The two leaves and the bud that is used to prepare this beverage, are appreciated in every household in the world. It is not considered just as a stimulating drink, but has become a way of life to the majority of the people the world over. It is the cup of tea that completes the morning breakfast, and it is the drink that makes up the “tea break” or the “tea time” for others.

The world tea scene has undergone fundamental changes during the past three to four decades, both in respect of primary production and its ultimate end use.

Tea is a labour intensive, horticultural industry, where millions of people in the developing world procure their livelihood. The price hike spiral that seems to have engulfed almost all consumer products, appears to have left tea untouched and unaffected. Inputs that are needed for tea production have been on a steady rise, but the realisation price for tea has been stationary, and at most times on the decline. This has caused considerable concern to tea producing countries, as there has been a reduction in their foreign exchange earnings.

Now to turn our attention to local conditions, Colombo remains the largest auction centre in the world, where, on average about 5,000 million kilos are sold on a weekly basis. It obtains the patronage of over eighty to ninety buyers each week. The rich soil, cool climate, pure water, the geographical position of the country, and above all, the terrain of the land provides the ideal conditions for tea growing. Sri Lanka, on a regular basis enjoy the benefits of two monsoons that blow regularly each year.

The influence of these climatic conditions imparts to the product a variety of flavours and aromas, which are synonymous with quality. Sri Lanka, unlike most other countries can produce a range of different teas that will satisfy the needs of every pallet. The cultivation and manufacture of teas are a highly skilled, scientific and technical process, and Sri Lanka produces some of the most sought after teas in the world. Tea is like a wine, a “living commodity,” but the assertive difference is the price. Teas are often blended to suit the requirements of consumers.

Product diversification will necessarily improve the intake of a product such as tea, and this should be encouraged at all times. It is bound to be welcomed by all those involved in the industry, such as producers, the packaging sector, and the trade. Whilst pursuing this line of action, it should be remembered that the essential character and the quality of tea are not destroyed in the process.

Such an approach can enhance the profit levels of all those involved in the tea trade and industry. In this instance, a closer co-operation of the producer and the consumer interest is called for.

The expansion of the value added operation in Sri Lanka was a slow process. It took a long time for local tea exporters to realise that trading in a commodity and marketing a consumer product were totally different functions. When the tea industry was exclusively under British management, this aspect of value addition was completely ignored. Retailers in tea have been content to use tea as a “known value item” a “loss leader” and as a “traffic builder." Today, tea has acquired different dimensions.

The first breakthrough for locals to indulge in value added exports came their way in 1959. A small quantity of tea in packets was the first order of this nature, and it came from Libya. Today, local teas are exported in a wide range of packets such as sachets, aluminium foil soft packs, box board cartons, economy packs, reed ware, basket packs, soft wood boxes, tins and canisters. The local exporter is now geared to suit every consumer demand, and this range of packaging is on a steady rise.

The inaugural shipment of instant tea was made in 1963, but unfortunately the production of instant tea is limited to one unit. The factory is now geared to produce both hot and cold water soluble instant tea. The entire production is exported in bulk, and has become an important ingredient in the making of tea mixes in the USA.

Tea bag exports in a way are a novelty, and a start was made only in 1976, mostly to cater to the Western markets, where sale of tea bags displayed an upward trend. Its expansion during the early days was hampered due to the non availability of locally produced CTC teas in sufficient quantities. The Export Development Board in collaboration with the Sri Lanka Tea board implemented a scheme in 1981 to enable tea exporters to import speciality tea for blending purposes.

The local tea bagging industry is capable of manufacturing a complete range of tea bags, such as Non Heat Sealed (double chamber) bags with or without string, and tag, with or without envelope. Tea Pot packs containing 15 grams are also manufactured mainly to be served on Airlines, Passenger Ships, and for catering. Consumer packs are exported in attractively printed cartons and Reed Ware Bags. Its expansion had been slow, and in 1998, the country had exported only 3% of the total exports in this manner.

As much as there were changes as presentation to the ultimate consumer, the customer stipulations too were fast changing. The old conventional method of brewing tea was on its way out, and what the consumer wanted was a “quick Brew” that called for the production of small leaf grades. A new process of manufacture had already started in Assam to cater to this expanding market.

Around the year 1931, a tea engineer named McKercher was experimenting with the idea of speeding up the process of rolling which was considered a bottleneck in the factory. This experiment proved a success, and thus was born the Crushing, Tearing, Curling popularly known as the CTC machine.

This form of manufacture assisted in the production of large quantities of small leaf grades that were required for inclusion in tea bags, which took the world by storm in the late 1950’s.

The local exporters are fast obtaining a niche in the more sophisticated market for flavoured teas. Addition of various flavours into tea is an innovation of recent origin. Colombo has become a centre for flavoured teas and, and a variety of scented and spiced teas are locally produced. The product range extends from Earl Grey to lemon, Orange, Lime, Mango, Strawberry, Apple, Jasmine, Peppermint, Cardamoms, Cloves, Cinnamon, Cloves, and Nutmeg etc. These are exported in keeping with buyer's requirements, either in bags or in packets.

Commercial production of Chinese type of Green Tea commenced in 1981. The export of these teas has improved gradually over the years. The current findings on the therapeutic value of this variety of tea should convert many consumers of orthodox teas to green tea. It is the popular belief that green tea has more healing capacity when compared to other conventional varieties, and further, the present trend is for people to get closer to nature, and in the process, are scrutinising the health giving properties of all what they consume.

Organic tea is the latest addition to our wide range of tea products. The world is becoming increasingly aware that the conventional farming systems which are based on external inputs such as fertiliser and pesticides, cannot offer a long term solution to our agricultural problems.

Systematic production of tea based on organic production methods was originally started in the country by a private individual on a plantation situated at an elevation of over 1500 metres above sea level in the Haputale district. Sri Lanka State Plantation followed, and inaugurated an organic tea project in the Knuckle’s Valley in the central hills, based on a production system that sustains agricultural production within a stable ecosystem.

According to this system,

· Soil fertility is maintained by improving nutrient recycling and biomass s production.

· The plantations are closed systems with limited external inputs.

· Environmental pollution and erosion that would normally occur with the cultivation and processing of tea would be reduced to a minimum.

· The use of energy from fossil and non-renewable sources would be limited.


Production of instant tea is limited to only one processing unit, with the result its export potential is limited at the moment. This unit is capable of producing both hot water and cold water soluble instant tea. The entire production is exported mainly in bulk form. It has become an important ingredient in the making of Iced Tea Mix that has gained acceptance in the USA.

In 1998, Sri Lanka exported 271 million kg of tea and obtained Rs.42 billion as proceeds from the sale of tea. Bulk tea sales still dominate, and 59% of the total were exported in this form. Tea in packets constitutes the largest form of value added export, and 31% was exported in this style to our overseas buyers. Tea bag exports in a way are a novelty, and a start was made only in 1976. Its expansion had been slow, and in 1998, the country was only able to export 4% of the total in this manner.

The dye is cast, and the progress the country has made in the recent past to expand the product base is a sure indication that the tea export segment in the country is getting more market oriented and viewing the marketing aspect in a more professional manner. The product diversification seems to be the only answer to the many problems the tea industry is facing today.

The country today is conscious of the need to bring about vertical integration in its traditional tea exports by converting a major portion of her exports to consumer packs and other forms of value added exports. The long term advantage to both the tea industry and the government of exporting a commodity in a finished form cannot be overplayed. Once tea is put into an attractive packet with a brand name, it becomes a consumer product, for which a franchise and goodwill are established. Value addition enhances the inflow of foreign exchange. What is most important is that the industry becomes more broad based, and benefit flows through to a number of allied industries such as packaging, machinery, packing material, printing and etc. It generates employment, both directly and indirectly in the country. The most important of it is that it creates brand awareness for Sri Lanka teas among consumers in importing countries, who very often becomes hooked to specific brands containing perhaps all but Sri Lanka teas.

Today, the major proportion of profits is accrued to blenders and packers, who have established brand names amongst what were generally considered to be traditionally die-hard consumers.

Although our local teas were readily accepted in England by the turn of the last century, in preference to more established teas from Darjeeling’s, and Nilgris, which were able to storm the western markets long before Sri Lanka teas made their appearance, they were nevertheless all marketed in bulk form. The UK with no tea of its own probably generates more profits from tea than any tea producing country in the world. They have now been deprived of most of the land holdings in the original countries of operation such as India and Sri Lanka. They are however determined to hold on to the tea trade as the high point in their trading operations.

Although, this is a contradiction in terms, there must be a lesson in it somewhere. They were fast to identify the distinction that lies between trading in a commodity and marketing a consumer product. These affirmations can be proved beyond any reasonable doubt when taking into consideration the extent of value addition that takes place in the UK. Bulk teas are imported direct from the producers, and after further preparation, they are exported to the more sophisticated markets in the world in a more presentable manner. In this form, the British packers are able to maintain an average mark up of 300% to 400% on the purchase price.

This operation however is fast getting diversified. Many non-producer countries in the world are presently working in competition with the UK. They are involved in the task of value addition, and these operations have proved a success. In addition, some of our major packers have already moved their operational bases to other countries, and these off-shore operations are said to be working satisfactorily. This could in the long term, reduce the competitiveness, and damage the image of Sri Lanka in world markets.

At this level of returns, it is very unlikely that the packers operating off-shore will let this developing trend suffer at any stage. Highest level of tea consumption in the UK was reached in 1957 when 255 million kg were retained for domestic use. In that year, the per capita consumption of tea rose to 4.51 kg, and only 5% of her imports were re-exported. Her total imports have declined over the years, with a marked decrease in domestic consumption. Her re-exports nevertheless, have been on a steady rise and is in the region of about 25% today. The UK is just one of the countries that yield to this form of activity, but the inclination for more and more countries to profit from this form of pursuit is expanding.

To all these appearances, these profit margins may look phenomenal and over exaggerated, but to a producer the problem remains real. This predicament of the tea grower has to be viewed in a more rational and a balanced manner.

As for the UK, tea has been the major drink for centuries, just as if it had been Sri Lanka’s major export. The recent developments that are taking place in the world to raise the image of tea are innumerable. The old standard form of selling tea in either packets or tea bags, all blended with teas from several origins are fast disappearing.

Today, the image of tea as a beverage is being projected in a more forceful manner. The shelf space allotted to tea is larger than ever before. They have on display teas from single origin, as well as blends. The range has expanded to include fruit flavoured teas, extra fresh teas, vacuum packed teas from different origins. They now come in strange flavours, in jars and porcelain containers.

They have made tea a more enlivening product. The standard packaging is fast changing, and we could expect many more innovations to originate in the near future. The sale of tea in a way, has failed to keep up with the salesmanship associated with the sale of other products. It is only in the recent past that an attempt has been made to ascertain the identity of products with the right image for promotional undertakings. It has now been discovered that tea could be promoted in different forms, and this tends to increase consumer interest in this traditional beverage.

Production of instant tea is limited to only one processing unit, with the result its export potential is limited at the moment. This unit is capable of producing both hot water and cold water soluble instant tea. The entire production is exported mainly in bulk form. It has become an important ingredient in the making of Iced Tea Mix that has gained acceptance in the USA.

In 1998, Sri Lanka exported 271 million kg of tea and obtained Rs.42 billion as proceeds from the sale of tea. Bulk tea sales still dominate, and 59% of the total were exported in this form.

Tea in packets constitutes the largest form of value added export, and 31% was exported in this style to our overseas buyers. Tea bag exports in a way are a novelty, and a start was made only in 1976. Its expansion had been slow, and in 1998, the country was only able to export 4% of the total in this manner.

The dye is cast, and the progress the country has made in the recent past to expand the product base is a sure indication that the tea export segment in the country is getting more market oriented and viewing the marketing aspect in a more professional manner. The product diversification seems to be the only answer to the many problems the tea industry is facing today.