Camellia: a name that means tea.

The Camellia Legacy

Camellia plc is a conglomerate with diversified interests including tea, coffee, wine, food, beverages, horticultural products, rubber, insurance, investment, banking and financial services, shipping, and much more. But tea, the original trade of the company, is a large share of the business and is located in India and Bangladesh with very large interests in Kenya, Malawi and South Africa. The Group is the largest non-governmental producer of tea in the world with a crop of almost 80 million kilos.

Camellia, the apex company of the Group, was originally set up as comparatively small businesses owned by individual British families who went out to the Middle East in the 19th Century. Its original name was The Sephinjuri Bheel Tea Company Ltd and was ser up in India in 1889. Other companies formed in India and neighboring countries around the same second half of the century were Mex Lawrie, Ducans and Eastern Produce, which years later merged. The 1967 merger of Alex Lawrie with Walter Duncan and Goodricke marked a major development, which was to lead to further mergers later on. In 1990 Eastern Produce Holdings (whose origins were in 19th century Ceylon) joined the Camellia group, changing their name to Linton Park Plc. Two other leading companies, in this case outside the tea industry, to be connected with the conglomerate were Associated Fisheries and Siegfried AG. The Lawrie Group acquisition was the result of a merger with Camellia in 1970s.

In other words Camellia Plc is the result of a series of mergers over the years. One of the masterminds behind these mergers was Gordon Fox, a Canadian businessman, who was extremely perceptive and far-sighted--skills that allowed him to detect opportunities whenever they arose. He also knew how to inspire others and pick out the best teams of top directors. He was the dynamic force behind the expansion.

Peter Leggatt: A Lifetime in Tea

Tea & Coffee Trade Journal spoke to Peter Leggatt, MBE, who holds a number of senior positions in the Group, at the head office of Camellia Plc and Lawrie Group Plc at Wrotham Place in Kent, U.K. Peter Leggatt is director of Camellia Plc, chairman of Lawrie Plantation Services Ltd, and director of Linton Park Plc. He is basically chairman of all their companies in India and Bangladesh. "Camellia remains the apex company controlling around 80% of Linton, 100% of Lawrie, and through either Lawrie or Linton we control 74% of Goodricke, 100% of Bangladesh, and so on. We like as a company to have control of the companies we operate," explained Leggatt. Leggatt is also a committee member of various organizations since the Lawrie Group offers their support to various causes which include: Help Tibet, European Schools in India Improvement Association (chairman), King Mahendra Trust for Nature Conservation, British Association for Cemeteries in South Asia (Council Member), The Leonard Cheshire Foundation International, Britain-Nepal Chamber of Commerce (vice chairman), The Britain-Nepal Society (chairman), and Sir Percival Griffiths' Tea Planters Trust (Trustee)

Peter Leggatt's links with India go back to his childhood through the novels of Kipling and stories his father told him about the Raj, elephants and tigers. He first came to India in 1963. "I have been connected with tea for 44 years," he says. "I joined Inchcape plc in 1959. Of those 44 years, I spent 20 living between India, Thailand and Bangladesh. I was not directly connected with tea production in Bangkok. I was connected with tea marketing. Whereas in India and in Bangladesh I was very much associated with tea production."

He joined the Camellia/Lawrie Group in 1988 and is now based in London but makes regular visits to India, Bangladesh and Nepal "I now go out there four or five times a year and spend several weeks on each visit. I visit as many gardens as I can and I meet as many people as I can. I thoroughly enjoy it."

The Tea Industry Today

Peter Leggatt remarked on the current situation of the tea industry and how costs have affected tea companies and their development in India, "Talking about India, costs have been rising every year really quite steeply. And prices have been going down. So India has reached the situation where most companies are on hardly a break-even situation because costs go up and prices go down. Eventually the crunch has to come. Because we are well run and because we have decent gardens and good management, we are surviving--but our heads are only just above water."

With regard to equipment and maintenance costs and innovation, he added, "There has not been a major development in tea machinery for some time, and I think that everybody who is running a proper garden and a proper factory has now high quality equipment available for the appropriate sort of manufacture. Orthodox tea has made a bit of a comeback. This used to be the only form of manufacture until the 1940s and 50s, then CTC came in and took it over."

Tea Marketing control Order

The Lawrie Group employs over 44,000 tea workers in India and Bangladesh. Each tea garden is a self contained little world of its own providing various facilities for its workforce, such as housing, hospital facilities, water supply and education.

Has the Indian Government considered helping out with these costs? "There are proposals which the Government might rake on in India regarding some of the social costs which are really quite high. Up to 20% of the cost of a kilo of tea is straight social costs, that is hospitals, schools, housing, water. All these things that good employers have been doing for years. The cost of doing this is going up every year and becoming a major factor in the cost of production. The Government said they would consider contributing towards that social cost but I cannot say I am optimistic that it is going to happen very quickly."

A topical issue is the tea marketing control order to which Leggatt remarked: "I do not think that has yet been ratified. The suggestion I think was that all tea should be sold through the auctions with effect from probably January 1, 2004. However, a lot of people were objecting to it, particularly the traders. If there was a Marketing Control Order, say all- non-export business would have to be through auctions, it would not be a bad thing but one producers should have the freedom to negotiate their export orders privately."

Company policy for exports is to sell mostly in bulk and sometimes direct: "We have long standing relationships with major packers in the U.K., in Europe, and to a lesser extent in the States who have for years had regular bulk shipments of tea on a private basis and obviously we would like to continue."

Instant Tea

A recent development of the Group is their own instant tea "We are a major producer for instant tea, which had a slow start-up. It is manufactured in the Dooars. It is probably the most modern instant tea plant in the world in a producing area. We can produce up to 500-600 tons of instant tea a year. And we can make that either from black tea or green leaf tea or a mixture. So we can make it either straight from green leaf or from black tea." This is part of the company's policy to diversify and keep up with the competition. "We are still an overseas company in tea. We can only invest in India in things connected with tea at the moment. I am sure it is going to change. Instant tea was something we could diversify into. So we decided to do so in the early 90s. Of course, at that stage there appeared to be a shortage of instant tea in the world. By the time our plant was up and running (everything takes a couple of years at least) the shortage had been taken out by people who had existing instant tea plants expanding their capacity. So we had to battle into a market that had gone up but we were competing against some well established operators like Tatas and James Finlay. But we sort of stuck in it and now we are producing, and we have orders of more than our capacity. Orders come from Japan, India internally itself, Europe and the U.K."

Brand Names

Nowadays, many businesses like to have their brand name. "Everyone in India who produces tea wants to have a packet. Everybody wants to value add. But in India you are up against the majors like Tatas and Hindustan Lever who control a very large chunk of the market. And we are in there with a quality pack which sells well in certain niche areas of the country but it is very difficult without an enormous advertising and promotion budget."

He continues, "What is happening in India as a whole is that there are now a lot of small, I have heard them described as "garage packers," who buy up fairly cheap tea and put it into polythene bags and think up a brand name and sell it in a small local area. I understand that this has made a hole in the majors like Tatas, Hindustan Lever and Duncan Brothers."

A quantity of packets of the Goodricke brands were on display in the Wrotham tea tasting room where Alan Hobbs, marketing director and tea taster of Lawrie Plantation Services Limited checks the various qualities of new tea shipments. This is carried out at least once a week.

The Gardens

The Goodricke Group, which operates locally and is registered in Calcutta, manages 36 tea gardens located in Dooars (12), Assam (10) and Darjeeling (14). Of these three, Darjeeling at the foothills of the Himalayas has always stood out as being one of the finest teas in the world reaching record prices with teas produced from their Castleton garden in Darjeeling. Recent events, such as costs and tea growing in neighboring Nepal have been threatening this price of teas. On this issue, Leggatt commented "Nepal is now producing from its high grown areas which are adjacent to Darjeeling where there has been tea for quite sometime but it is now getting much more organized. They have small quite modern factories and they have the advantages that the tea bushes are very new, they are very young. Therefore the quality is good. They have the advantage of having access to clones from Darjeeling, as well as to clerical and senior management from Darjeeling. Infrastructures are being improved such as roads, water, electricity. And they are producing about a million kilos of high grown tea. It cannot be called Darjeeling because it is not in Darjeeling, it is in Nepal. It is Nepal tea. There are I think some unscrupulous people in the trade who have been buying this Nepalese tea and blending it with Darjeeling tea and then passing it off as Darjeeling. Obviously as Nepal gets its act more and more together their crop will increase."

Darjeeling tea is experiencing a downturn "Darjeeling tea production is now down to 10 million kilos. So a million coming in from Nepal is 10% which is quite a knock. So in 3 or 4 years time if it gets to 2 million it is going to be more of a knock when Darjeeling is struggling with low yields and very high costs of production." The reason for high production costs is that "With low yields and Government legislation on wages and welfare results in a very high cost of tea. We are the biggest producers of Darjeeling from our 14 gardens, with a crop of 1.2 million kilos that was in 2002. But our yield in Darjeeling is about 400 kilos a hectare compared with the yield in the rest of the growing areas of over 2000 kilos per hectare.

As a top quality tea, he remarked "A lot of it is wonderful. The best Darjeeling is first and second flush, and may be the autumn flush which is incomparable but during the rains there is some tea that comes out of Darjeeling which is not so good as those in early and late periods. Historically that used to be bought by Iran and Russia. Now both Iran and Russia have dropped out of the market and that has made an impact on Darjeeling.

As regards the situation in the Dooars and in Assam, the reply was "The Dooars does not export at all. Good Assam has always had a market in this country, in Germany and of course in India itself. The Indian market has been creeping up in the last consumption figures. Most Indians do not drink Darjeeling. If we could encourage the consumption of Darjeeling in India we would be very happy."

The Future of Tea

To conclude, a key question asked was on the future of tea. To this Peter Leggatt replied "At the moment particularly for India we are going through a bit of a depression, a bit of a trough. We always thought that tea was cyclical, and that you had these peaks and troughs and ,always sailed on. This time we have been in a trough for three or four years." But Leggatt is optimistic: "I am sure that we will get out of it. I am sure that quality is one of the things that is going to help, and we certainly as a group are improving our quality or bringing our quality up to the highest levels we can wherever we can. And this certainly has a benefit. A good tea will always fetch better prices than ordinary tea. There is always a market for tea. It is a staple beverage. Tea remains our core business."

Growing tea grows on you. Besides being a relaxing drink, tea is a philosophy of life. And as Peter Leggatt says "I like to think that the sense of time which imbues the whole process ... planting, nurturing, cultivating ... preparing, enjoying ... Tea takes time." His empathy with the East and its people remains strong "We like the interaction with our entirely local staff. In India and Bangladesh we have no expatriates. All of us who are connected with tea enjoy it!"

And to summarize, in the words of Peter Leggatt, we can say "The founding fathers of the great gardens saw beyond their own legacy".