Monday, May 10, 2010

Sri Lanka Tea - Q1 tea earnings top Rs. 34.9 bn, highest ever

By Steve A. Morrell
Expectations are Tea and Garments would prop the economy. At the United Nations Economic and Social Commission for Asia and the Pacific ( ESCAP), forum last week, Executive Director Institute for Policy Studies, Dr. Saman Kelegama said garments and Tea already within Billion Dollar vortex in forex earnings will continue to contribute significantly to reserve balances. But such contribution will be under incessant pressure subject to counter productive taxation.

To a question by the press on a new model for Plantation Management, he said there had been broad references indicated in the Piyadigama and DEW Gunasekera reports which would now need serious consideration. The formalised estate sector should review their options and act on guide lines already laid down.

The Sri Lanka Tea Board ( SLTB) released production figures first quarter 2010 last week. Although March production was not quite that impressive, todate intakes were a plus factor about 50% above last year. Seemingly impressive but not quite because last year was bad; financially and agriculturally. Purportedly because of the weather.

However, Rupee earnings indicated in the Asia Siyaka weekly Tea market report topped Rs. 34.9 billion on first quarter production.

The tea market remained strong in the short run, but with Kenya already recording plus variances approximately 26% , Ceylon Tea would need to retain their market end users. Not merely retain but explore new markets. We reported last week that single garden teas are steadily gaining clientele in the US and sited possible influx of Bogowantalawa teas being accepted on US retail shelves. This was a good sign, said Tea Broker sources.

Meanwhile, at the Chartered Institute of Marketing forum last week, CEO Brand Finance David Haig said that branding was an important segment for marketing and reverted to Dilmah Tea as an international Sri Lanka Brand. But he said Twinings in the UK market purportedly at lower quality captured premium prices, but Dilmah decidedly much better in all aspects have not as yet impacted the UK market. The question was asked at retail outlets ‘Who or what is Dilmah?’ based on such UK responses and more so persistent quality of the Brand, Haig said it would not be long before it too captured prestige of Twinings.

Meanwhile, Ceylon Tea Brokers Ltd., reported in their Weekly Tea Market Report that because tea and voffee retailers are constantly on the rise, particularly in Australia, a leading Supermarket Purchasing Executive Bill Harvey, was held by police for alleged fraud into promotional surcharges. The scheme involved 15% to 20 % paid by wholesalers to guarantee their products would be stocked in the super market chain covering some 700 stores throughout Australia. The report said similar fraudulent deals have been detected in the UK and Russia as well.

The sum involved was reportedly about $.1 million as ‘under-the-table’ payments.

In the local context too we have had reports of the Gampola factor emerging ., Our efforts to pursue such suspicions have ended at a blank wall.

Last week all else in the tea world was overshadowed by the Tea awards ceremony.

Our detailed report on the Tea awards would be in our pages in a day or two. Meanwhile we congratulate Lovers leap, and Ram Ramakrishnan the group Manager for his outstanding performance winning the gold award of the year, at the Japan contest.

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