KAMALIKA PIERIS

Merrill Fernando (b.1930) said that he decided to write his biography, titled ‘The story of Ceylon tea maker, Merrill J Fernando” (2023) because he wanted to draw attention to the potential of pure Ceylon Tea. Fernando is known for his unique role in branding and marketing pure Ceylon tea through Dilmah.  Sri Lanka‘s tea, spices and other produce could transform our economy if they are marketed correctly, he said. 

 Merrill   Fernando entered the tea trade as a tea taster. Merrill was one of the few who in the 1950s, entered the closely guarded British preserve of tea taster.  The British did not want locals in that department. They said that locals did not have the palate to make good tea tasters as they ate spicy food. During the war there were four Sinhala tea tasters, but this was temporary and ended with the war. Those four had been subjected to open resentment by the British, said Merrill.  

After independence, there was pressure from the government to recruit locals as tea tasters.  The Tea commissioner, P. Saravanamuttu had exerted much pressure on the tea companies for this. The decision to train locals was therefore    a reluctant response by the British tea firms then operating in Colombo to numerous requests made to them over several years by the Government of Ceylon to open their closely guarded field to locals.  

Merrill heard that the Tea Controller was proposing to take in a few local young men for training in tea tasting under the Government Tea Taster, O.P. Rust, Managing Director of Darley Butler and Co. Merrill applied and was accepted. He did well in the training and O.P.Rust was pleased. This was in 1950.

 While training as a tea taster Merrill had started a side business, supplying bulk tea to shops and restaurants around Negombo. He bought from a few estates known to him and also from private auctions.  He selected the tea carefully and made sure it was of good quality. Clients switched from their regular suppliers to Merrill , the business thrived and Merrill was able to put down a deposit on his first car, a brand new Morris Minor.  Merrill was fast turning into a successful tea taster and a successful vendor, the two qualities needed for creating Dilmah later on.

 In 1954, Merrill went to London as his firm AF Jones wanted him to learn about the branding and marketing of tea. Around 90% of Ceylon tea was exported and most of it was sold in London   at the Tea Auction held at Mincing Lane.  

 What I saw and experienced during my training in London gave me a completely contrary view to my previous belief in the integrity of the British business style,   said Merrill. He had developed a great respect for the British employers he had met in Sri Lanka. That was shaken when he saw what they were doing to our tea in London.  

Firstly, the tea was sold at prices which were 15-20 times higher than what they paid for it in Ceylon.  This, it appears, was something new for Merrill. Experienced tea traders would have known this for a long time.

Secondly, Ceylon tea completely lost its identity in London. It was absorbed into a commercial chain which had no link with Ceylon, complained Merrill.  Ceylon tea was blended with cheaper teas and then passed off as Ceylon Tea.    The other two tea blending centers, Rotterdam and Hamburg did the same. Merrill was shocked. On his return to the island in 1956, he broached the idea of   exporting value added tea.  Answer was the best place for that is London.   

Back home, Merrill   found that the tea trade was still controlled by London. From growing, to broking, selling, shipping and distribution, including retail marketing overseas, the British continued to control Ceylon tea.  UK had retained its vertical control over tea. 

The prominent tea exporters in the country were   representatives of foreign brands like Brooke Bond and Lipton. They had to protect these foreign brands.  There was not one voice to promote Sri Lanka interests, said Merrill.

Merrill found that the state regulatory and supervisory bodies for tea were also fiercely protective of British and multinational interests.  Colombo Tea Traders Association (CTTA) dominated the tea auctions in Colombo. CTTA was run by a committee of five buyers and five sellers, all loyal to British interests. The same firms were appointed to the committee   year after year.However, in 1968 the Europeans in the buyer segment were ousted and replaced by five local companies.

Merrill was openly critical of the activities of the various statutory tea agencies. Sri Lanka Tea Board (SLTB) was helping the tea trade in other countries. SLTB had funded and promoted Lipton tea at the Moscow Olympics in 1980. SLTB had spent around Rs.  50 million between 1983 and 1988, promoting Rabea Tea, which was owned by a company in Saudi Arabia. The money channeled to Rabea should have been spent on the development of fully owned Sri Lanka brands, said Merrill.

Merrill had a poor opinion of the Ceylon Tea Centers, set up in various capital cities. The Ceylon Tea Centers had no impact on tea sales,    but its restaurants were very popular for rice and curry. An Egyptian with no experience in tea was appointed to the tea center in Egypt and girls from Kenya   were employed at the London Tea Center. Ernest Jesudason head of Ceylon Tea Centre, London was a British   national with minimal links to Ceylon. He had little knowledge of tea or tea marketing, said Merrill.   Merrill suggested that   the Tea Centers should be closed down.

 The members of the Sri Lanka Tea Promotion Board and the Sri Lanka Tea Board   knew nothing about selling tea. They knew nothing of market strategy. The officials on these Boards had neither the talent nor the personnel who could understand the intricacies and dynamics of international tea marketing, said Merrill.They were   unable, and   reluctant to respond to market changes.

 Appointees to these organizations did not come from the mercantile world. Ceylon Tea Promotion Board consisted of ex- officio appointments, such as representatives of the Chamber of Commerce, the CTTA and TRI. None of them had any idea of the tea trade, its marketing, branding or advertising so the Secretariat could do whatever they wished.

The first Director General of the Sri Lanka Tea Board was the head of Tea Research Institute. He did not   know anything about the international tea trade.   Merrill said that Clarence Cooray when Head of the Tea Promotions Board, was entirely dependent on British  tea interests in Ceylon for advice on the  promotion of Ceylon tea, owing to a lack of  local persons with sound overseas tea marketing knowledge.

When the Sri Lanka Tea Board Act was in preparation, in the 1970s, Merrill had advised to appoint people with the required knowledge and experience. 

 Merrill stated that his observations on Tea Propaganda Board and the Tea Board were confined to the 1970s and 1980s. SLTB showed sound judgment in respect of tea, in the decades that followed, he added.

Tea agencies, both private and state, were unable to identify and push promotional opportunities and exploit them at the correct time, said Merrill. There is ignorance of market realities. They showed  a submissive, over cautious and uninformed mindset.

 We needed a strong tea secretariat, convinced of the importance of Ceylon tea in the national economy and knowledgeable about global tea marketing.  The money from the Tea Cess should be used to promote Ceylon owned brands instead of foreign owned brands, Merrill said.

Sri Lanka   missed several market opportunities, said Merrill. Sri Lanka     failed to move into the tea bag segment. Indonesia secured it.Sri Lanka also failed to enter the Middle East market and the Russian market at the right time.

Though the Middle East was one of Sri Lanka’s strongest markets, the popular brands there did not belong to Sri Lanka. Lipton dominated in the Middle East, both in tea bags and bulk supplies. Lipton had in place a very professional managed marketing and promotional infrastructure in the region.

The Gulf Cooperation Council (GCC) consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab emirates came into existence in 1981. Merrill had pointed out that this was an excellent opportunity to consolidate Sri Lanka‘s hold on the Middle Eastern market, and that we should move fast and establish a monopoly there. Had we established a common marketing initiative of Ceylon tea at the time that the Gulf Cooperation Council came into being, Ceylon tea would have benefited.  

Merrill’s interest in creating a local brand of value added Ceylon tea was opposed by vested interests. When Merrill was on the Ceylon Tea Propaganda Board   he suggested that they should export value added locally owned brands.  The  Sri Lankan members of the Board were supportive, but the Chairman of Brooke Bond, strongly   opposed the idea. It was not a practical idea, he said, as we would need to blend from multiple regions.

There was opposition also from local officers. In the 1980s, the Sri Lanka Tea Board was sympathetic to Merrill’s ideas.  In 1980 SLTB had pointed an Advisory committee on the Promotion and Marketing of Ceylon Tea.  But implementation was stifled by the bureaucrats of the SLTB, said Merrill.

Thanks to his insistence on creating a local product, Merrill was seen as a disruptive influence. CTTA representatives had been instructed by their British masters to oppose all his initiatives and proposals at the CTTA.  When Merrill was appointed to the Sri Lanka Tea Board, there was opposition saying he was a disruptor.   Members of the Tea Propaganda Board also did not want Merrill appointed for a second   term.                     

Merrill Fernando was, from the start, highly critical of the British control of the tea industry. But others, who were dependant on the industry, avoided the subject. Most were careful not to anger the British owners, for obvious reasons. Also, they did not care   what happened to Ceylon tea once it had left the island.  (Continued)