The company has a production capacity of around one million kilos of tea a month, an annual turnover of around Rs 700 million and its own R&D laboratory. It also sells black tea packets and tea bags.

"Our focus is to build the brand," said Perera. "Five or six years ago we started concentrating on brand development and can see the result now as more people ask for our packs.

"We have moved from traditional bulk tea sales, which are big in quantity, to value added teas, which give better returns on our investment than bulk tea." The amount of tea in the pack is very small, a mere five percent, and fruit just four percent with the balance being water, sugar and preservatives. HVA sends black tea to a company that specialises in food concentrate in Denmark which sends back the liquid tea and fruit concentrate for packing here.

The flavoured iced teas are put in tetrapacks by the Rich Life company in Wadduwa. Sri Lanka does not have good enough technology to make tea concentrates in a hygienic manner and in large commercial quantities to achieve the required economies of scale. Furthermore, such machinery is very costly.

Perera said HVA was promoting iced tea in a big way in the domestic market and has acquired four vans to distribute the products to retailers and also to sell to consumers. It also sells iced tea packs to schools and supermarkets.

Orders from supermarkets have increased as more people become aware of the brand, Perera said. As part of the promotion campaign, HVA sold iced teas at the Fox Hill motor races during the April holiday season.

Last year, the company began exporting a new product called the Good Life range that combines herbs such as gotukola and siyambala with tea. The company was set up in 1991 with investments by the Dutch agribusiness consultancy and investment company HVA (Handels Vereeniging Amsterdam) and Omega Holdings, a company owned by former minister Milinda Moragoda. HVA was a trading company set up by Dutch bankers and traders in 1879.

The initial investment was around Rs 200 million. It is now a sole proprietorship owned by the firm's managing director Rohan Fernando, who helped set up the venture initially and who bought out the Dutch partners. It has a factory at Kandana that employs 85 people.

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