Sri Lanka Tea Board to Build Chain of Tea Shops

Domestic demand is so large in India and China that residents drink up most of the tea. Suppliers don’t have to contend with overseas transportation issues, currency fluctuation, tariffs and formidable thresholds for purity set by importing countries.

Not so in Sri Lanka where most of the tea is exported. That is why Sri Lanka’s Tea Board is establishing a chain of up to 30 tea shops nationally. The intent is both to increase domestic consumption and improve the availability of quality teas.

WTN151014_SriLanka_Navin DissanayakePlantations Industries Minister Navin Dissanayake, as reported in the Daily Mirror newspaper, said last week that “Although we export Pure Ceylon Tea’ Sri Lankans don’t have the benefit of drinking good quality tea.”

“I want tourists and locals to have an affordable, good cup of Sri Lankan tea,” he said.

Dissanayake did not describe the shops in detail save to call them “very good tea outlets.” He indicated they would be located throughout the country and said the final number of shops depended on whether they are constructed as retail tea shops or “tea lifestyle cafés.” The Tea Board currently owns a tea café at the Colombo Race Course which is operated by Sri Lankan Catering. He said the new shops would not be modeled on that venture because “that is a colossal loss.”

There are a growing number of coffee houses in Colombo but Sri Lankan’s purchase very little tea at shops that resemble those in the West.

Sri Lanka’s per capita tea consumption in 2014 was estimated at one pound versus one and a half pounds per person in India. By comparison, per capita consumption in wealthier countries in Western Europe exceeds 4 pounds per person. In the Middle East Moroccans consume 9.6 pounds of tea per person and Turkish residents rank No. 1 consuming an average 16.6 pounds per year. China consumes 725 million tons annually but ranks 33rd among tea drinking nations at 1.8 pounds per capita, according to FAO and Euromonitor International, a British-based global market research firm.

Sales and volume figures for tea bought at local markets in Sri Lanka is not often recorded leading to inaccurate per capita estimates. The same is true in India. One significant difference is that India’s domestic consumption continues to climb at a sustained 2% per year. Production is rising as well and now exceeds 1 billion kilos. In Sri Lanka production is flat. Exports fell sharply in August. Revenue from exports fell $152 million (SLRs21.3 billion) to $855 million (SLRs119.9 billion) for the first eight months of the year.

Dissanayake’s comments prompted local media to question his reference to “quality tea.”

The assessment is subjective, according to Economy Next. Sri Lankan’s typically settle for lower grades saving their best teas for Turkey and Russia to maximize export revenue.

“Sri Lanka’s high grown teas, which have a lighter taste, were at one time considered ‘superior quality’ but the stronger tasting low grown teas have enjoyed higher prices for some time due to demand from Middle East in particular,” according to Economy Next.

“Many Sri Lankans who are used to high grown tea may react negatively to tea grown in Galle for example,” according to Economy Now. “The taste of even a single factory is highly variable, across seasons, even across days of the week, and the taste depends on the humidity and temperature of a particular day of the year and elevation which affects bacterial growth during fermentation.”

Funding the shops is still under discussion. Dissanayake suggested the tea board, which is a government agency, would finance construction and then work with private sector to operate the shops.

Since November 2010 Sri Lanka has collected a SLRs3.5 per kilo tax on tea exports. The fund, now grown to $50 million, is earmarked to promote sales in overseas markets. Some now argue a portion should be used to increase domestic consumption and to generate sales from the 1 million tourists that visit the country annually, but unless production increases diverting quality tea from export will reduce revenue overall.

Sources: Daily Mirror, Economy Next

Dan Bolton

About Dan Bolton

Dan Bolton edits STiR Tea & Coffee Industry International. He was formerly editor and publisher of World Tea News and former editor and publisher of Tea Magazine and former editor-in-chief of Specialty Coffee Retailer. He is a beverage retail consultant and frequent speaker at industry seminars and conferences. His work has appeared in many beverage publications. He was a newspaper reporter and editor for 20 years prior to his career in magazines. Dan is the founding editor of Natural Food magazine and has led six publishing ventures since 1995. He lives in Winnipeg, Canada.