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Ceylon Tea Faces Challenges In Russia

Mar 18, 2017 3:08:11 PM - thesundayleader.lk

by Lakshman Wijesinghe

Although Ceylon Tea is highly recognized in Russia, Lankan tea exports to word giant faces challenges emphasizes the  Ambassador of Sri Lanka to the Russian Federation – Dr. Saman Weerasinghe.

The name ‘Pure Ceylon tea’ is a well-known name for the Russian consumers and there is big segment of loyal Ceylon Tea drinkers in Russia. More than 65% of our total exports to Russia are Tea and in the year 2016 we have exported 34 million kilos of tea which worth of US$ 146 million, according to the Russian Customs statistics.

“However, there are lot of challenges for the Ceylon tea market in the Russian Federation. The financial crisis commenced in 2014 has affected in reducing the disposable income of the Russian consumers to approach high priced tea such as Ceylon Tea where some of the consumers look for tea at a lower price of other origins irrespectively of high standard of quality. Thus, the export volume of other origin teas has surpassed us last two years,” Ambassador  Dr. Weerasinghe said.

Considering the devaluation of Russian Ruble  in more than 100% over the last 02 years, the Sri Lanka tea exporters were put in a financial difficulty in realizing their sales proceedings and caused for sever loses and default payment.

In later part of 90s and beginning of new millennium, large component of Ceylon tea entered into the Russian Federation in the form of pre-packed teas contributing large portion for the forex income of the country. However with the introduction of discriminative tariff structure in 2006 (bulk tea at 0% duty & pre-packed teas 20% duty), the export of Ceylon tea in pre-packed teas to Russia has been declining gradually while expanding the  bulk tea component.

It is also much visible that an increasing demand for tea bags has affected the exportation of Ceylon tea to the Russian tea market. The CTC teas produced in India and Kenya are highly used by the Russian packers for the tea bags as CTC tea gives more cuppage compared to orthodox teas.

At the same time, there is a misuse of the name -Ceylon Tea. As per the Russian labeling law, the Russian local packers may use the term Ceylon Tea as a narration on the pack if it contains small percentage of Ceylon tea where the large portion of the teas are represented by  other origin teas. This practice misleads the end-consumers by offering bogus Ceylon tea and tarnish the image of Ceylon Tea. Also the genuine Ceylon tea packed in Sri Lanka face a stiff competition from locally packed so called Ceylon tea to maintain its market share. Though the economic situation and aforesaid factors have made an unfavorable market for our high quality tea with a higher price, we have been able to maintain our market with a slight drop thanks to the genuine Ceylon tea lovers’ n the Russian Federation.

In the context of promoting Ceylon tea in Russia, the launch of Ceylon tea global campaign was initiated in Russia, during the recent visit of Navin Dissanayake, Minister of Plantation industries of Sri Lanka to the Russian Federation with participation of leading Russian and Sri Lankan tea trade members. We will use all the advertising tools to utilize for the promotion of Ceylon tea among both end-consumers and   trade channels.

As the first step of this exercise, preliminary arrangements have been made for screening of newly developed Ceylon Tea commercial in one of popular cinema chains in Moscow and St. Petersburg. We hope to commence this program during next month.

It is also important to notice that we have in the process of screening the tea advertisement and the promotional materials in popular cinemas, where we can catch larger number of upper middle range of consumers.