1. Developing Trends in the North American Market Joseph P. Simrany, President Tea Association of the USA Colombo International Tea Convention August 29 th -September 1 st, 2007

2. 2 Introductory Comments Grateful to the Conference Organizers for the invitation to be here Grateful to the Conference Organizers for the invitation to be here Conference Chairman – Mr. Michael de Zoysa; Chairman of the Sri Lanka Tea Board – Mr. Lalith Hettiarachchi; and the Chairman of the Colombo Tea Traders Association – Mr. Tyeab Akbarally Conference Chairman – Mr. Michael de Zoysa; Chairman of the Sri Lanka Tea Board – Mr. Lalith Hettiarachchi; and the Chairman of the Colombo Tea Traders Association – Mr. Tyeab Akbarally Working together all things are possible Working together all things are possible

3. 3 Sri Lanka is one of the most beautiful Places on Earth! The USA is learning to appreciate Specialty Tea The USA is learning to appreciate Specialty Tea Sri Lanka Needs More consumer awareness Sri Lanka Needs More consumer awareness More work needs to be done More work needs to be done Let’s make it happen! Let’s make it happen!

4. 4 Objectives of this Presentation Review Tea Trends in the North American Market Review Tea Trends in the North American Market Explore strategies that Sri Lanka could employ to increase the popularity of their tea in this market Explore strategies that Sri Lanka could employ to increase the popularity of their tea in this market

5. 5 Tea has Diverse Appeal Tea appeals to many people in many different ways Tea appeals to many people in many different ways Tea is perhaps the most versatile beverage on the planet Tea is perhaps the most versatile beverage on the planet

6. 6 The North American Tea Market is Amongst the Most Diverse in the World 85% of Tea in the USA is consumed over ice 85% of Tea in the USA is consumed over ice As a result of that as well as the popularity of instant tea and herbal tea, it is generally assumed that USA tea consumers do not have an appreciation for “real” tea As a result of that as well as the popularity of instant tea and herbal tea, it is generally assumed that USA tea consumers do not have an appreciation for “real” tea

7. 7 Tea Imports into the USA (Kilos) 1996-19982004-2006 % Inc/ dec Black Tea 85,875,28887,572,7001.9 Green Tea 5,424,20714,795,400172.8 Total Tea 91,299,495102,368.212.1

8. 8 Tea Imports into the USA in 2006 The USA imported 240 million pounds of tea or 108 million Kg. The USA imported 240 million pounds of tea or 108 million Kg. 83% of which was Black with most of the remainder Green Tea 83% of which was Black with most of the remainder Green Tea Total tea imports were up over 7.5% over the fullyear 2005 Total tea imports were up over 7.5% over the fullyear 2005

9. 9 Size of the Tea Market in U.S. 1990 $Value by Type 1990 $Value by Type Trad. $0.87 Billion Trad. $0.87 Billion RTD 0.20 “ RTD 0.20 “ Fd Srv 0.50 “ Fd Srv 0.50 “ Special 0.27 Special 0.27 Total $1.84 Billion Total $1.84 Billion Green $20 MillionGreen $20 Million 2006 $Value by Type 2006 $Value by Type Trad. $1.90 Trad. $1.90 RTD 2.65 RTD 2.65 Fd Srv 1.0 Fd Srv 1.0 Special.95 Special.95 Total $6.50 Billion Total $6.50 Billion –Green $200+ Million

10. 10 Consumer Issues Driving Trends Growing number of scientific studies suggesting tea plays a role in the inhibition of many chronic human diseases Growing number of scientific studies suggesting tea plays a role in the inhibition of many chronic human diseases Widespread acceptance by the scientific and medical communities that tea is a healthy beverage Widespread acceptance by the scientific and medical communities that tea is a healthy beverage Widespread awareness by the media that tea is proven to be a healthy beverage Widespread awareness by the media that tea is proven to be a healthy beverage Tea enjoys positive imagery regarding its contributions to health versus alternative beverages Tea enjoys positive imagery regarding its contributions to health versus alternative beverages

11. 11 Tea & Health Strategy Sales results from focusing on the health benefits of tea exceeded our most optimistic expectations Sales results from focusing on the health benefits of tea exceeded our most optimistic expectations Consumers already believe tea is healthy and their perceptions are reinforced by scientific studies Consumers already believe tea is healthy and their perceptions are reinforced by scientific studies Long term trend in the USA is to eat and drink healthier foods & beverages Long term trend in the USA is to eat and drink healthier foods & beverages

12. 12 Green Tea Sales Prove Health Strategy is Working Green Tea has moved from 3% of total imports 15 years ago to over 17% of total imports in 2006 Green Tea has moved from 3% of total imports 15 years ago to over 17% of total imports in 2006 This is an increase of over 500% This is an increase of over 500% The increase in popularity is almost entirely due to the association with health benefits The increase in popularity is almost entirely due to the association with health benefits

13. 13 Black Tea Will Benefit Next As more scientific information emerges regarding the health benefits of Black Tea, it is entirely possible that it too will surge in popularity As more scientific information emerges regarding the health benefits of Black Tea, it is entirely possible that it too will surge in popularity

14. 14 Future Health Plans The Tea Council of the USA remains committed to the health message The Tea Council of the USA remains committed to the health message Another Scientific Symposium is planned for September 18, 2007 in Washington DC Another Scientific Symposium is planned for September 18, 2007 in Washington DC The Tea Council of the USA is grateful to its Producing Country members (India, Kenya, Malawi, & Sri Lanka) whose generous contributions make these kinds of events possible The Tea Council of the USA is grateful to its Producing Country members (India, Kenya, Malawi, & Sri Lanka) whose generous contributions make these kinds of events possible

15. 15 Other Consumer Trends Driving the Popularity of Tea in the USA A desire for more convenience A desire for more convenience Ease of preparation Ease of preparation Ready availability Ready availability

16. 16 Third Major Trend Driving the Increased Popularity of Tea Growing appeal of Specialty Tea Growing appeal of Specialty Tea Sri Lanka has a tremendous opportunity in this area Sri Lanka has a tremendous opportunity in this area This is the most profitable segment of the Tea Industry This is the most profitable segment of the Tea Industry

17. 17 Forth Trend Responsible for the Popularity of Tea in the USA Promise of high profitability is drawing thousands of entrepreneurs to sell various forms of tea Promise of high profitability is drawing thousands of entrepreneurs to sell various forms of tea The number of tea rooms has grown from 200 to 2200 over the last 10 years in America The number of tea rooms has grown from 200 to 2200 over the last 10 years in America Thousands of Coffee Houses have added Specialty Tea Thousands of Coffee Houses have added Specialty Tea

18. 18 USA Market is Exciting Market is Vibrant & one of the few in the world where tea sales are growing Market is Vibrant & one of the few in the world where tea sales are growing The market forces in place are strong and long term The market forces in place are strong and long term The health message will drive increased consumption for many years to come The health message will drive increased consumption for many years to come

19. 19 Tea is Finding its Way into Many Other Products Cosmetics Cosmetics Medicines Medicines Blends with Juice Blends with Juice Food Preparation Food Preparation Pet Foods Pet Foods Candies & gums Candies & gums Toothpaste Toothpaste Alcoholic Beverages Alcoholic Beverages

20. 20 Sri Lanka Has Tremendous Tea Potential It is only a matter of time before Sri Lanka realizes its true tea potential in the USA & the rest of the world It is only a matter of time before Sri Lanka realizes its true tea potential in the USA & the rest of the world Sri Lanka produces some of the best tasting tea in the world. Sri Lanka produces some of the best tasting tea in the world.

21. 21 Sri Lanka Has Tremendous Tea Potential A wide variety of high quality specialty teas A wide variety of high quality specialty teas Awareness in the North American market is low and needs to be improved Awareness in the North American market is low and needs to be improved There are many relatively inexpensive ways to improve awareness There are many relatively inexpensive ways to improve awareness

22. 22 Sri Lanka has Tremendous Potential Increase Trade Media Coverage Increase Trade Media Coverage Hire a domestic PR AgencyHire a domestic PR Agency Coordinate programs with targeted consuming county tea councilsCoordinate programs with targeted consuming county tea councils Accent the positiveAccent the positive Capitalize on the rich heritage and romance of tea from Sri Lanka Capitalize on the rich heritage and romance of tea from Sri Lanka

23. 23 Strategies for Success Make your website more user- friendly Make your website more user- friendly Create links to all consuming countries Create links to all consuming countries Encourage foreign tea councils to disseminate you merchandising materials to their membership Encourage foreign tea councils to disseminate you merchandising materials to their membership Attend International Trade Shows Attend International Trade Shows

24. 24 Strategies for Success Create an electronic newsletter that targets key buyers regularly Create an electronic newsletter that targets key buyers regularly Create an interactive segment of your website to entertain and educate visitors Create an interactive segment of your website to entertain and educate visitors Hire dedicated professionals responsible for country performance and give them the tools to make it happen Hire dedicated professionals responsible for country performance and give them the tools to make it happen

25. 25 Strategies for Success Assume a leadership role in industry wide initiatives such as: Assume a leadership role in industry wide initiatives such as: Global Pesticide InitiativeGlobal Pesticide Initiative Adoption of a Universal Code of ConductAdoption of a Universal Code of Conduct Elimination of inferior teas from the supply chainElimination of inferior teas from the supply chain Share your Knowledge through Seminars and Tea ClassesShare your Knowledge through Seminars and Tea Classes Contribute to Scientific SymposiaContribute to Scientific Symposia

26. 26 Strategies for Success Talk regularly with your key customers to ensure that you are aware of their ongoing needs. Talk regularly with your key customers to ensure that you are aware of their ongoing needs.

27. 27 Sri Lanka Has Tremendous Tea Potential The Tea Association of the USA and each of its divisions stand ready to assist Sri Lanka to realize this potential The Tea Association of the USA and each of its divisions stand ready to assist Sri Lanka to realize this potential Thank you for the opportunity to spend some time with you. Thank you for the opportunity to spend some time with you.

28. 28 Sincere Gratitude to the Organizers It has been a sincere pleasure to spend some time with you. It has been a sincere pleasure to spend some time with you. Coming back to Sri Lanka is like coming back to a second home. Coming back to Sri Lanka is like coming back to a second home. Thank you for your kind hospitality! Thank you for your kind hospitality!