TEA MARKETS

CIS, Japanese buyers active

Bartleet Produce Marketing Tea Surveillance report upto March 18:

The quantity of tea arriving at the Colombo Auction this week increased to 6.27mkg from 6.210mkg traded at the previous sale. Meanwhile the Ex-estate crops too showed an increase from 1.082mkg to 1.182mkg.

Market segments: In the Ex-estate segment widespread demand was witnessed for the better teas whilst others met with lesser demand. High grown BOP and better westerns gained where as others were irregular. Below best and plainer types witnessed a lower demand.

CIS and Japanese buyers were active whilst UK continent and the North African buyers were selective in their buying patterns. The Tippy market segment witnessed fair demand where buyers from CIS were active whilst Iran and Dubai were very selective.

On the Leafy grade segment, inquiries from Syria for small shotty Pekoes boosted the prices of the Pekoe grade further. Wiry types continued to enjoy some high prices with OP and OPA grades also appreciating from last week. Bold Pekoes remained at last levels whilst the inquiries for the bottom wiry teas were negative.

Policy: According to the Plantation Industries Minister more focus should be given to achieving the objectives of the development projects which are being implemented in 471 estates.

The main aims of the projects are reducing production costs, improving labour productivity and raising the profile of estate workers up to a professional standard.

Activities designed to facilitate this included the introduction of low interest loan schemes, launching of social development activities and introducing standardization for tea factories. Under this programme over 700 km of estate road were rehabilitated at a cost of Rs. 241 million.

Export drive: Richard Pieris and Company with its St. Clairs brand has penetrated into the quality conscious and wealthy tea consuming giant, Russia.

One of the officials of the Maskeliya Tea Gardens Ceylon Ltd., a subsidiary company of Richard Pieris company, stated that the launch which coincided with the annual Prodexpo Trade Exhibition held in Moscow did facilitate in tapping this much wanted golden opportunity for the brand.

The Russian urban population which is a flourishing at the moment is a cash-rich segment and is looking for products and services to appeal to their wealthy lifestyles. The company which commenced its exports through the brand in 2006 is currently catering to Romania, China, Japan, Chile, South Africa and Australia.

Meanwhile, Hapugastenne tea plantations, which has had a good year is planning to diversify into value added forms of tea from its current bulk form according to the company chairman.

The brand has been launched both locally and internationally with some 80 percent of the production targeted to reach the CIS and the Middle Eastern countries. In order to keep up with the competition, the company is also eying at manufacturing organic and green tea.

Company news: Udapussellawa Plantations has posted a record profit after-tax of Rs. 95.2 million, up from Rs. 2.6 million a year earlier after suffering five loss-making years from 2001 to 2005.

The accumulated loss is estimated at Rs. 412.4 million. According to the company CEO, the year 2008 will be a much better year for stronger and well supported growth. Out of the 11 estates ten are into tea and one is into rubber and coconut.

In the meantime the company has focused on extensive tea re-planting programmes as well as diversified into timber.

Kelani Valley plantations too had reported a best ever performance since its incorporation in 1992. Profit after tax has shot up to Rs. 412 million symbolizing a growth of 61 per cent on a turnover of Rs. 2.83 billion, which was up by 21 per cent.

Indian market: In Kolkata the Union Cabinet has approved a Rs. 230 crore proposal to improve the quality of tea which will aim at upgrading and modernizing processing factories and setting up of new factories for green tea production and certification of organic tea.

Approximately 50 percent of the allocation is provided for increasing orthodox tea production as India has lost nearly 8mkg in the Russian market which has changed its preferences from CTC tea to orthodox tea with the country’s affluence levels.

According to industry officials the expectation is to increase the production of orthodox tea from 80mkg annually to 120mkg in a span of five years time.

Research: According to industry experts, former coffee drinkers are changing to tea as it is healthier, more accessible, creative and convenient.

Additionally, the appeal of tea is changing from and old age people’s beverage to a whole family beverage concept. With its new status as a convenient, on-the-go beverage, tea is beginning to battle coffee as the choice number one morning drink.

According to NPD Group, which tracks food trends, 5.6 percent of Americans started their day with tea last year, up from 4.7 percent in 1997. During that same period, morning coffee drinkers dropped from 36 percent to 31 percent.

The Tea Association estimates that Americans consumed 2.5 billion gallons of tea in 2007 and the green teas and white teas have become very popular too with the consumers.

Plantation stocks: With reference to the weekly surveillance of the 19 plantation stocks, five were high in value whilst 11 were lower and three reported static. Madulsima, Maskeliya and Bogawantalawa plantations witnessed a gain marginally week on week.