Ceylon Tea to engage new markets to confront prevailing challenges

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A tea plantation near Kandy. Ceylon Tea became a casualty of reduced buying from the Middle Eas

Director General, Sri Lanka Tea Board (SLTB) Anura Siriwardena said last week that the SLTB is currently exploring the possibility of marketing tea in 25 countries.

This move comes at a time when the Colombo Tea Auction continued to record minus results with western, high-grown, and low-grown tea recorded minus price levels compared to 2014, presenting a real challenge.

The new market being explored would include China, Japan, the US and other destinations, where Ceylon Tea could be conveniently accessed for enhanced consumption. Sales strategies expected to be explored would include expanded sales destinations. Allocated funds to implement these expansion plans would amount to Rs. 3 billion. These plans would be implemented towards the latter part of 2015.

Would this spell disaster in the short run? John Keels Holdings (tea brokers), did not think so. CEO, JKH, (tea brokers) Sudath Munasinghe said such vicissitudes did test the tea industry in the past; ‘but we survived.’

Commenting further he said Russian buying and the Middle East market saw reduced demand. He agreed this was worrying but reiterated that the sales operations were not in serious trouble. At least not as yet.

The Russian Ruble depreciated because of their Ukraine problem. Plunge in oil prices reverberated worldwide, but Ceylon Tea was a casualty because of reduced buying from the Middle East.

What of Pakistan and their consumption of Ceylon Tea? Munasinghe said he agreed Pakistan was one of our major buyers, but shifted their buying loyalties to Kenya. Particularly because Kenyan tea was cheaper. Pakistan buying of Ceylon Tea dwindled to just 1.5 %.

Would President Maithripala Sirisena’s recent visit to Pakistan see any significant improvement to their tea-buying? He said answers to that question could not be given right away, but talks between both leaders resulted in improved bilateral relations.

Currently we cannot not identify if tea is on Pakistan’s agenda; but positive developments could be expected.

With US and EU sanctions easing on Iran, we could expect more buying from Iranian buyers in the coming weeks.

The Asia Siyaka Weekly Tea Update too did not contradict reduced market trends for Ceylon Tea, but extended their research to other tea auction centers. Reporting on Mombasa auctions, the report said although sales were adequate, prices were down comparatively. India was reeling under the phenomenon of bad weather. India was not distinctly dependent on tea-buying countries, because of its substantial internal consumption.

The tea sales average at all elevations declined. Inclusive end March, prices averaged Rs 415.64 per kilo.

Souce: http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=123314

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