Sri Lankan exporter eyes functional teas, non-tea markets
Dec 11 (EconomyNext) – A top Sri Lankan tea exporter in which India’s Tata Beverages has a stake says non-traditional markets like Africa and South America and new products like functional teas hold great promise.
"The younger generation is not interested in black tea but in all kinds of different teas, so we have a great opportunity there," declared Vish Govindasamy, Managing Director of Watawala Plantations.
While Colombo auction prices were the highest in the world this could be risky, he warned.
"It’s an opportunity but also a challenge because big brands look at how to buy the same blend at the cheapest possible cost and give the same taste to consumers. So they will move away from Ceylon tea and buy and blend cheaper teas to get the same taste. It’s not difficult to do."
Although good quality black tea does fetch high value, functional teas presented a bigger opportunity.
"Functional teas like three-in-one milk tea sachets present an opportunity. People do not have the time to mix tea, milk and sugar."
Other products worth exploring are ‘detox’ teas that cleanse the body, teas designed for weight loss, RTDs or ready-to-drink teas and tea-flavoured alcohol, he said.
Of the top three global beverages, tea has the smallest share in value and volume, coming after coffee consumption and bottled water.
"Ceylon tea has only a small part of what we call ‘share of throat’," Govindasamy said.
"We continue to see other tea producers and big brands as our competition or even compete among our tea factories. But the real competition is not in tea but outside tea. We’re really competing with other big beverages."
In the global beverage business global players have been edging into tea businesses, he said, noting how Starbucks and Unilever acquired tea companies and Tata Teas bought the British Tetley brand, two or three times its size and now the world’s number two tea brand.
"We must look beyond tea bags and supermarket brands," Govindasamy told a plantation crop research symposium organized by the island’s four plantation crop research institutes.
"We need to look at a new generation of consumers willing to pay higher than supermarket brands which will continue to push for lower prices."
With tea consumption already high in traditional markets like Russia, India and China, exporters should look at traditionally non-tea drinking countries in Africa and South America.
"We have a huge opportunity in South American and African markets. In countries like the United States and Brazil, tea accounts for only a small percentage of hot drinks. That’s where most of our opportunities are. Both nations have huge populations and tea consumption is small."