Sri Lanka Tea Operations in Global Marketing

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• Increasing demand in the premium and gourmet segment

• Increasing demand for ethnic foods

• Trend toward smaller packages, individual portions sizes

• Increasing demand for ready-made and convenient meals.

(osec.ch)

According to the Tea Association of Canada, the tea industry is experiencing growth as consumers enjoy the taste and variety of its products, and because consumers are aware of health benefits associated with drinking tea. While traditional black tea is still the preferred type, a wide variety of specialty teas (herbal, green, white) and iced teas are increasingly being consumed in Canada. Tea and coffee together make up about 23% on a volume basis of all beverages sold in the Canadian market in 2005 according to U.S. based Beverage Marketing Corporation. Sales of tea measured by volume (hectolitres) made up 9.6% of all beverages in 2005, while sales of coffee made up 14.3% of all beverages

The domestic market is the industry's most important market. Statistics Canada data shows that in 2005, Canadian made tea and coffee products had a 54.4% share of the domestic market, while 13.4% of manufacturing shipments were exported. In the late 1990s, exports increased significantly but have since leveled off to 27% of shipments in 2005. Imports also increased as a percent of the Canadian market since 1996 from 27.4% to 43.6% in 2005

Average daily consumption (in grams) of selected beverages, by age group and gender, total household population aged 19 or older, Canada excluding territories, 2004

Age: 19 to 30 31 to 50 51 to 70 70 and Older

Gender: Men Woman Men Woman Men Woman Men Woman

Total beverage consumption

2,610* †

2,056†

2,345* †

2,206†

2,051* †

1,891†

1,584 †

1,532†

Water

1,045

1,000

861* †

1,065

705* †

840†

500* †

654†

Coffee

227*

183

451* †

375†

474*

364

365* †

270†

Tea

105*

136

131* †

178†

174* †

227†

246 †

262†

Regular soft drinks

304*

142

193* †

97†

115* †

62†

37 †

29†

Diet soft drinks

32

44

61†

69†

53

55

39E *

13E †

Beer

300*

54

232* †

49

174* †

36E

69E * †

9E †

Wine

19E

18E

28

36†

52* †

34

27 †

20†

(statcan.gc.ca)

Green Ceylon tea (or Ceylon green tea) is generally more pungent than other teas and has a distinct nutty taste to it. Ceylon green tea has its very own characteristics and this particular Ceylon tea is darker and richer in flavor than the green tea commonly found in China. This difference in taste gives advantage to Sri Lankan tea.

Competitive advantage in value added tea marketing

Many sources suggest that exporters have now realized the difference between trading a commodity (black tea in bulk) and marketing a consumer product (value added tea in branded pack). Commodities are products that consumers cannot differentiate from one another as they all seem to serve the same need and deliver the same value. Consumer brands in contrast are differentiated with compelling characteristics that make it better than other offerings in the product category. Ceylon tea will remain vulnerable to downward demand-led price pressure as long as it is treated as commodity.

Sri Lanka is conscious of the need to bring about vertical integration in its traditional tea exports and is now into converting a major portion of tea exports to consumer packs and other