Inherent inadequacies

Excerpted from the autobiography of Merrill J. Fernando

One of the glaring weaknesses in both the above Boards (Tea Board, Tea Propaganda Board etc.) was the Board members were mainly ex-officio, representing the Chamber Commerce, CTTA, TRI, and the smallholders. None of these people possessed a coherent concept of the tea trade, be it in marketing, branding, or advertising. As a result, the administration of the Secretariat was able to do exactly as it pleased.

The only exception to this distressing generality was Victor Santiapillai, who was then the Director of the Export Development Board (EDB), having relinquished his position as Director, International Trade Centre, Geneva, at the invitation of Dr. Sivali Ratwatte, then Chairman of the EDB, in order to serve the EDB for a three-year period. Santiapillai understood and supported many of the reforms I proposed, but implementation was stifled by the bureaucrats of the SLTB (Sri Lanka Tea Board).

When the Sri Lanka Tea Board Act was prepared, I was requested by the then Minister of Plantations, Dr. Colvin R. de Silva, and his Ministry Secretary, Doric de Souza, to go through the draft of the Act, in discussion with Dr. Jayantha Kelegama, Director of Commerce, and to submit my views. The Minister instructed Dr. Kelegama to incorporate in the Act any proposal I submitted, which he considered worthwhile, without, of course, attributing them to me.

I first met Dr. Kelegama at the Ceylinco Akase Kade and over three meetings thereafter, provided him with many issues to consider. One of my proposals was that ex-officio appointments to such boards, nominated by the Chamber mostly, should not be permitted and that the Minister should have the sole authority, to appoint people with the requisite experience and knowledge. Though this suggestion was accepted and incorporated in the constitution of the SLTB, the Government fell soon afterwards, and the proposals were not implemented.

The Director General of the Tea Board at that time was Dr. R. L. de Silva, from the Tea Research Institute, undoubtedly a competent tea scientist but on account of his ignorance of the important aspects of the international tea trade, a misfit as DG of the Tea Board. The key members of his team, such as Lalith Agalawatte and Sambasivam, were not impressive either.

Conspiracies within

Lalith Agalawatte was, initially, an Assistant Commissioner at the London Tea Centre on Regent Street. Notwithstanding his modest title, I got the clear impression that he wielded a great deal of influence, not only in the centre but at the Tea Board Colombo office as well. He seemed to be well in with TGA Advertising, the France-based agency working for the Ceylon Tea Centre in London, for promotional activities of the Tea Board in Europe.

The ‘The 1868’ project was proposed by the London Tea Centre, to develop a Pure Ceylon Tea bag in France. I participated in this project by supplying the finished product, but with no financial involvement in the project itself. The owners of TGA were introduced to me and on a subsequent visit to Sri Lanka, I advised them on an appropriate blend and, through Printcare, developed high quality packaging for the product. I also advised Agalawatte, in good faith, that this project would eventually fail as a promotional initiative for Ceylon Tea, as, if the brand were to succeed, it would become one more foreign label to compete against genuine Ceylon Tea brands.

Shortly thereafter, a TGA representative arrived in Sri Lanka without my knowledge. I was not surprised when I discovered that Agalawatte, who had by then been transferred to Sri Lanka and appointed to the position of Assistant Director of the CTPB, had invited the TGA representative to Sri Lanka to meet another exporter, who would supply the tea cheaper! We did not receive any more orders. The project was eventually abandoned after 30 tonnes of tea had been exported, with the London Centre spending around Sterling Pounds 150,000 in promotional expenses.

Another instance of this individual’s duplicity was when he obtained my support to pack a brand of tea for a Sri Lanka businessman operating in Japan, whose substantive business interests lay elsewhere. The tea was shipped to Australia. At the same time, I participated in a TV tea commercial at a Commonwealth event in Melbourne, in which, prior to the event, I was made to understand that Dilmah tea was to be featured. When the event got going I discovered that Agalawatte had engineered for the brand supported by him, to be featured at the launch, instead of Dilmah.

Prior to this incident he manipulated to withhold a sum of USD 119,00 approved by the Tea Board as its contribution to the advertising and promotional costs of Dilmah, in Australia. Despite verbal assurances given to me by Agalawatte, that the funding disbursement request had been presented to the Chairman for approval, when I contacted Oliver Fernando, then Chairman of the Tea Board, I found that the request had not been submitted to him.

Ironically, this man, who for some time had been currying favour with the then Minister of Plantations, Major Montague Jayawickrema, was able to persuade the Minister to appoint him as the Head of the newly-opened Ceylon Tea Centre in New York. When the proposal to open the centre came up for discussion, I opposed it vehemently, but in the vote that the Minister called from the chair, mine was the only dissenting voice. The proposal was approved and I was so distressed that I refused to speak to the Minister for the next three months.

Agalawatte spent two years in New York, incurring huge expenditure to no purpose, and when there was a call to investigate his activities, the Secretariat sent Agalawatte’s equally-wily colleague, Sambasivam, as the investigator. He returned with the verdict that Agalawatte was doing a fine job and that he was in the process of negotiating a contract with McDonalds for the supply of tea. I cautioned the Board, that it must be a blatant lie as McDonalds would not entertain offshore suppliers for the US. Predictably, that contract never saw the light of day and, soon afterwards, Agalawatte obtained his Green Card and disappeared in the US!

Costly white elephants

In one instance, I proposed that the Ceylon Tea Centres around the world (UK -London and Manchester – Denmark, Italy and so on) be closed down, as they served no useful purpose. As Tony Peries has observed pithily in his writing, the “… UK centre did minimal service to the cause of Ceylon Tea but was better known as a good lunchtime curry house…” (a very accurate evaluation of the contribution that the UK centre made, to the furtherance of the cause of Ceylon Tea!).

My proposal was accepted and the decision was made to close down these centres. However, one year later, when the renewal of the leases on the centre in Japan came up for review, the Board was compelled to renew it on the grounds that there had been a delay in conveying the decision to close down! That centre in particular had been spectacularly unsuccessful in the promotion of Ceylon Tea, with Japanese consumption of coffee increasing in the previous decade by about 400%, whilst tea consumption remained static.

Our overseas Tea Centres had been established during a period when the UK, Australia, and New Zealand consumption of tea was almost 100% Ceylon Tea. Therefore, those centres performed a largely public relations function in a market basically saturated with Ceylon Tea, in which promotion was not a requirement. Ironically, despite the presence of the Tea Centres in those countries, Ceylon Tea gradually lost almost total market share!

The Head of the Ceylon Tea Centre in Regent Street, London was Ernest Jesudasan, a British national, with minimal links to Ceylon; a nice, well-meaning gentleman with, in my view, little practical knowledge of tea or tea marketing, despite having served earlier as Director of the CTPB. The Head of the Ceylon Tea Propaganda Board then was Clarence Cooray, who, owing to the lack of Ceylonese with sound overseas tea marketing knowledge, was entirely dependent on British tea interests in Ceylon for advice on the promotion of the cause of Ceylon Tea!

An expert committee

The Sri Lanka Tea Board had more teeth than the CTPB, but it was equally impotent in the promotion of Sri Lankan interests via trademarks. However, after intense lobbying by the trade, the Sri Lankan Government of the day was made aware of the need for establishing Sri Lankan-owned brands and, in August 1980, appointed an Advisory Committee on the promotion and marketing of Ceylon Tea.

The remit of the Advisory Committee, appointed under the guidance of the then Minister, Major Jayawickrema, was, briefly, “to review and report on the existing strategies for marketing of Ceylon Tea and to recommend a comprehensive package of proposals to ensure the effective development of Ceylon Tea in the international market”.

This group comprised I. O. K. G. Fernando (Chairman, SLTB), C. Chanmugam (Deputy Secretary, Treasury), W. L. P. de Mel (Secretary, Ministry of Trade and Shipping), G. Cumaranatunga (Add. Sec., Ministry of Trade and Shipping), the writer (then Managing Director, M.J.F. Exports), V. Santiapillai (Chairman, EDB), and Dr. R. L. de Silva (Director-General, SLTB). The committee co-opted S. Nanayakkara (Director, Commerce), S. Kulatunga (Director-General, EDB), T. Sambasivam (Dep. Director, SLTB), and L. Agalawatte (Actg. Director, SLTB).

At that time the Tea Promotion Bureau, the division of the SLTB responsible for promotion, operated offices in London, Cairo, Dubai, Sydney, Tokyo, Auckland, and Johannesburg. In addition, some of these centres also operated restaurants or catering services, as ancillaries to the promotional work. The committee recommendation was that these catering services should be phased out, subject to the terms of the respective leases.

The committee also made wide-ranging recommendations in regard to State promotional support for Ceylon Tea in the world market (subject to minimum quality standards and conformity of the product), with highest priority given to tea packed and bagged in Sri Lanka and, secondly, to Pure Ceylon Tea packed overseas in Joint Venture operations.

The proposals also covered issues of generic promotion, government incentives for processing and export marketing of value-added tea, fixing of export duties for tea bags and packets, duty rebates on imported packaging materials, concessionary export duties for packeted tea within specified weight ranges, rebates for tea bag exporters to encourage that aspect of the trade, maintenance of minimum quality standards of product, and the use of symbols for promotional work. The use of the Lion logo was discussed exhaustively.

Futile exercises, the Lion logo controversy

One of the most contentious issues before the tea trade then was the use of the Lion logo. The Secretariat was relentless in its efforts to mandate the use of the Lion logo on all tea packets intended for export, on the premise that the Lion symbol identified Ceylon, the origin, only. I completely opposed this notion, instead taking up the position, that the Lion symbol should represent only good quality Ceylon Tea, and not be symbolic of any and every tea originating from Ceylon, irrespective of quality.

Here too, as (Tony) Peries has observed in his writing, “…the major packers were in the excellent position of benefiting from tea (not Ceylon) advertising, at no cost to themselves…, through our promotion under the ‘Lion’ logo”.

Theoretically, the launching of the ‘Lion’ logo was a masterful marketing strategy. It would have been the eloquent voice of the cause of quality Pure Ceylon Tea, had the pack bearing the logo consisted of the genuine product. However, the reality of the marketplace was quite different.

There was absolutely no reliable method to determine the proportion of genuine Ceylon Tea in a pack carrying the Lion logo. It could be either as high as 90%, or as low as 10%. Therefore, irrespective of the Ceylon Tea content, Lion logo packs prospered from the identification with Ceylon Tea. At one point, there were as many as 355 brands carrying the Lion logo, though Ceylon Tea imports to the UK had dwindled rapidly.

Whilst the diminishing UK imports of Ceylon Tea over the years reflected the ineffectiveness of the Lion logo campaign, absolutely no action had been taken to change the strategy, nor was there any indication, that this serious market erosion was receiving any attention from the SLTPB. Had the Lion logo been leveraged judiciously to promote the interests of Pure Ceylon Tea, the British market would probably still represent the highest consumption of Ceylon Tea in the world, as it did in the days of Thomas Lipton!

Though it had been developed and sustained at considerable expense, the Lion logo was not associated with a genuine quality standard. As a result of a combination of unfavourable and conflicting factors, the development and promotional strategy purported to be the saviour of Ceylon Tea, eventually became its nemesis, because of the indiscriminate use of the logo. The committee recommendation was that. gradually, the Lion logo should be phased out.