Director of Akbar Group of Companies Imran Akbarally said on a recent edition of LMDtv that “the entire modus operandi of the tea industry was turned on its head and posed an incredible challenge to all stakeholders of its supply chain, which subsequently led to a decline in volumes.”

This was owing to the COVID-19 pandemic that shook the tea industry to its core.

“If we take the second half of 2022 up until today, the volumes have continued to be a challenge; and it’s only in the last two to three weeks or so that we’ve seen some relief,” he added, in reference to the status of the tea industry at the time. The industry’s success hinges on several factors including favourable weather patterns and access to fertilisers.

Akbarally considers Kenya and India as the biggest threats to Ceylon Tea, and stated: “Kenya has been able to grow at a rapid pace due to better yields and overall, a more automated agricultural process. It has been able to capitalise on certain markets from a price point, which is no longer attainable for us… and the Indian tea industry expects volumes to continue growing.”

Sri Lanka needs to “identify niches where we can truly stand out in the wake of all these macroeconomic challenges and inflationary pressures that continue to strain our product in the world market,” he said, outlining a strategy for countering the threats posed by competition.

Speaking about the devaluation of the rupee, he provided the following statistics: from January through June 2021, Sri Lanka gained Rs. 127 billion in foreign exchange; the revenue for 2022 at the time of the interview was 172 billion rupees. He pointed out that despite a crop drop of 11 million kilogrammes, the rupee-denominated value of foreign exchange increased by Rs. 45 billion.

He also reasoned that the cost of production was the best indicator of whether or not an industry is flourishing: “This can be achieved over time by transitioning from a commodity mindset to a more value added product offering. And many brands in Sri Lanka are a testament to this. But at an industry level, there’s certainly more that can be done in this regard.”

Commenting on the industry’s resilience, Akbarally pointed to its continued success despite facing numerous obstacles: “In the wake of the pandemic, the entire tea auction system – which is the mechanism by which 99.9 percent of the tea in Sri Lanka is sold – transitioned from a physical, vocally interactive one to an online auction.”

“In the last 12 to 18 months, what we’ve noticed is a lot more unity across all stakeholder groups in the industry towards achieving a common objective,” he observed.

This can be cited as an example of and reason for the industry’s longevity and success. He referred to the industry’s concerted efforts against the fertiliser bill, which was ultimately defeated.

The Akbar Group’s director asserted: “As for value addition, diversifying our actual export basket in terms of the variety of tea is one. Another significant point is how we define tea as a beverage in the global market; there’s been an ever-increasing acceptance and adoption of herbal tea. It’s encouraging to see that this change in consumer mindset is being reflected at a policy level.”

Responding to a question about the impact of the war in Ukraine on the industry, Akbarally hypothesised that the conflict was not the only factor for the decline. Even though Russia “was once upon a time the largest market for Ceylon Tea… over the past eight to nine years, there has been a persistent decline,” he countered.

But despite all these hurdles, Sri Lanka has been able to achieve 65 percent of its volume in a market like Ukraine, which is a testament to the price elasticity of tea as a robust product.

Closing his interview on LMDtv, he remarked “that the larger players in the tea industry should make every effort to welcome younger entrepreneurs and help foster a sense of innovation.”