Similarities in Kenyan and Lankan tea

The Kenyan and Sri Lankan tea industries would reveal that both have much in common. Both countries produce similar volumes of tea. Both countries have small domestic markets resulting in most of the production being exported.

Although Sri Lanka is generally credited with being the world's largest exporter of tea and the world's third largest producer after India and China, varying climatic growing conditions result in Kenya occasionally displacing Sri Lanka from these positions.

Uninformed analysts may therefore be tempted to look at Key Performance Indicators (KPIs) and find that indicators such as yields and plucker productivity in Sri Lanka are way behind those of Kenya, and may come to the conclusion that the Sri Lankan tea industry is falling behind its Kenyan counterpart. The success of this strategy could be seen from that fact that Kenya dominates the tea trade in these three countries which together account for 66.5% of Kenya's tea exports.

If we were to add in Pakistan's neighbours through whose borders, tea is redirected into Pakistan avoiding payment of high duties, the figure goes up to 75.4% of Kenya's total exports.

Sri Lanka on the other hand, has followed a strategy of product differentiation making use of the different agro-climatic regions occurring in the country.

Sri Lanka produces distinctively different teas in the six regions, namely, Nuwara Eliya, Uda Pussellawa, Dimbula, Uva, Kandy and Ruhuna. Sri Lanka has continued with the Orthodox type of manufacture which, though more costly, brings out the best quality inherent in the tea leaf. Furthermore, Sri Lanka has differentiated the product within individual factories, with individual factories producing around 24 different grades or kinds of tea.

Colombo has investments in over 450 tea bagging machines, by far the largest concentration of tea bagging machines in any city or country in the world.

The success of these efforts can be judged from the fact that Sri Lankan companies are chosen as launch customers by the two major tea bagging machine manufacturing companies in the world.

Not surprisingly Sri Lanka has over 400 registered tea exporters with most of them sourcing their requirements of tea only in selected areas of the weekly Colombo tea auctions. The brand marketing of tea from Sri Lanka has been well established over a long period, so much so that tea brands have dominated the portfolio of the Registrar of Trade Marks.

Sri Lanka tea is shipped to over 130 countries in the world under brands which are very often known only in the niche markets in which they are marketed.

The quality of the teas marketed under these different brands have distinctly different characteristics and have generally been developed by taking into consideration the taste preferences of consumers in the target markets as well as the quality of the water and their tea brewing traditions.

The strategies followed by the two countries for their tea industries have been markedly different and both have successfully made use of factors which give them a competitive advantage in their selected markets. Kenya in the case of bulk supplies to major producers, and Sri Lanka to branded niche markets.

What is clear is that Kenya would not have succeeded in following the strategy adopted by Sri Lanka and neither would Sri Lanka have succeeded in following the strategy adopted by Kenya.

It is therefore important that all players in the Sri Lankan tea industry position themselves to take advantage of Sri Lanka's overall strategy in order that both the individual players and the country would benefit.

Trying to pursue a strategy akin to that of the Kenyan tea industry could be disastrous, as can be seen from the experience of Nuwara Eliya estate which under State control tried to maximize yields by planting out the Assam Jat 2000 series cultivars developed for the low country.

As a consequence, Nuwara Eliya estate which is geographically situated in Nuwara Eliya produces a tea which has neither Nuwara Eliya organoleptic or taste characteristics nor Low Grown or Ruhuna characteristics.

- R. L. Juriansz, Chairman, James Finlay & Company