Restart Asian Economies

Restarting South Asia: The Tea industry faces up to its challenges

The coronavirus pandemic wrought havoc on almost all walks of life, and the various industries ranging from commodities, tourism to apparel are even today trying to get back to normal. It was no different for the Tea industry, though it seems that some of the challenges it faced have helped the industry see things differently.

For one, it was a year (2020) that produced better tea than previous years explained Rudra Chatterjee, Managing Director of Luxmi Teas of India. That was certainly a challenge, given that approval for the products actually took place, not by being at the location and tasting the teas, but by viewing photos, he added.

Chatterjee was speaking at the Restart Asian Economies series organized by the Friedrich Naumann Foundation for Freedom (FNF) South Asia, which discussed ‘Ideas and Actions for the Tea Industry.’ The on-line discussion held on March 15th included the CEO of Dilmah Tea from Sri Lanka, Dilhan C Fernando, and was moderated by Subodh K Agarawal, Consultant, Friedrich Naumann Foundation for Freedom, South Asia (FNF).

Faced with lockdowns introduced to contain the spread of the coronavirus, said Chatterjee, gave them the opportunity to reach out to their customers and loyal friends and to recognise that tea is a large industry in terms of people, on whom the growers are dependent. The lockdown meant that in the first few months there was no production, and by the time restrictions were eased, most of the second pluck too had been flushed out.

He said that in terms of production there had been about a 15 per cent drop, yet morale was kept up with management which remained on the plantations having regular meetings with workers and the excellent programme put in by the government. Since India had already introduced payment of wages through technology that had not been an issue.

Like in India, production had not been affected in Sri Lanka according to Dilhan Fernando. With excellent collaboration with the government, health services, public health inspectors and technology ‘we rode the wave’ he said. However, the challenge was to get the product to the factories and keeping those operational.

Both Dilmah and Luxmi are committed to upholding the quality of their brands, and both Fernando and Chatterjee claimed that the larger issue is fighting the mediocre varieties of tea available on the market. Dilmah, says Fernando is committed to the purity of the product and environment and social sustainability, yet when consumers are unable to tell the difference between high and low-quality teas and are enticed by the various deals offered, they end up purchasing teas that are of the lower quality. That means pricing he points out, adding that price will also determine whether they could be in the frontline to battle climate change and social inequalities.

Tea, he explained has all the anti-oxidants to ensure wellness, but must compete with the many products that are marketed as being good for the health “Consumers move to teas that are not teas,’ Fernando states, adding that it is only through education that the industry could make sure that consumers know what they are buying. Here, the Dilmah School of Tea plays an important role in ensuring tea drinkers are discerning consumers. To date, says Fernando, around 10,000 have been educated on the finer points of tea, though irresponsible marketing of lesser quality teas remains a challenge. It’s not only about learning to brew a good cup of tea but being aware of its properties which act against cancer, dementia, stroke etc.

With more online shopping says Chatterjee, consumers are getting better at learning about the product, the varieties available and how the taste and aroma vary from region to region. Indeed, as they explained the taste could differ from teas that come from the same plantation, but different sections. When consumers acquire a better knowledge of the beverage, it would be that much more difficult to market a brand that comes for instance with a free spoon as against ‘I enjoy second flush tea,’ statement. It is, he says competition between the commodification of the product and the romance and nuance of tea.

Tea, says Fernando, demands that one knows its characteristics and varieties. Responding to a question on tea versus coffee, he states that the competition is not between the two beverages but a contest against all the beverages out there. Dilmah sells tea in Italy, he says, where following the morning cup of coffee, consumers look for tea and infusions as the day progresses. Adds Chatterjee, variants of the brew such as black, white, tea with spice or milk tea have been in the market for years before the advent of lattes and cappuccinos. What’s more, as Chatterjee describes the preferences of how tea is prepared and consumed too differs from region to region.

Growers are also dealing with the immediate issue of getting their product to the global market. A shortage of containers and congested ports across the world has made keeping track of their shipments difficult. In some instances explains Fernando, containers are kept in yards outside the ports.

There is also the issue of increased supply and more lands being put under tea cultivation, which, says Chatterjee contributes to climate change. Illegal deforestation in Assam for instance has increased land under tea cultivation, but with no respect for the environment resulting in flooding etc.

For the first time in the history of the tea industry in Sri Lanka, tea auctions were held on-line, during the lockdown. Fernando states that experience helped the sector stay afloat and also provided an avenue for smallholders to sell their product. However, there is a long way to go, he cautions. “It’s a work in progress requiring a more holistic approach and ensuring traceability etc.”

Specific challenges on the ground in Sri Lanka are the demand for better wages and making the industry more attractive for younger persons. Acknowledging the right of plantation workers to better wages, Fernando explains the challenge is in securing the right market price, which would then ensure not only better wages but also allow for other improvements in the sector. In terms of retaining younger workers, it involves bringing a human touch into the industry by addressing specific issues such as feminine hygiene, nutrition and alcoholism. Space must be created for the youth too to become entrepreneurs. These are challenging issues, he states, but those that must be addressed.

When customers begin to seek better products instead of succumbing to blanket marketing and choose teas that are produced ethically, through fair trade etc. better sustainability of the industry could be ensured, says Chatterjee.

Though consumed around the world, there seems to be low penetration of regional products within the South Asian market, and that could be overcome says Chatterjee through promoting ‘our own traditions, just like Early Gray and the English Breakfast, and going global with it.’ Promoting the very different ways tea is taken, just within India for instance where it changes from region to region; one region prefers more milk in the tea, another takes masala tea or the roadside cup of tea with lemon enjoyed in Kolkata.

Both agree that regional collaboration, where South Asia could be the hub has the potential of developing standards and promoting sustainability, health and safety and protecting the worker and the environment.

And perhaps Tea could be the panacea needed to build South Asian relations! Like cricket and similar food preferences, they point out, tea also is a common factor that binds South Asians.

What better way than to resolve any issues over a cup of tea!