The tea industry in South Asia has suffered massively because of the COVID-19 pandemic. Regional entrepreneurs must generate ideas and take action in order to keep the tea industry alive and beneficial for a healthy economy.
India and Sri Lanka are both known for producing and exporting tea. Since they fall into the category of developing countries, they have to rely heavily on their tea industry for their economy because a large chunk of revenue comes from just exporting tea. The pandemic has created a crisis where production and exporting of tea have decreased significantly in these countries.
The Friedrich Naumann Foundation for Freedom (FNF South Asia) regional office organised an online seminar, ‘Restart Asian Economies: Ideas and Actions for the Tea Industry,’ on 15 March. The programme discussed the challenges and opportunities faced by entrepreneurs in the tea industry especially during COVID and the solutions to tackle the problems posed by the pandemic.
The panelists of the online seminar were Rudra Chatterjee, managing director of Luxmi Tea in India and Dilhan C Fernando, CEO of Dilmah Tea in Sri Lanka. Subodh K Agarwal, a consultant at FNF South Asia regional office, moderated the seminar.
Moderator Subodh K Agarwal addressed the panelists, asking, “Since all the economic sectors took a massive hit because of the pandemic, and as of tea industry being a laboring industry, India has seen 18% decline in exports and Sri Lanka 16%. So in terms of tea production, what were the challenges entrepreneurs faced and how it personally effected them during the pandemic?”
Dilhan Fernando replied, “What we mostly focused on and where we found the most difficulty was in primarily reaching our people where there was hard lockdown. Because of this, it was a challenge for us to get our labourers food, supplies and their wages in the dispersed conditions. This sort of situation pushed us into areas we never understood, so we had to react differently. Our main concern was protecting our people so they followed the safety measures and stayed healthy. We had to arrange PCR tests, mobile units, doctors, nurses etc. These were the challenges we faced.”
Rudra Chatterjee mentioned that there were a lot of points in Dilhan Fernando’s statement which were similar to his situation in India. “One advantage Indian production has is, it’s in enclosed ecosystem. The people who work also live in plantations. So we didn’t have to worry about them unless people from outside were coming in. We made our worker clubs quarantine center where families of the workers were coming and we placed them in quarantine where they were tested regularly. Our main issue was in terms of agriculture, where our tea production went down 15%, in some cases even more. During this difficult time, we learned new things -- not to focus on volume but to focus more on quality. We also learned through collaboration, whom we were dependent on. It was a challenge but we’ll always remember this year in the tea industry.”
“After water, tea is the second most consumed beverage in the world. There was no shortage of tea supply to the consumers around the world. Which means the production and the supply of tea carried on. Even during these challenging times, what were the solutions you adopted in order to maintain the continuity of the supply chain of tea?” the moderator asked Rudra Chatterjee.
Rudra Chatterjee replied, “Tea was a very challenging product to make. Today because of technology and the research and development programmes of tea, there are clones which can grow up in marginal areas where tea never grew before. The number of people dependent on this industry and the extra supply is actually the biggest challenge of this tea industry. The issue is not the extra supply of average quality tea but the good one. And during this time, people were more focused on buying good quality tea than average one where the price difference is about 100 rupees in the Indian context. The issue is, we’ll have to think about the entire chain to the final consumer and make sure that the consumer is enjoying the product, buying the tea that they like and the demand is keeping pace with the supply.”
Moderator Subodh Agarwal asked Dilhan Fernando to comment on the market factors as far as tea production was concerned.
“There is an abundance of mediocre tea category out there in the market, but importantly there is less ability on the part of the consumer to tell the difference between a good and a bad tea.” Dilhan Fernando also stated that consumers were leaning towards better deals of tea in which they are mistaking other herbs or substances as tea. “Consumers are asking for authenticity, premiumisation, sustainability but they come with a cost.” He also mentioned there is a fact of education on how which tea works for the human body.
There are lots of articles mentioning the health benefits of tea for the human body along with building immunity against COVID-19. The moderator asked Rudra Chatterjee about his opinion on this sort of perception.
Rudra Chatterjee shared his thoughts on how tea has substances which are definitely beneficial to human health. “I don’t want to sound like a scientist. Especially as a tea producer it’s going to be little like selling snake oil to make claims which haven’t been proved. Tea has anti-oxidants which are good for human health. And tea is the healthiest beverage you can drink other than water.”
The moderator asked Dilhan Fernando him if they were trying to educate people about the quality of tea.
Dilhan Fernando stated, “What we do, is probably the most rewarding but also the toughest thing to do. In the early 2000s, we set up a school called Dilmah School of Tea which travels around the world. Every week there were training sessions where we explained to people about tea, from the simple way of how to brew a perfect cup of tea. So this education is critical. But as a business, it’s not something we can do. We educated under 10 thousand people so far but it’s like a drop in the ocean. For this to properly work, we need transnational effort among tea producers with a commitment to quality.”
Finding a rather interesting question in the chatbox about comparing coffee with tea, moderator asked Rudra Chatterjee is tea can offer variants like coffee and is it possible to convert a coffee drinker to tea.
Rudra Chatterjee mentioned that he is both a coffee and tea drinker. And there is no reason why someone can’t love both. “There is no conflict between these two beverages. Just because you drink one doesn’t mean you can’t drink the other. Tea has actually a lot of variants. Going back in history before frappuccinos and lattes, there were green tea, cold tea, and black tea including hundred more varieties of tea. Even latte is kind of a milk tea which the kind of tea we drink in India. Every region of India and even in Sri Lanka, people drink tea in different way.”
Auctioning of tea has been going on for past quite a decade. Because of the pandemic, online tea auctions are taking place in Sri Lanka. For this case, the moderator wanted Dilhan Fernando’s opinion on how this impacted the tea industry.
The Sri Lankan panelist said that this method has been quite successful for them. “They say that if there’s no change, you stagnate and eventually you die,” he stated. He also mentioned that even though this method was a success, there is a still long way to go.
On the topic of supply and demand of tea, the moderator asked The Indian panelist Rudra Chatterjee how it would be possible to fulfill the demand of tea without increasing cultivation land.
“I wish that was a challenge”, stated Rudra Chatterjee. “Over the years in India, there has been deforestation of illegal tree plantation, where tea has been planted. And during this of time, tea lands got doubled. Demand can increase but it can’t exponentially increase. Same as the case of supply.” He also showed concern towards the climate change and mentioned that because of the climate change, some tea plantations needs to be converted to forests.
As South Asia lacks the technology to test the quality of tea which is sent mostly abroad, the moderator wanted to know the view of the panelists on this topic. Both of them agreed on the subject that this region lacks the technology to do the standard testing of tea and they both mentioned that the process must be simplified.
Tea industry without a doubt, plays a vital role in south Asian economy. During these dire times, regional entrepreneurs of south Asia must gather and bring forth ideas and solutions in order to keep this industry standing on its feet.