Business Times

Middle East markets moving away from Ceylon Tea : Dilmah founder

Urges creation of Tea Authority

Middle East markets are moving away from Ceylon Tea and prefer more aggressively promoted and marketed international brand names, which use cheaper tea of a style of manufacture culturally alien to Arab palates, a concerned tea industry exporter has said.

But Merril J. Fernando, Chairman of Ceylon Tea Services – makers of Dilmah Tea -, noted that despite this weakness Ceylon Tea prices reached the higher ever levels in the year to March 31, 2010.
The company reported post tax profit of Rs 537 million, up from Rs 487.1million in the previous financial year. Sales turnover improved on the previous year by an increase of 11.6%.

Mr Fernando, who turned Sri Lanka’s tea industry upside down from a traditional bulk tea exporter to an increasingly, growing value-added seller, lamented about the weak marketing efforts of the country’s traditional export.

“Pitiful marketing inactivity on the part of our traders and the Sri Lanka Tea Board left the opportunity open for this effective intrusion into exclusive Ceylon tea markets. Our exports to Saudi Arabia, a prolific consumer of Ceylon tea previously, have declined from 11.4 million kilos in the year 2000 to 4.7 million kilos in 2009,” he said in the annual report.

The answer, he argues, is not to follow market leaders with blended tea and CTC manufactured tea, but to re-launch traditional grades of Pure Ceylon tea and market strongly. He cited the case of a very popular Pure Ceylon tea, packed and shipped from Sri Lanka under an importer-owned brand name, which dominated the Saudi Arabian market for several generations.

“Sadly for Sri Lanka, that brand name too is now blended with other origin teas and packed in Saudi Arabia. The Sri Lanka Tea Board invested several million dollars in advertising and promoting that foreign brand while being made aware that it will, sooner or later, become our biggest competitor in that country,” he said.

He said the company was extremely careful and considerate in applying provided incentives strictly towards the benefit of the tea industry and the country.

Dilmah has been rewarding the industry by advertising and promoting Ceylon Tea and helping create a positive impression of Sri Lanka over the past 22 years by investing US$ 8 to 12 million a year especially during the past 12 years.

If 10 other brand names were developed taking advantage of the incentives, Ceylon Tea would have again become a powerful force, he noted. Mr Fernando said the industry needs a stable policy, direction and expertise if it is to play a significant role in the economy and urged the creation of a Tea Authority with full control over the industry, pursuing an astute 10 year plan. The need to rehabilitate the industry - via replanting, factory development, legislation against rampant abuses by some producers and exporters and to provide an incentive package funded largely by a Cess, targeted towards building fully Sri Lankan owned brand names, is a desperate need now.

The company paid a dividend of Rs. 30 per share for the year up from the previous year’s all time high payment by 20%. The board comprised the Chairman, Deputy Chairman/CEO, four Executive Directors and two-Non Executives. The report said during the year total remuneration of the Executive Directors amounted to Rs. 57.4 million (earlier Rs 46.8 million) and Non ExecutiveDirectors amounted to Rs. 600,000 (earlier Rs. 182,500).

The directors are Merrill J. Fernando – Chairman, Himendra S. Ranaweera - Deputy Chairman/ CEO, Malik J. Fernando – Director/Operations, Dilhan C. Fernando – Director/Marketing, Ms.. Minette Perera – Director/ Finance, Roshan Tissaaratchy – Director/ Sales, and non executive directors: Rajan Asirwatham and G. E. Chitty.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
Mr President- Serve only two terms: BT poll
F&G Trust lifeline for over 4,000 hapless depositors
Share split mania hits Colombo – race to increase market cap
FR case against state by migrant worker
SEC to formulate new price band formula
ICTA offers US$ 50,000 in training grants
Sunday Times first Business Editor passes away
Comment - Price bands and day-trading
Feature - The “Broken Promise” of the film private sector
Feature - Sri Lankan job vacancies fell by 37.% last year due to global crisis: S urvey
Tile manufacturers plastered with ball clay issues
What can bees teach regulators and investors?
It wasn’t me … behind a mask of defence
Sri Lanka Design Festival in Colombo on November 11-17
‘We are concerned about EU re lations with Sri Lanka’: Italian ambassador
On-the spot-cash from AMW in trade-in scheme
Dilith, Varuni join directorate at Reefcomber
Swadeshi Industrial Works upgraded to ISO 9001:2008
Middle East markets moving away from Ceylon Tea : Dilmah founder
Excon 2010 to be held in September
Bankers to showcase Lanka as a financial hub
IMF wants pension funds in capital markets
Correction - ‘CPC owes Rs 18.5 billion in oil hedging dues, to Standard Chartered Bank’
Sunday Times Biz Club (STBC) re-launches website
SLT Directory on Mobile WAP
Commercial Bank promotes MoneyGram in Cyprus
South Asian Undergrads Meet in Colombo
Etisalat; enabling children to access today’s world through education
Rs 1 billion for tea marketing, re-planting mandatory, and expansion of plantations
Industry wants CSE to tighten director disclosures
Business Times on the Presidency
Experts urge Internet banking customers to be cautious
Havelock City commercial complex: Seven times bigger than Majestic City
Kelani Tyres Plc reports Rs.706 million pre-tax profit
3.1 mln computer network Asian professionals needed by 2012
Strike-hit Lanka WallTile threatens …
Sri Lanka Tourism- Beyond number crunching
Union Bank profits up during first half of 2010
JKH switches tourism properties in the Maldives
A university where discipline and entrepreneurial skills matter


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution