Bartleet Produce Marketing Tea Surveillance report upto October 8

BOPs show strength, plainer types irregular

The quantity of tea arriving at the Colombo auction this week increased to 6.373 mkg from 6.200 mkg traded in the previous week's sale. Meanwhile, Ex-estate crops showed a decrease from 0.715 mkg to 0.681 mkg.

Market Segments: In the Ex-estate segment, BOPs showed some strength this week whilst the plainer types were irregular and the brighter once moved up due to better quality.

Hardly any buying was witnessed from UK whilst the Continents buying pattern too had seemed quite selective. According to industry sources the international currency volatile situation has made quite an impact on the buying pattern of these regions Japan which picks up anything brighter seemed to be active this week too.

In the Tippy market segment lower demand was witnessed. Buyers from Dubai and Iran were very selective in their buying pattern whilst the Middle East and CIS showed moderate buying. With the financial difficulties that the buyers are facing currently the low grown Leafy market came down further.

Buying pattern of the shippers to CIS countries too were moderate. Bottom type teas were not moving at all and only few local buyers were active for those types.

Brand dozen: According to the Chairman of the Tea Advisory Committee, the current rising price in the international market has set Sri Lanka an ambitious target of exporting two billion dollars worth tea within the next two years.

Industry stakeholders have called for a niche marketing strategy to enhance exports, taking advantage of the high tea production in the Island, which is estimated to touch 320 mkg this year.

In support of this the policyholders who are conceptualizing the 2009 budget, need to introduce some strategic incentives that can spruce up the tea industry, such as providing additional support to develop and promote ten new brands. This was one of the main requests made by the industry.

Indian tags: Printcare PLC, a major supplier to the tea bag industry, has branched into India to meet the packaging requirement of the Indian tea bag industry through a new company, Printcare India (Pvt) Ltd according to the group Chairman. Furthermore, he stated that this will be a long-term investment that will help strengthen the position in one of the largest and fastest growing tea bag markets in the world as the premier supplier of tea bag tags and envelopes.

The company turnover had grown 38 percent to Rs. 2.9 billion and the pre-tax profit 26 per cent to Rs. 132 million while the profit attributable to shareholders was up five percent to Rs. 86 million.

According to the Chairman the tea bag industry was going through a crisis as a result of the shortage of filter paper in the world market caused by a shortfall in the output of the abaca plant producing the prime raw material for making filter paper.

Company news: Tata Tea is expanding in the US by widening the reach of its American brands and launching Indian flavoured tea bags.

Tata Tea had acquired Good Earth Tea Corporation of the US in 2005 and plans to launch the Good Earth brand in the eastern parts of the country.

Since 2006, Tata Tea has been concentrating on building synergies between its tea and coffee operations in the US and this not only involved cross-utilisation of distribution channels but also product development and co-ordination. According to the Executive Director Marketing Indian-tea-flavoured bags has been launched in the US.

The plan is to leverage the distribution channels of the American brands and Tetley. Meanwhile Tata Tea is exploring ways to enter the Russian market too.

Voicing concern: The Chairman of the Planters Association recently referred to some of the pressing issues that affect the industry such as the cess levied on tea and rubber which should be of more benefit to the industry.

He emphasised that a greater proportion of the cess should be re-disbursed to the industry to assist in specific areas of development.

He also pointed out that increasing costs have a negative impact on the industry.

According to him there has been a 104 per cent increase in the cost of Urea, a 46 per cent increase in diesel cost and an average 20 per cent in the cost of industrial electricity, which has impacted directly on production costs as well as indirectly on all the sectors which provide services to the plantation industry.

The grim reality is that the plantation industry which manufactures products without a pre-determined selling price is unable to pass on production cost increases to the buyer or the end user.

Plantation Stocks: With reference to the weekly surveillance of the 18 plantation stocks, nine were lower in value whilst seven reported a gain and two reported static.

Kahawatte, Kelani Valley and Bogawantalawa plantations reported a gain of 10, 8 and 7 per cent respectively week on week.