In the couple of decades since its launching, my company has spent an average of Rs. 1.5 billion annually on the promotion of Dilmah as a Single Origin, Pure Ceylon Tea. The benefit of this costly campaign was not to me alone, but also to any other exporter of value-added tea from Sri Lanka as, across the world, Dilmah has enhanced the image of genuine Ceylon Tea as a highly-desirable product.

Market research commissioned by the previous tea market leader in New Zealand, subsequently unseated by Dilmah, revealed that their relegation was due to the consumers’ preference for the taste of Dilmah tea.

I am aware that several other exporters, encouraged by the success of Dilmah, did try to benefit from the renewed popularity of Ceylon Tea, but their strategies were flawed from the beginning. Whilst claiming to be marketing ‘100% Pure Ceylon Tea,’ they sold at half the price of Dilmah.

The truth is that it is not possible to buy a good tea at a mass market price. That is not a sustainable marketing strategy, but a cheap trader’s ploy to devalue a product in order to be competitive and, actually, did a great disservice to the quality image of Pure Ceylon Tea.

Entering the UK market

Moving into the UK market was a struggle. I wrote to the Chairmen of Tesco, Safeway, and Waitrose and was well received by the CEO’s and obtained introductions to the tea buyers. I was surprised to see that they listed a few Dilmah products. However, sales were slow to pick up as the price of Dilmah was two pounds 79 pence for 100 bags, whilst the market leader, Twinings, was one pound 79 pence for the same quantity. However, Twinings was also aware that its product could not match me for quality and freshness.

One day, Sarah Bradbury, the Tesco buyer, told me that since Dilmah was the only premium product that they had, she intended to place it away from the regular tea category. I disagreed as the shopper looking for tea would head directly for the tea aisle and not elsewhere. She did not agree and, later, Twinings pressurized buyers to reduce the Dilmah price to that of Twinings.

Tesco also told me to follow suit but, instead, I preferred to withdraw the product. Though I resisted these machinations, without consulting me, Sarah persuaded the distributor to reduce the price. As a result I had to suffer large losses and was compelled to withdraw my product anyway. These are some of the strategies that multinational giants employ to stifle healthy competition.

In the early 1980s, on average, Sri Lanka used to export about 20 million kg of tea to the UK annually, equivalent to 10% of UK tea imports, whilst India and Kenya accounted for an annual average of 50 million kg and 45 million kg respectively (27% and 23%). The Ceylon Tea component to the UK had declined considerably, since the 1960s and early ’70s, when its share of the UK market was around 30%. This was mainly due to the reduction of the London Auction consignments and the corresponding increase at the Colombo Auction. The emergence of Pakistan as an important outlet for Ceylon Tea during the same period, was another contributory factor.

Since then UK imports from Kenya have overtaken all other suppliers, with Malawi as the second largest, followed by India. As for Sri Lanka, its present export volumes to the UK are minuscule in comparison with earlier quantities, with Turkey, Iraq, Russia, and Iran being the main destinations for our tea.

History and decline of the tea industry under British control

The British planted the tea, rubber and coffee not out of altruistic motives, but in the way of Western colonizers the world over, for the sourcing, at low prices, of highly-sought-after products and commodities which could not be grown in their home countries. Of course, as history so clearly demonstrates, the way of Western colonizers is to first enter to trade and then stay on to rule.

In Ceylon, for the purpose of cultivation, land was acquired by the British Crown, largely through the now-infamous Waste Lands Ordinance of 1840 and its subsequent amendments. The latter enabled British entrepreneurs to buy land at ridiculously low prices to open up plantations. Denudation of natural, highland montane forest cover contributed the balance.

In the process this enactment dispossessed native village farmers of commonly-held land, which had been at their disposal for centuries, whilst high elevation catchment areas, fiercely protected for centuries by native kings, were diminished, to the lasting detriment of the environment, indigenous fauna and flora, and rain water retention capacity.

Where there is a desirable product, the means must be provided to grow. harvest, process, sell, export, market, and distribute. Between growing and distribution, there are expenses for which the entrepreneur needs financing. Distribution implies transport and shipping. This wide spectrum of needs gave birth to labour indenture, motor roads, railroads, produce broking, shipping, banking, insurance, allied support services, and plantation management agencies. As I said in an earlier chapter, this long chain, from beginning to end, was controlled by the British for over a century.

Objectively viewed, the tea industry was effectively coordinated and very well organized, but with the primary purpose of providing Ceylon Tea as a raw material to the major overseas packers, who processed imports and supplied the retail trade. The key links of the industry chain, the branding, packaging, and marketing, which, together, added value and generated profit, lay outside the country of production.

In Ceylon, the country of production itself, the relevant statutes, regulations, protocols, conventions, and laws were formulated by the British, as were the numerous trade-affiliated bodies that were set up from time to time, as and when the need was perceived, for the self-regulation of various aspects of the industry. All these disparate, yet interconnected, activities comprised and represented one vast plantation-based economy, which was administered for over a century by the British colonizers, for their benefit. In the process, any gain to the country and the native citizen was both incidental and, in relative terms, marginal.

The economic structure in Ceylon which prevailed into the 1970s was a British inheritance, designed by the British themselves. It was a country which then lived by foreign trade, derived almost exclusively from the plantations – tea, rubber, and coconut – and that trade was controlled by British interests. The only exception to this colonial dominance was the spice cultivation and export trade which, traditionally, had been largely in local hands for many centuries. The British domination of the economy of Ceylon was not different to the role played in the 18th and 19th centuries, by the East India Company, promoting British interests in other countries of South East Asia.

When I entered the tea export trade in the early 1950s, the above picture had changed only minimally. There were a few native faces, but they were neither numerous enough, nor sufficiently well-placed, to make much difference to the British dominance of every aspect of the industry. Implementing or driving changes to that system, as I found out personally in later years, was far more difficult than I ever imagined. To me what was incomprehensible was that even after the British stranglehold was relaxed, our local inheritors of those industrial interests were quite content in allowing the old status quo to remain. The actors had changed, but the colonial legacy lived on.

Institutions of control

The first industry-linked organization to emerge was the Ceylon Chamber of Commerce (CCC), in 1853, followed by the Planters’ Association in 1854. In parallel with these developments, the estate agency houses, produce broking establishments, banks, and other related institutions came into being. The Colombo Tea Traders’ Association (CTTA) was established in 1894, mainly for the purpose then of bridging the gap between the grower and exporter, and as a platform for the discussion and resolution of common plantation industry problems.

Much later, in 1909, the Low Country Products Association was formed, under the leadership of Sir James Pieris, a highly national-minded legislator and social and political activist. The latter body represented Ceylonese plantation owners, largely of rubber, coconut, and cinnamon, who obviously realized that their interests would be better served by a platform of local entrepreneurs. Amongst the latter were also landowners venturing in to cultivation of tea in the low country, when it became evident that tea could be grown quite successfully in the humid climate of the lowlands of the country.

The highlands, by then, had become the almost exclusive enclave of the British. Well into the 1970s, all the above entities except the Low Country Products Association were controlled by British interests. Successive governments did little to correct this anomaly. In fact, financial regulations inhibited local companies and individuals from operating accounts in foreign banks.

Fortunately, when I launched myself as an individual entrepreneur, my benefactor, Mr. Gash of Grindlays, allowed me to operate my personal account on behalf of the company without changing its name. Local banks then were, on the whole, inflexible and unimaginative in extending funding assistance and, unlike the foreign banks, insisted on iron-clad guarantees in the form of mortgage of property and personal sureties. These were serious impediments to the local newcomers to the business world. The local banks were essentially risk averse and in the absence of development banks, financing of trading operations and start-ups were fraught with difficulties.

Of course, with a multiplicity of banks and other financing institutions emerging in the last few decades, particularly consequent to the liberalisation of imports, trade, and fiscal regulations after the UNP Government of J. R. Jayewardene, the lending and new investment platform has widened considerably. Many of the obstacles that entrepreneurs faced up to the 1970s have since been removed.