Horizontal Diversification of Ceylon Tea Industry: Future Scope and Market Potential

Abstract

Adding innovative tea products into existing product line is a form of diversification in Tea industry. To investigate the different tea products exported from Sri Lanka, and to study their future scope as diversified tea products, the study was conducted in Colombo, Sri Lanka. Forty five tea exporting firms were selected using stratified Random Sampling Method representing small (15), medium (15) and large (15) firms. A questionnaire based field survey was carried out for the purpose. Descriptive statistical tools and the Wilcoxon Ranked Sign Test were used to analyze data. Out of the 43 firms, 41(97%), 14(34%) and 37(86%) firms exported black tea, white tea and green tea respectively. Seven firms (16%) were engaged in exporting Oolong tea while 20 firms (48%) engaged in herbal tea export. Fourteen firms (34%) exported organic tea. Tea concentrate was exported by only 4 firms (9%), while no firms were engaged in exporting in tea tablet. Fifty five percent of the tea exporters suggested that the most important product we should pay attention was black tea. With 53% (23) of strongly agreements the promotion of green tea was highly recommended revealing an expanding market in future in Europe and United States. Herbal tea attained relatively a higher mean value with 65% (28) strongly agreements. Seventy four percent of exporters suggested promoting Ready to Drink or Ice tea is an innovative product to capture the active life segment among the global tea consumers. Iced tea gained low mean value 0.95. No firms were observed engaged in exporting tea tablet and tea concentrate hence, both products acquired low mean values 0.32 and 0.27 in sequence. Among innovative tea products except Ceylon black tea, green tea, herbal tea and organic tea have an abundant space for development and a potential demand in future in the global tea market among other tea products.