Could you give us some background information on the MJF Group in terms of its structure and historical background?
We are a family owned and managed company. We are engaged in marketing and distribution of the finest quality pure Ceylon tea in value added consumer units, under our own brand name DILMAH. We hold the unique record in the industry in offering a complete in house operation, by the ownership of tea plantations, the best manufacturing facilities in the region, printing and packaging facilities, 50 years of tea tasting and blending skills and some other related services. Importantly, we developed our own brand to launching Fine Ceylon Tea, in competition with multinational companies who ruled the world of tea. We are better equipped to market tea than any other company in the world. As the founder of the company, I started with the business of exporting bulk tea (raw tea for blending & packing off shore), soon after I left school. In the four decades of selling raw tea, my company became a major player in this business. However, I began to worry about its future, as the demand for fine quality Ceylon tea, among the big International brands began to decline due its high cost. Competition in the market place, the growth in super markets and discount stores weighed heavily on quality and tea was turning into a commodity. Progressively, brand names, which built their reputation on quality, moved to cheaper origins for their tea, disregarding quality standards previously established. Making tea a commodity compelled consumers to rely on brand names and not on real quality, which changed consistently, as a consequence of souring tea for their blends from wherever tea was cheapest. I saw the writing on the wall for raw tea exporters!! Initial signs of a decline in quality soon assumed massive proportions. Growing demand for lower prices created by competition among retailers drove quality to depths not known before. Price became the significant factor, not quality.
I was just out of school when I got selected to be one of the few lucky entrants to the Tea Trade, which had always remained in the hands of foreigners. In my very first months I realised that the tea industry brought very little benefit to the country and to plantation workers. Raw tea exported for blending, packaging and branding removed from the Ceylon (Sri Lanka) any benefits of value addition to our tea, and the consumer paid a relatively high price for it. Middlemen extracted all the profits. I vowed that, one day I should have my own brand of tea and take to consumers the freshest and finest pure Ceylon Tea at an affordable price. I would then retain in the country all the benefits of value addition, towards improving the lifestyle of tea farmers and towards preventing the country's dependence on foreign aid. This was a wild dream. It was almost sacrilege, when foreigners dominated the industry. Twenty years later I registered the brand name DILMAH, which I dedicated to my two sons DILHAN & MALIK, who were toddlers then. Fourteen years later and thirty-four years after my dream, DILMAH tea was launched in Australia. The following year it was launched in New Zealand.
You mentioned that you began to market DILMAH in Australia and in New Zealand, are there any new markets you would like to add the already existing ones?
Today, discerning users in 87 countries enjoys Dilmah tea. As a fine quality, gourmet tea Dilmah has no equal!
Sri Lanka is going through an interesting period, how would you describe the development of this industry and what has been your contribution?
The tea industry fell victim to political machinations during a socialist regime. Plantations were nationalised and management got into the hands of incompetent political stooges, with no knowledge of the industry, some even lacked common sense. Understandably, the industry became a casualty of government; accumulating huge losses and recording substantial drops in crop yields. In the mid nineties management of plantations was entrusted to the private sector. Subsequently, they were sold to private investors, providing a stake to staff and workers. Private investment delivered dramatic improvements to crop volume and to the quality of tea; a result of good management without political interference. After 26 years of plundering national asset in tea plantations, sanity finally returned! Global prices of tea have fallen away in the recent past. Many plantations are unable to realise the cost of production in their sale prices. The Coffee industry has been badly hurt by very low prices. This is the result of tea becoming a commodity and coffee in the hands of a few players. Multinationals must be made responsible for the pathetic fate of tea and coffee producers. The tea trade is in the control of one or two multinationals, which, over several years, acquired nearly all of the small and medium companies and eliminated competition towards creating a stranglehold of the industry. The current state of the industry explains their success. While tea producers are languishing and coffee growers are driven to suicide or perishing in the heat of the Arizona desert, in their efforts to search for employment across the borders, International brand owners are fattening their bottom lines by sourcing raw tea and coffee measly. Below production cost prices! My contribution was my vision for the tea industry, when I was just a young trainee in the tea trade. My dream of launching my own brand of fine Ceylon tea provided the answer. To my astonishment, I found no friends in the industry or in government, when I finally began to pursue my dream. The tragedy of many countries and, of many people is that we remain committed to what we do and have done for years. New ideas and new directions are, not only criticised and resented, but those in authority also torpedo them. My painful journey towards developing my own, "fully Sri Lanka owned brand" would make an interesting case study for third world governments and for CEO's. While tea producers sell their crop below their cost today, brand owners are laughing all the way to the bank. In the case of DILMAH these profits remain in the country. Numerous other companies in Sri Lanka and in other countries are copying the example of DILMAH. I state, "copied" with good reason. I took 34 years to launch DILMAH. All that time was spent researching markets, understanding consumer strengths and weaknesses and in preparing the right types of tea for each country. Without such knowledge, just trying to duplicate DILMAH success, will not deliver long-term results. I realised that, any chance of success would depend on a "perfect cup of tea" My search for excellence took a few decades, which is why consumers around the world acclaim "DILMAH! The finest tea on earth!" Many say, " If it is not DILMAH, it is not my cup of tea! " I have no doubt that other Sri Lankan companies too, will eventually, become important players in the global trade, if they dedicated them selves to doing so. I have dedicated my life to tea! | What are you currently doing to improve your exports? Do you have a very strong sales team?
DILMAH is the only innovator in the tea category. Others distract consumers with cosmetic changes like varying the shape of the tea bag from square to rectangular, then to round bags, to squeezable, to pyramid shape etc., they have made no improvements to the all important "quality of tea! " Little wonder then, that there has been no overall growth in the category. Consumers move from one shape of tea bags to another and they eventually return to their previous type. Not surprisingly, every change of shape also raises the cost. DILMAH brings in real innovation to tea with refreshingly fresh quality and a variety of tastes. Innovations in the pipeline will bring much excitement to consumers. We have a very dedicated team in Sri Lanka. My two sons Dilhan and Malik developed our marketing policy and its implementation for each country with the support of an excellent team. They receive my inputs and guidance. We operate and own offices in Australia, New Zealand, Russia, Poland, and Singapore and will soon have an office in London.
Since you started marketing value added tea, are there any competitors or similar companies?
We opened up the CIS -Russia and other former USSR countries with DILMAH 12 years ago and DILMAH was the No.1 brand there. We had some bad experiences in Russia and we were driven to reduce our market share. There is no real expertise in supplying Russian importers today. There is quite a large volume of value added tea shipped there today, by a number of our competitors.
Can you give us some details on the size of your company, your staff?
The MJF Group is the worlds only fully integrated tea company, today. We own plantations, unique tea tasting and blending skills, arguably the best production facility in South East Asia, printing and packaging services and our own brand DILMAH. We did not acquire a brand we developed it. In our export business we employ about a thousand staff and workers. Other companies in the Group employ about 800 workers. Three other companies, who share ownership with us, manage the plantations. The number of workers in the plantations is about 25000.
The younger generation of plantation workers, who are leaving the plantations in search of jobs in urban areas means that there will be a shortage of workers on the plantations in the future, how are you planning to confront this problem?
We shall have to face a very serious problem with shortage of workers within the next 7 to 10 years. Mechanical plucking of tea is possible in some areas but many highgrown estates will be affected without workers. While the boys are more aggressively searching for other opportunities, the position with girls may not be too bad. As a family we are assisting plantation workers towards higher education and in other ways. I have no honest answer to the potential crisis due to the inadequate workforce on plantations.
Are there any new projects in the pipeline, any new process plants?
We have a major project in the pipeline to develop a unique instant tea product. Apart from this, we keep innovating all the time. We have a few, very exciting products form launch next year.
Talking about the future, the Economic Review might be back in 2 or 3 years time for a new report. Sri Lanka has always been associated with tea, where do you see the future of the tea sector within the next few years and your role within this future?
It is my firm belief that a growing number of consumers will begin to understand tea and appreciate its goodness, health benefits etc. Importantly DILMAH is taking tea seriously and we are engaged in educating consumers about it. We are resisting the trend towards making TEA a commodity. Dilmah tea will upgrade the image and profile of real tea. Ceylon tea is the worlds finest. But where do you buy it? Availability and education of consumers is our prime responsibility over the next two years. We come into direct conflict with multinationals then. I believe we shall take Ceylon tea back to the glories of the past by education and making some great teas available to consumers. During your next visit, you would be able to buy tea in the style of wines. Tea that represents the character and feel of World Investment News Ltdrs. You will be proud to sit with a pot of Pinot Noir style tea!
Since all our readers are businessmen and looking for business opportunities, with the needs and capacities to invest, what would be your final message to them with regard to the potential that the country has?
The political climate may prevent potential investors from injecting their funds in the country. Nevertheless, considerable investment keeps coming in. There are opportunities in IT, Fisheries, and in tea, of course. I believe, that the demand for origin-packaged tea will grow and that local packaging, guaranteeing integrity of content will provide investment opportunity. Sri Lanka offers an educated workforce and good middle management, under proper direction. The gem industry could offer good opportunity for investment, if it is brought under some meaningful direction and guidance.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions.
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