Business

Dilmah third largest standalone global tea brand

Just about even with Tetley and catching up on Lipton

by Steve A. Morrell

Dilmah teas sell in approximately 93 countries. If Lipton, now a global tea brand, could say they command 15 % market share of that market and Twinings, given their in-house assessment have 6% Dilmah, according to Fortune Magazine is just about even with Tetley. All this would lead to the standalone Brand Dilmah commanding third slot in that brand category.

Just as much as Lipton, the Brand, had its origins in Ceylon, Dilmah too has its roots in Sri Lanka. But for convenient marketing strategy it is Ceylon. And is Ceylon tea.

Dilmah owns vast tracts of tea land in the Central hills and apart from Brand projection its image also portrays Dilmah teas originate from their own tea land adding strength to the Brand and more so its market share.

Merril J. Fernando, Chairman of his company MJF Exports with his sons Malik and Dilhan run the company, Dilmah Teas. The company pioneered the continuous movement of Ttea picked packed and branded at origin and supplied direct to consumers offering guaranteed consistency quality and authenticity.

They have also built on introduction of Single Region Single Estate Tea giving rise to marketing strategy of exclusivity of, say, a single malt, (In the ‘Scotch’, idiom). That coupled with varied elevations of Sri Lanka’s tea land and diversity in weather and soils, has marked Dilmah to relate to, more appropriately, the wine industry internationally.

Dilmah the company, started its operations in 1988 with Australia its first marketing target. New Zealand followed and in time the Dilmah Brand gained strength and is now an internationally branded beverage.

The wine equation however has met with some ridicule from global players notably larger conglomerates that now see Dilmah a threat to their cozy conception that an ‘upstart’ company from a tiny Island in the Indian Ocean could threaten their snug world which they consider their little niche in the beverage industry.

Fortune Magazine says quoting Merril J. Fernando:

"The big multinationals would say that," he said. Merril Fernando who says he has spurned many offers to buy him out over the years, said; "I’ve stayed true to the leaf because I believe in its quality and not in its mass-market commoditization."

Fortune Magazine also says: "The world may drink more than a billion cups of tea a day, but big producers have struggled to add value to the brew, while Starbucks and other coffee brands have prospered. So the Dilmah Group, the name is taken from the first syllables of the brothers’ names, has positioned itself like fine wine.

Its elegant packaging is heavy with wine iconography. Descriptive labels equating a robust black tea to a shiraz or a fine white leaf to champagne. The aim is to present the tea as the purest in the world, while also playing to consumers’ health concerns and rising enviro-consciousness. Unlike the blends in an average tea bag, which can contain leaves from several countries. Dilmah teas, it says, are from a single origin. "You have to regard tea in the same way as you would an immaculate vintage," says the brothers’ 77-year-old father, group patriarch Merrill Fernando. "People need to know what they are drinking."

The company "my third son," as Merrill describes it which was founded in 1988, effectively created a new market segment that the industry now calls "curiosity teas."

According to Euromonitor, a London market research consultancy, Dilmah is now the world’s third-largest standalone global tea brand, about even with Tetley, which is owned by India’s Tata Group. Merrill claims Dilmah’s innovations have forced competitors to follow with their own speciality brands. Starbucks, too, has caught the boutique-tea trend, with its 1999 purchase of Tazo Tea.

"Dilmah is a very interesting company," says William Gorman, executive chairman of Britain’s Tea Council. "This is an industry that has been incredibly slow to innovate, and relatively tiny Dilmah has showed it how." The company has doubled in size since 2000. Merril Fernando got his grounding as a tea taster when it was still a "White man’s skill", in 1950.

Since then, a working stint in Mincing Lane, the tea buying centre of the world at that time, and then buying out the Company he worked for after he returned and continued his work. The surge for Dilmah identification grew to its present global impact.

The mighty Starbucks too has seen Dilmah strategy a threat and has tried to match what it considers strong marketing.

 

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