Big plans for Sabah Tea

The Malaysian tea market has more than 100 brands, most of which are regional brands. Sabah Tea is an example of a regional brand that has transformed into a national brand, but more importantly, it has ambitions of becoming the country's third largest take-home tea brand .

Sabah Tea is one of the products under Yee Lee Corp Bhd, whose businesses range from running oil palm plantations to trading products like the Helang cooking oil and Spritzer bottled water. The Ipoh-headquartered company ventured in the tea business in 1997 by buying a tea plantation in Ranau, Sabah, spanning 831ha in 1997 from the state government and rejuvenating it. Back in the 1980s and 1990s, the Sabah Tea brand was unknown in Peninsular Malaysia. In fact, it was only in 2007 that the Yee Lee group expanded the product range to the peninsula. But today, more than half of its sales come from the peninsula.

Fresh tea: Sabah Tea Garden, the company’s tea plantation, with Mount Kinabalu in the background. (Pix provided by Sabah Tea Sdn Bhd)

One of Sabah Tea's main selling points is that it is pesticide-free. Only about 30% of the plantation land has been used up, and insects are drawn more towards the surrounding rainforest. And to ensure that the packaged product is 100% pesticide-free and pure, Sabah Tea's leaves all come from a single source (meaning it is not blended with leaves from other plantations).

Yee Lee Trading Co Sdn Bhd marketing manager Teh See Yong says Sabah Tea sales have been growing by double-digit percentage for the past three years. “From now on, we are aiming for 20% growth annually,” he tells StarBizWeek. That should augur well for Yee Lee's plan to make Sabah Tea among the top three biggest take-home tea brands by 2015, after Lipton and Boh.

The tea market can be broadly divided into three segments: take-home, comprising tea leaves and tea bags; food service, which covers outlets such as restaurants and stalls; and ready-to-drink. Sabah Tea is only a small player in the food service segment, and it has no plan to enter the ready-to-drink segment in the near future. Currently half of Sabah Tea's sales come from the tea bag segment, while the rest is equally divided between pot bags and loose tea leaves. Teh says Sabah Tea is not yet profitable. While it could be profitable as soon as next year if it wanted to, Yee Lee prefers to take “the long position” due to the challenging market.

Teh showing some Sabah Tea products.

Yee Lee spends more than 20% of Sabah Tea's sales annually on advertising and promotion. “We have no choice but to spend substantially, since we are new in the market,” he says.

Based on data from market research company Nielsen, it was the third biggest tea advertiser in the first half of this year, after Unilever (Lipton) andNestle (ready-to-drink brand Nestea). Yee Lee was ahead of Boh Tea Plantations.

Nielsen, which calculates ad spending based on official published advertising rates, says that Yee Lee spent RM873,000 in media-based advertising in the first half of the year, versus RM9.9mil by Unilever, RM5.7mil by Nestle and RM487,000 by Boh (outdoor ad spending was not included).

“We're also bringing in new machinery to the plantation to expand our capacity, and we're growing the tea plants without using pesticide, so the yield is lower (than other companies' tea plantations). But it's worth the effort since it is good to offer a different product to the market which the consumers can value,” he says.

Yee Lee has also participated at Media Prima's Jom Heboh on-ground events, and sponsors the E-Jamuan Teh fund-raising event co-organised with the National Cancer Society of Malaysia and the Breast Cancer Welfare Association of Malaysia. It also plans to sponsor an event (with the Rotary Club) in October to take disabled children up Mount Kinabalu.

In terms of Sabah Tea distribution, Teh calls it “quite decent”. “Our key strategy is how to leverage on the distribution network of Yee Lee which covers more than 20,000 outlets. Sabah Tea already has over 20% now, and we aim to bring it to at least half of the outlets by 2015,” he says. Teh says that by 2015, Sabah Tea will be a significant product for the group.

-thestar online.

www.sabahtea.net