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How product innovation in tea brings the strong aroma of business success

Mlesna tea, a household name in Sri Lanka today, enjoys iconic status in the highly competitive area of local value-addition teas. Its distinctive taste is enjoyed today in more than 50 countries and its onward penetration of newer and newer markets is powered by bold experimentation in new product designing.


PRODUCT INNOVATION: Mlesna MD Anselm B. Perera. Pictures by Sumanachandra Ariyawansa.

You forge ahead in this competitive arena by "improving your product and innovating; by simply doing new things," explains Mlesna (Ceylon) Ltd Managing Director Anselm B. Perera in this thought provoking interview:

Q: Your's is one organisation which has caught the imagination of tea consumers. Could you describe in brief, its origins and development ?

A: I started off with a small team in 1983. Prior to that, I worked at Brookbond's from 1969 - just after leaving school - until 1978. I shifted to Shaw Wallace's for a short time and launched my tea business subsequently, just before the ethnic violence of 1983. The first year was difficult but we persisted.

Right throughout my years at Brookbond's, what we saw was that the product was exported in commodity form. It could not be helped at that time because multinationals were organised that way and we learnt everything from them - the blending, the packing, the teatasting, the whole business. We used these practices as our basis and the rest of it we developed as we went along.

My ambition, when I moved out, was to bring out a value - added product, not to merely export the commodity.

The majority of exporters were just shipping the bulk at that time. Because the amount of work you have to do in this operation is limited. You blend it up, pack it, put a tag on it and export it. Value-addition, however, is our organised purpose - packaging, designing, marketing. It does not end up in just doing the product. You market it as well. From the point of export, until it reaches the consumer you are responsible.

For our country value - addition is the key. If you continue to do bulk only, you just don't add enough value. It is time the trade wakes-up to this.

Everyone has a different way of doing this. Tea bagging is a big thing today. Everyone in the world would eventually use tea bags for convenience.

There is this new concept of making leaf tea in tea bags - new pyramid-style bags and party bags and so on. These will also take a certain place in the market.

Q: Any special market compulsions which have led you to deal in value-addition tea bags ?

A: When we were children, tea was sold in a piece of paper. But that is no more. We have to come up with new gimmicks to sell the same product. We have to also upgrade the quality of the product.

If we sell tea as an average product, there is no exceptional value added to the product, to the modern day consumer. Because the modern day consumer is becoming more and more sophisticated, their income levels are increasing and they want something special.

Even if you take an average consumer item, like milk, even there one has value addition now. In the old days one had to boil one's milk and then consume it. Today it is specially packed, in ready-to-drink form. You store it in your refrigerator and consume it at your leisure. Tea is also coming to that.

Ready-to-drink tea is so popular among the present generation because they are so busy. All types of tea bags are becoming popular because of this time factor. The majority of young families do not want brewed tea, they want tea bags. Today, morning, noon and night, almost every consumer goes in for tea bags because they are convenient.

Q: Is the market for tea growing ?

A: The market for tea is growing internationally. The emphasis that tea is a health product or healthy product is greater now than ever before. Tea itself is a totally bio-product. Whatever fertilizer you add to the earth never enters the leaf in the form of chemicals; it comes in its natural form. But you also have this fuss about organic products, where you only add organic fertilizer to the soil and so on.

But if you only use organic fertilizer, the character and quality of the leaf drops. The taste is totally different. You cannot have super quality teas from organically-produced soil, because when the virgin soil is there you will have fantastic quality.

But ten or twenty years down the line, the soil will deteriorate and you will need to redo the soil by using fertilizer. You need fertilizer for good quality tea.

The organic tea market has also grown to a degree. A major slice of the tea market demands organic tea. But we do not ship to that degree. We also have a small line of organic tea. But the world needs to be extremely rich to go in for organic tea because this tea is very expensive. As a result the price of such teas are three, four times the normal teas.

Q: How do you cope with competition in you line of business ?

A: You keep abreast of competition by improving your product and innovating; by doing new things.

Twenty three years ago, when I started, you didn't have many people doing value additions, new teas, flavoured teas, etc. But now you have quite a few people coming into the market.

The biggest problem in this context is that when people copy products they do so in a very poor manner, at a very cheap cost and offer it to the market at a very low price. This is because they lack innovation; they do not have designing or start-up costs.

They are merely copying someone elses product. Then what happens is that their costs are low and they are using low quality material and teas to bring out a look-alike product and offer it cheap. When this happens they bring the whole value of the market down. Bulk tea business has rotted as a result of this. You offer it at $5, I offer it at 4.99 and the next man at 4.90, another at 2 and it perpetually goes down.

Actually prices must go up because of rising, new expenditure in the world. Everyday, expenditure increases. But most of our people insist on cutting it down.

When I started in 1969, a pound of tea was about two rupees, that is four rupees a kilo. Thirty seven years ago a dollar was four rupees. A kilo of tea must have been around four rupees. Today bottom end teas are around the dollar mark and top end teas are around the two dollar mark.

After about 40 years it has gone up by only a dollar. This is most unsatisfactory. Today, tea should be in the region of four dollars a kilo. This is a comfortable price for the plantations. This is the reason why all the plantation companies are suffering. The goose that lays the golden eggs does not get the right price.

Q: Does Ceylon tea continue to enjoy the prestige it once commanded ?

A: Still Ceylon tea is the cleanest and best quality tea. It still demands a high price compared to other teas.

Of course, our cost of production is also high. Because of that, whatever price they get is not enough for the plantations. Cost of production is high because of (a) bad labour (b) our yields are low (c) with the fertilizer subsidy gone people are up against difficulties when it cones to purchasing fertilizer.

Still, the trade continues and it is a trade which provides the biggest employment.

Internationally, we have a very good name and a very good brand. Ceylon tea is still regarded as the best in the world. It has a bright future provided our internal management is good.

Labour in the plantations should be managed better and political interference in their affairs should stop.

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