With the recent celebration of International Tea Day, producers, brands and marketers across the globe are joining together to promote sustainable production while raising awareness as to the benefits and impact of this miraculous beverage. However, the contemporary story of tea, cannot be told without speaking of the story of Pure Ceylon Tea, which has dominated global markets for more than 150 years.
Pure Ceylon Tea has been sought after the world over for its unique quality, rich aroma, and diverse flavour profiles. As a result, over generations, the Sri Lanka tea industry honed its value proposition with a singular focus on producing only the best tea for international markets. And this reputation has served the nation well.
Withering potential of business as usual
Today, the collective industry – from privately held tea gardens to smallholder estates and Regional Plantation Companies (RPCs) generates US$1.3 billion – equivalent to approximately 10% of the nation’s annual export earnings. Particularly given the unprecedented turmoil that the Sri Lankan plantation industry is currently facing as a result of disrupted tea production from haphazard policy decisions on fertilizer, logistics and shipping, and the continuing fall out of the Russo-Ukrainian conflict, such a performance is highly commendable. But is this the best we can do?
The question for Sri Lankan producers that have already built strong value propositions, is how to evolve and adapt our product in order to make it more relevant, and appealing to a new generation of consumers, all while maintaining the same unsurpassed reputation for quality that Sri Lanka still holds to this day.
According to United Nations ‘Tea Outlook for 2027’, world black tea production is projected to increase by an annual growth rate of 2.2 percent to reach 4.42 million tonnes, reflecting major increases in production capacity in China, Kenya and Sri Lanka. Meanwhile, global consumption of tea which is projected to grow at 2.5% annually reflects strong growth, and is valued at US$ over 207 billion. By 2025, this figure is set to increase to over US$265. [1]
Certainly there is still more productive capacity that is yet to be unleashed through updates to field and factory processes – through mechanisation, digitalisation, and implementation of agri-tech systems, but parallel to these efforts, many of Sri Lanka’s most innovative Regional Plantation Companies (RPCs) are also exploring new kinds of value-added preparations which have the potential to make Pure Ceylon Tea more accessible and relevant to a new generation of consumers.
Millennials and Gen Z to drive 21st century tea market?
While sipping a hot cup of tea during an office break or at the comfort of your home seems to be the norm for many of us, this rather traditional format of consumption has great potential in the global ready to drink tea and coffee market, which is expected to be worth over USD 167 billion by 2030.[2] Products range from flavoured ice tea, cold brewed tea and tea concentrates that can be diluted for consumption.
In the U.S. where the tea market is expected to reach over USD 3 billion next year, 87% of millennials consume tea with Gen Z not far behind. This is owing to increased awareness on health and wellness and preference to herbal products which are “sustainably and ethically sourced”.[3] Even if one visits a super market or specialty stores in Sri Lanka it is evident that the range of bottled or canned flavoured tea is increasingly popular with consumers. This is encouraging more companies to experiment with ready to drink beverages. Here too, Sri Lankan producers must find opportunities to plug in to these non-traditional markets, while adding our own unique value proposition to the mix.
A drink which was first recorded as a medicinal beverage in 3rd century AD in China, tea carries many health properties and are rich in polyphenols reducing the risk of premature death, heart disease, stroke and diabetes. RPCs like Elpitiya plantations and Malwatte plantations are currently tapping in to the health benefits the plant can offer by infusing it in cosmetic products like shampoo and face wash to introducing instant ‘aerosol tea’ sprays which have the potential replace tea bags in the years to come.
So what does this all mean for the tea industry? The answer simply boils down to research and development. Recognizing the importance of value addition, RPCs have partnered with universities and foreign companies to dissect and see how properties of Ceylon Tea can be used to innovate and create an array of products to suit the current lifestyle and needs of its consumers.
30 years since privatization; what’s next for RPCs?
With greater focus on sustainability and ethical sourcing, RPCs have shown its commitment to transform its production processes and facilities to one that utilizes renewable energy wherever possible. Furthermore digitizing its ERP and HR processes have become a top priority so as to do away with documentation systems that are outdated to promote transparency in operations.
RPCs like ‘Bogowantalawa for example, has made its mark in becoming the world’s first and only tea growing, manufacturing and marketing company to offer Gold Certified uncompensated Climate Positive Teas. This means that for every 1 kilogram of made tea purchased from its Tea Estates, approximately 100g of carbon dioxide is sequestered in the soil. Also, Elpitiya Plantations is the first RPC to Generate Green Energy more than their usage, currently they generate 160% of energy above its usage by way of Hydro and solar. In addition companies like Harleys plantation which strive to promote ethical and sustainable plantation practices are among many RPCs which have partnered with institutions like the Rain Forest Alliance to become one of the most awarded and certified plantation group.
CSR initiatives which are driven in partnership with institutions like the Plantation Human Development Trust, look in to the wellbeing of the plantation community in relevant tea estates stemming from Early Childhood development centers, healthcare, education, housing and sanitation.
Whilst all these initiatives are in place, it is important to recognize that agriculture practices around the world are changing. With millennials and Gen Z’rs, expected to drive the market, the question of how we then make job roles more attractive to the same age group comes in to play if we are to keep the industry alive. To overcome this situation majority of the RPC’s have already commenced mechanizing major operations like plucking, weeding, draining, uprooting, holing, pruning, spraying etc.
For example, the need for drone operators in plantation to conduct mapping and application of weedicides and fungicides will become a necessity in the future. Upskilling of tea harvesters and supervisors to carry out roles that require them to use technology will be needed to ensure that the tea industry is to thrive.
Even though Sri Lanka is in the midst of an unprecedented economic crisis, the country’s tea sector has remained resilient and are taking necessary measures to meet the needs of its consumers. The partnerships we’ve built and confidence placed in Ceylon Tea only demonstrates the need for continuous research and development, innovation as well as in-depth market knowledge to ensure that the livelihoods of those who depend on the industry are protected and to bring in much needed foreign exchange to the country.
[1]https://www.statista.com/statistics/326384/global-tea-beverage-market-size/#:~:text=Global%20tea%20market%20size%202012%2D2025&text=The%20global%20tea%20market%20was,to%20the%203rd%20century%20AD.
[2]https://www.prnewswire.com/news-releases/ready-to-drink-rtd-tea-and-coffee-market-worth-167-88-billion-by-2030-grand-view-research-inc-301547685.html
[3] https://www.worldteanews.com/Insights/millennials-and-gen-z-drive-21st-century-tea-preferences
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