Tea Biz
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Tea Biz News and Insight - September 16, 2022


HEAR THE HEADLINES – Stubborn Inflation Nudges US Economy Toward Cliff | Tea brands brace for a downturn as core inflation remains high, undermining consumer confidence | Starbucks Announces a Retail Renaissance | Orthodox Tea Exports Fall Short of Demand

| NEWSMAKER – Dr. Roshan Rajadurai, the Managing Director from Hayleys’ plantations, managing agents for Kelani Valley, Tallawakelle, and Horona plantations

| FEATURE INTRO – This week, Tea Biz travels to Sri Lanka to assess the condition of a resilient tea industry following an unsettling spring marred by high unemployment in the aftermath of the COVID pandemic. For several months tens of thousands protested the inflation-driven cost of food and shortages of basics, including fuel, cooking gas, and electrical power. The upheaval led to the resignations of both the prime minister in May and the nation’s president, who fled the country in July.

Organizational Discipline Helps Tea Industry Cope with Continual Crisis – Sri Lanka has been facing its worst economic crisis since gaining independence. Following the pandemic, many industries on the island have ceased to exist due to political and financial difficulties. However, the island’s tea industry continues to battle on. Tea Biz correspondent and PMD Tea MD Dananjaya Silva sat down with Dr. Roshan Rajadurai, the Managing Director from Hayleys’ plantations, managing agents for Kelani Valley, Tallawakelle, and Horona plantations PLC, to discuss how his plantations have adapted and continue to produce tea, given the economic hardships.

The T Biz podcast delivers tea news that you need to know, a recap of the week's major headlines, with commentary and cultural trends. Hosted by Dan Bolton. It is the voice of origin for t professionals and enthusiasts worldwide. Tea Nourishes and inspires. It is the most ancient of plant based medicines, simultaneously energizing the body as it sues the mind. Making tea is an art and craft, as described on the tea Biz portal, intimately local, the two hundred billion tea trade exerts global influence, employing millions to enhance the well being of all. Hello everyone, here are those week's headlines. Stubborn inflation nudges the US economy towards a cliff. Starbugs announces retail renaissance. An Orthodox tea exports fall short of demand. Plus organizational discipline enabled Lanka's tea industry to cope with the country's worst economic crisis since gaining independence. Following the pandemic, many industries on the island ceased to exist due to political and financial difficulties. However, the island's tea industry continued to battle on. Reports Tea Biz correspondent and pmdt Managing Director Nagia Silva. More in a minute, but first this important message. What makes a Perfect Cup of Ceylon tea? The Perfect Cup is from the tea businesses that ensure the protection of all the children living within their tea estates. We Salute Kailani Valley, Telewacki, Ly Boga, Wan Thalawa, Harana and Eliptia t estates. Support Save the Children Sri Lanka. He brands brace for a downturn as core inflation remains high, undermining consumer confidence. The sound of crashing stock markets this week reinforced the likelihood that a recession is just over the horizon. Nevertheless, in August, retails spending remained robust, bolstered by low unemployment and higher than expected savings. As a result, in store expenditures grew by twelve point compared to August holiday sales projected at seven point. My MasterCard will cushion the next quarter, but there will be a slowdown in retail sales in as interest rates jump. Inflation is the culprit overdently, remaining at eight point three percent in August, down from July and June, but energy and food prices accelerated to six point three up from five point nine percent in June and July. Wholesale tea prices remain firm due primarily to scarcity as tea production in India and Sri Lanka as decline. Demand from the Russian Federation has returned to pre invasion levels and Russian buyers are paying a premium without flinching. Kenya has sufficient stocks and low auction prices, but it is an unfortunate victim of transport costs that curb demand. Spring teas were spared, but yields from the summer harvest in much of southwestern China, Dunan, Hubei and Jijing, have declined. David's tea, North America's largest tea chain, is a weather. The company reported second quarter net loss of four point eight...

...million. Sales totaled fifteen point two million, down eighteen point seven percent year over year. CEO Sarah Segal told investors quote. After successfully navigating through the covid nineteen pandemic, we are now coping with additional headwinds, notably mounting inflationary pressure and recessionary fears affecting consumer habits. Sales and profitability decreased her over year, mainly due to an uncertain macro economic dampening demand in the short term. Ominously, the declines were primarily online. Sales from e commerce through July one decreased by six point five million, or forty three point nine percent, to eight point three million, compared to sales of fourteen point eight million in the prior year quarter. Last year, e commerce sales represented seventy nine point one percent of David's t s revenue. In the contribution is fifty four point six percent. However, sales at the company's eighteen break in mortar locations grew by one point one million to four point two million during the first half of the year. Brick and mortar transactions account for twenty seven point six percent of total sales, compared to sixteen point six percent in the prior year quarter. Business inside retail consultant Joseph Camberado advises readers of Entrepreneur magazine to do the following six things in anticipation of a downturn. First, reduce expenses and prioritize cash flow and consider a line of credit. Next, lower your supply chain risk and automate what you can to reduce labor costs finally focus on employee retention in their annual compensation best practices. report. Pay Scale found that seventy six percent of organizations experience labor shortages in one turnover average twenty four percent, much of which was voluntary. In addition, the report found that forty four percent of US companies say they are losing employees over pay, as wages drop in real value month over month. Promising a retail renaissance, starbucks executives say they are reinventing the company, budgeting four hundred and fifty million for in store technology. In addition to new well being benefits and increased pay, speed of service is a priority. Improvements to the mobile order and pay APP in a new cold beverage system will reduce the time it takes to make drinks. Stores with clover VERTICA will deliver freshly ground, freshly browed coffee in thirty seconds. Store remodels will improve customer experience by, quote, unlocking the intersection of convenience and connection. End Quote. The intent is to expand a third place experience beyond the physical store, reports the company chief technology officer, Deb Hall of Faith, says, quote, we will never replace Arboretus Rather, our job is to automate the work and simplify it so that their job gets easier. End Quote.

Founder in interim CEO, Howard Troll, still investors the company would open two thousand new US locations to launch a quote, new era of growth. End Quote. According to the company, the three year expansion will deliver comparable store sales of seven to nine revenue will grow by fifteen to quote. Starbucks is a growth company and our accelerated expansion is a direct reflection of the expected returns from our reinvention plan. End Quote. According to Chief Financial Officer Rachel Rigari, quote, we have already begun to take action on an inspired roadmap to build the future of starbucks, all while staying through to our mission of uplifting communities through a shared love for coffee and further extending our coffee leadership and innovation. Schultz told investor day attendees. The event introduced newly named CEO, Laxman Nar Simhan to the investment community. He officially joins starbucks on October one. Globally, starbucks expects to operate forty five thousand stores by the end of increasing to fifty five thousand locations by business inside. What important innovation eliminates the need for Bariss to scoop from containers of ice when making tea. Beverages account for more than sixty of the company's more than twenty nine billion in sales. Making tea and coffee is the core competency. Starbucks is one of the top tea retailers in the world, selling more than two billion in packaged and food service tea. To please customers, starbucks introduced thousands of variations to what was once a simple list of ingredients. The result is an increased workload and wait times for customers. Baristas complained that the task has become impossibly complex and stressful. Workers have voted to join unions and hundreds of locations to address these concerns. Wages in the US currently average seventeen dollars per hour at starbucks, with Barista's earning from fifteen dollars to twenty three dollars per hour. Weather and war combined this spring to boost exports of Indians Orthodox tea quite significantly. Exports increased by twenty two through June to nine million kilos, by more than ten million kilos over the same period. In most of the increase was due to spiking demand for Orthodox tea, which accounted for forty nine million kilos, an increase of nine million kilos compared to the previous years. In past years, Germany and Japan purchased large quantities of Orthodox tea, but sales to both the EU and Asia are down. Exports to Japan fell by almost eleven percent during the first half of the year. Exports to Germany declined ten percent and shipments to the UK were down two point five below the same period in according to statistics provided by the teaboard of India, Argall, director of Asia Tea Group, says, quote, the Orthodox Tea Market is at an all time high. The market is booming in Iran for Indian Orthodox teas. Orthodox tea production could reach...

...an all time high. Shri Lanka produces half of the black loose leaf tea processed using traditional orthodox methods. The process involves plucking mainly by hand, withering, rolling and drying. Orthodox tease produce a rich colored liquor and distinctive flavor. During oxidation and fermentation, tea processed in this time proven way is brisk and bright and takes on a multi layered flavor profile. People. Quote taste in quote Orthodox teas and quote drink CTC rolling, in shaping or critical steps that lend a distinctive twist, or pearl or pressed leaf. Tea Production in Sri Lanka has declined by eighteen point six percent, about thirty five million kilos, and may not recover, leading to a potential deficit of six the million kilos, which would be the lowest crop since if that is the case, demands for Indian Orthodox will encourage increase production to fill the gap. Orthodox tea total only a hundred and thirteen million kilos of the one thousand three hundred and forty four million kilos India process last year, Sri Lanka's minister of Plantations told attendees at this week's annual general meeting of the T Exporters Association. Quote. Shri Lanka once led the world into your exports, but in the past decade China, India and Kenya have overtaken us. So we are in fourth in relation to production quantity, but celon tea is still renowned as the highest quality tea. Our export income has not decreased. We recorded six hundred ninety million by the end of July. End Quote. Exports are down almost ten percent to a hundred and forty eight million kilos for the first half of the year. Four team point five million shortfall compared to venda and in the amount in Bengaluru. Reports on this week's t or some prices. India tea press report for the weekend in Tenth September twenty twenty two. The Tea Board of India has just announced the last dates for plucking from north India. Do you links seeking? Much of Pradesh and the Tarrakan will have to stop blocking from December three, most to the sum and the North East India from December tenth. Catch her quality to in doors from December seventeen in auction sail thy six. So good demand in Cocata for roll tea taps, but prices were lower this week. Exporters were active Orthodox tea. Do you links? A slight improvement and prices from the previous week, but it's significantly lower compared to the same time last year. Goat is a good demand too, with class is nearly same as last week. Sam is enjoying good weather and crop and the outlook remains positive for the rest of the season. In the south, coach auctions were close due to the state festival. On the cooler, auctions were on and CTC dust that well here in both sale volume and prices. No award from our sponsor. Q trade understands that a successful tea blend goes beyond the creative fusion of appearance, a Roma and flavor. Our Multi Award winning product development team is passionate about converting natural ingredients into sensory experiences that customers crave. Every recipe is formulated with a commercial backbone of dependable quality sourcing, with a pricing structure that supports us safe, right, related, profitable and scalable bland.

Q trade meets every brand's retail, food service and e commerce need. For more information, visit our website, q trade tease dot com. This week, tbez travels to Sri Lanka to assess the condition of a resilient tea industry following an unsettling spring marred by high unemployment in the aftermath of the covid pandemic. For several months, tens of thousands protested the inflation driven calls to food and shortages of basics, including fuel, cooking, gas and electrical power. The upheaval led to the resignations of both the prime minister in May and the nation's president, who fled the country in July. Lank has been facing its worst economic crisis since gaining independence following on from the pandemic. Many industries on the island have ceased to exist due to the political and economic difficulties. The islands tea industry continues to battle on. This is done on silver and I sit down with Dr Russian Raga, the managing director from Haley's plantations, managing agents for Kelnya Valley, Halaba, Kelly and horror Plantations Plc, to discuss how his plantations have adapted and continue to produce tea given the economic hardships. In what ways did the COVID pandemic restrictions show street LUNKA's plantation sector to be resilient and adaptive? The plantation sector has a legacy of four and fifty years off very well organized centralized management structure. So when this pandomic situation sadly came up, the government imposted there day curpee between had two bide by, but on the fourth day onwards, we quickly got on board and things were as normal as normal could be. Normally we manufactured and made arrangements to send out produced, to the produce to Columbu and to ship it out. The moment we got wind of this pandemic situation, we put in place a series of measures. First, of course, we made the people aware of what this is all about and we had influx of people from columbue and outstations flowing back to their states. So we made sure that everybody who came their names are recorded and, if necessary, if you're suspect cases, we had isolation quarters. We isolated them for fourteen days. We kept the medical and other authorities informed, because the organized sector as one million people living in a community style, uh village style, set up in close confines. But to manifest what I'm saying is up to about end of last year, we didn't have a single casualty rising out of covid that is because we put in measures, as I said, identifying people from coming from outside, making people living inside away of the pandemic. We did fumilicating and providing of medicine, medicine and, most importantly, what we did was to ensure that people didn't have to congregate, that they didn't have to go to Baslas and townships. So we made sure that we brought the food tactic and gave it practically to their doorstep. And there's a group of people who had no other means of earning more income, and we paid them on time. Although last year was not a good year, we ensured that their wages were paid. And, as a means of helping the people in this situation, we sort of opened out our industry for people who came from Columbua and elsewhere. We allowed them to pluck areas that we could not manage with the regular workforce, so that family unit had more opportunities to earn more. And we had another system called the revolutionary model. We sort of experted on it. So there are a lot of people who didn't want to be workers, registered workers. Now were their workers,...

...but they got into the earning pool of the family and thereby they were able to enhance their family income. And also we got organized with the large food suppliers, like the government Wahouse system, and brought in food in lorries and we had stopped for to work three months. But what is important thing is that we ensured that the workers didn't have to go out and thereby spread this povid. So we had a very, very tough and a very well disciplined control system and to the credit of workers, I must say they corporated fully, they listened to the management, they followed advice of health departments. So that's the success of the long years of practice the plantations actors. Managing crisis is like this. How did adaptations forced by the pandemic help Haley's prepare for the political term or of two? There is no work to go back to the construction industry where their mails so employed youth work. It has crashed, and also the eateries and small hotels, and so all the people who came back to the states. All our company system we have made available opportunities for employment. For example, we pay the workers to remove ITATS and we will pay you by the kill or rate. So that is a very good intervention. And people who don't want to learn to uh sort of plucking or harvesting work, they go to the field, we move them weets and we pay them on the weight. We then convert them to compost. Once the composer is made, we make calls and incorporate the bulk Manu and the compost into the soil so that it enhanced us the soil fertility. So what you're saying is that this hundred and fifty year old industry that has been the backbone of the Sri Lanka economy continues to be that because workers who are who are from plantation backgrounds, who have worked in you know, whether it be hotels, construction, they again once again come back to live on the estate. Actually, that and the employment is only part of the solution that we provided, because we had influx of workers that it's actually as tower services. But we made sure that we accommodated them, that we looked after them in terms of food supply, because there as no food because of covid interdistrict curfew and restrictions. So managers went out, but curfew passes. They really did a grand job on the ground. I mean they volunteered. They could have waited and said, look, we don't want to expose our sets, but every company, every manager, every planter, took it about himself to look after his community under his charge, food medicine, another way, with all everything was provided and absolutely no breakdown. And Ours is only interesting right thought you went up to now, with all the challenges we are maintaining the industry as it was before. A lot of challenges, not of stress, a lot of issues, but he still maintained the industry as it was. Fuel shortages have crippled and decimated many sectors of the country. What professions and adaptations have Haney's made to ensure the smooth running of operations after the crisis came on? Definitely we have taken radical measures to reduce the running of unnecessary trips and vehicles. We have mapped out all the roads each division and identify the shortest routes. We have some innovations, like we introduced zip lines before the crisis, but it came in handing out we can say about nine a day because it has to do a circuitous route, so it's sort of ECO friendly and it does not use FSL fuel. We do ECO friendly management now. Our managers and assistant managers are provided with the food bicycles and now they're resorted to more walking. Managers and workers and staff are given given the hundred and ten percent to support us in this time. And One area that you touched on that was actually moving tea from the state's down to Columbo. That there has been some disruption. How are you working through that situation? Because the logistics are provided from from from outside of the estate. What we do is you provide some fuel, measure fuel to take the tea down to Columbo, and even for fire supplies, because we need file to run now dryers. So we...

...assist them in some form because of the fuel shortage and then and the resultant file shortage. So we are trying to harvest, within the permitted the procedure, file that is already grown on the state for this purpose. actilling our branches, reducing some excessive shade and all those initiatives and energy efficient measures we have used, relying more on hydropower, relying we are trying to put we have put almost sixty ton people set of our rooms in solar. So all all those things can happen after the crisis, but these are interventions that happened before which now has a beneficial use for us right at this moment. Intrigued by what you've heard in today's podcast, would you like to learn more from our proble networking tvst journals than t experts? Remember the visit the TV is website from more compretend some coverage. That's W W W T, hyphen Biz B I Z alcohol. Thanks for listening. Farewell until next week. m.

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