Evaluation of Competitiveness of Ceylon Tea in the World Market

Abstract

Competitiveness and being competitive is vitally needed to enhance the performance and to tackle challenges in the highly competitive world tea market. The prestige brand Ceylon Tea established in the past has been enjoyed by Sri Lanka having no analysis done to determine the competitiveness of Ceylon Tea in its major destinations. This study was carried out by using the CMS model to determine the competitiveness and to test the possibility of using the model for such purposes. The total change of exported quantity to a particular country could be differentiated into three corporates such as market growth effect, composition effect and the residual effect or competitive effect by using the Constant Market Share (CMS) model. Fifteen destinations of Ceylon Tea markets were selected for the study based on the total quantity of Ceylon Tea exported and the potential of the country to import Ceylon Tea. Tea import data of last fifteen years from 2003 to 2015 were used for the study. The results revealed that Ceylon Tea is found to be competitive in Russia, Kuwait, Japan, Turkey, Germany, Australia, USA, and India, and Azerbaijan, Iran, UK and Libya are found to be having potential for being competitive for Ceylon Tea. However, Sri Lanka could have maintained its share of export and increased the market share in many of these destinations by enhancing the market growth as well as composition effect. Therefore, this model could be used to determine the competitiveness of Ceylon Tea in its destination. Further, tea promotion policy decisions including brand promotion through effective marketing communication could be achieved.