Satisfying the world's insatiable thirst for tea

Lynn Ockersz

Tea is the next most exposed and consumed beverage after water; hence its enormous business possibilities, particularly in the area of value-addition, explains Chairman and Managing Director James Finlay & Co. (Colombo) Ltd, Kumar Jayasuriya in this interview with the Daily News.

In marketing tea and continuously increasing its appeal the world over, we need to look at the "romance of tea" or at the cherished reputation it has established for itself down the centuries in numerous cultures as a beverage of special choice, the Finlays' chief said in support of his position that "tea business is good business." He also explains that the marketing of tea and its positioning in the world market needs the continuous support of the Government.

Q: Your company has been identified in the public mind down the decades mainly as a leading tea exporter. Would you consider this an apt description or has Finlays diversified its sources of revenue? If so, what are your main product lines?

A: I think the description of us as a tea company is appropriate, but in recent times, over the last 15 years or so, we have got involved in other areas of business. In fact, if you trace our history we have been involved in other businesses in our over 113 year history, but it is in the last 15 years or so that we have got into a sort of diversified area.

The other areas of business are basically insurance broking, where we represent insurance companies and sell the products of these insurance companies to our clientele. In addition to that we are in Environmental Services.

We have a joint venture with Rentokil Initial Group of UK, which is the largest environmental services company in the world, offering pest control, hygiene services and timber treatment services in Sri Lanka. We are also in chemicals; we have a joint venture with DASL, a German chemical company.

And very recently we got into Temperature Control Logistics; which is really cold storage and warehousing and logistics.

What we actually do here is, store products of major manufacturers, of frozen and chilled products and offer a logistics solution to them.

So, those are some of the areas we are currently involved in and we offer a sort of diversifying nature to our tea business which in the main is the business we are known for, and associated with for a long period of time, having started 113 years ago as planters of tea, we have gone into value addition of tea and are among the top 10 exporters of tea from Sri Lanka.

And tea is our mainstay and in fact tea is the mainstay of our parent company as well. Our parent company is 250 years old and they are based in Glasgow in Scotland. They have tea operations in Kenya, Uganda, the US and in the UK.

Yes, we are very much a tea company but these other businesses which I mentioned provide - if you like - a nice diversification of our revenue schemes. And in fact these other businesses have been doing very well and today account for more than 50 percent of our profits. So, tea has to really wake-up and buck-up and move forward.

Q: Would you say that a tea exporting firm has a consistently bright future in the country given the fact that our primary products have been overtaken by other exports as major foreign exchange earners?

A: I would still think that the tea business is a good business if you analyse it on many fronts. Tea is the next most exposed and consumed beverage after water, the world over. Consumption of tea is increasing with the health connotations associated with tea. More and more people are turning to tea.

I think what we should do as a country - as a company we are certainly doing this - is to add value to tea. Gone are the days when you could expect to export tea in bulk to some overseas packer and let him do the value addition at that end.

Sri Lanka has for some time now been concentrating on value addition and you see an increasing tendency for tea to be shipped out in consumer packs. Packets, tea bags, flavours and recently even Green Tea. At Finlays we are happy to say we are in the forefront of that value addition endeavour.

Today we have one of the most modern tea packing and bagging factories in this country. They are ISO certified, HACP certified; tea is increasingly being looked upon as a food item. In so doing, you have got to maintain and conform to the standards associated with food production.

So I think tea has a good future if only we market ourselves by adding value to tea and also preserving that special quality connotation associated with pure Ceylon Tea. I think those two things are important and we also need to be more adventurous in marketing tea.

We have got to look at the "romance of tea"; I think the success will come if we position tea as a life-style. Today there are very successful companies in coffee. As you know Starbucks is a very popular coffee house, to put it mildly. I think there are great opportunities for tea also to be presented in that way; pure Ceylon tea, Sinhala Estate Teas etc.

There are lots of similarities between wine, coffee and tea and other beverages. I think it is about time Sri Lanka takes a leaf off the success that some of these beverages have achieved and really position Ceylon Tea as the beverage of choice, as the tea of choice and bring out that romance associated with tea.

Because if you take a country like Japan, there are a lot of tea ceremonies involved, where people take a lot of time to show old-age traditions and customs in presenting tea. That's the way to position tea. If companies take that kind of bold stance there is a great opportunity for tea to prosper.

It would be also helpful if Government supports the promotion of tea. The marketing of tea and the positioning of tea needs the support of Government.

Q: Speaking of value addition, besides Green Tea, how else do you, at Finlays, add value to tea?

A: Well, we are one of the top exporters of tea bags. In fact we are the largest exporter of tea bags from anywhere in the world to an extremely prestigious market like Japan. We cater to around five supermarket chains in Japan. We do so with several supermarket chains in Germany.

We do so in the Middle East. We have two brands operating in the Middle East, where we exclusively do value added teas. Tea packets in consumer packs from one kilogram to 100 gram packs. The brands are Alwazah and Istikan. The latter, Istikan, is very much in Syria and Turkey. Alwazah is in Kuwait, Saudi Arabia, Dubai, Bahrain. It is a Pan Arab brand. We have been associated with these brands for a long period of time.

We think that is the way tea has to be presented to the outside world. We possess a most modern type of tea-bagging machine. It is completely environmental friendly in the type of bag it produces. It is entirely bio-degradable and does not have a staple. Usually the tag is stuck to the tea bag with a staple.

This particular type of bag does not have a staple, so that anyone who wants to have a cup of tea on a Microwave can now use it.

Also this bag, since it is made of environment-friendly material is fully bio-degradable. Yes, we are very much in the forefront of exporting value added teas. You can ascertain that from the statistics.

Among the top exporters, FOB value per kilogram is a clear indicator of whether we are in the value-added segment or not.

Finlays have consistently been significantly higher than the national average value-added FOB value. That is a clear indication of which segment we belong to; whether we have been in the bulk segment or the value-added segment. Finlays have always been in the latter.

Q: What is your vision for Finlays?

A: My vision for Finlays is to be in businesses in which we would have a competitive edge. We are already involved in such businesses but going into the future as well, I believe that we have to be the supplier of choice to our customers. Secondly, we should be in businesses which provide our employees the opportunity of creating, innovating, achieving and excelling. Thirdly, these businesses must be profitable.

If only they are profitable that we could engage in activities such as re-investing, CSR activities and so forth.

So, I see Finlays in the future being involved in businesses where we will strive to gain competitive advantage, and the supplier of choice, offering quality products and services to our customers and where there is opportunity for our people to excel and for us as a company to make profits. Tea business is one of them, Cold Chain Logistics is another, which is a new field in Sri Lanka, which we have brought in and completely changed the landscape for that kind of industry in Sri Lanka.

What we do in the latter is that we work with the major brands of chilled products in this country. They bring them into our store, we warehouse them and thereafter deliver the product to the customer.

We are just getting into this business of delivering, where we will have specially-designed refrigerated trucks taking the products to the customer's doorstep. So it is a full Cold Chain Logistics solution that we are offering which will be very much in line with international standards.

In fact Finlays' ultimate parent company is the Swire group. Swire is one of the largest cold chain providers in the world, active in the US, Australia, Vietnam and so forth. So we have enough technical services and back-up from Swires who are helping us in designing these solutions, which are now innovations into this country.