Ceylon Tea has come a long way since the first tea field was planted in Sri Lanka in 1867. This week’s TIPS column looks at the export performance of this mature export product during 2016, during the first four months of 2017, and the outlook for the near term. 2017 also marks the achievement of a significant milestone – the 150th anniversary of Ceylon Tea. So it is indeed a good time for us to critically review the performance of the tea industry and make strategic decisions to make Ceylon Tea relevant in the global market for the future.
Global tea demand has been subdued over the past three years with global tea imports contracting for a third consecutive year; the sharpest YoY decline of 16.6% was recorded in 2016. Sri Lanka’s tea exports amounted to US$ 1.27 Bn in 2016, with the export value contracting by 5.3% on YoY terms, the second consecutive year of negative exports. Macroeconomic instabilities and structurally lower oil prices in key export markets were the main contributors to this trend.
Sri Lanka’s tea industry needs to evolve and transform to be resilient and strong amidst rapid changes and market headwinds that are happening globally. Consumption habits are evolving at a rapid pace and tea has already gone beyond being a traditional beverage to offering a variety of new formats such as medicated teas, flavoured teas, jellies, sorbets, etc. These changing preferences increasingly demand for greater innovation in the production and marketing sphere. It is time to make strategic decisions to take Sri Lankan tea to the next level, and there is no better time to embark on these than now – when Ceylon Tea proudly celebrates 150 years.