Dilmah sets ambitious revenue target in China market

Taking a differentiated positioning in the China market, Sri Lankan-based independent tea brand Dilmah is looking to double its revenue in China over the coming three to five years, said a top executive of the tea brand.

"Next summer (in 2026) we are trying to introduce our iced tea to the China market for the first time, and we are ambitiously trying to develop both hot tea and iced tea market in China," said Dilhan C Fernando, chairman of Dilmah, adding that the product is tailored specifically for Chinese consumers.

According to Fernando, through introducing the tailored iced teas for Chinese palates, the company looks to increase China's share in its global revenue from the current 4 percent to 8 percent in three to five years.

Entering into the China market in 2015, the tea brand took a differentiated strategy to compete with local tea brands and mainly targeted the high-end market by offering unique Sri Lankan teas as part of a global tea experience.

In Fernando's eyes, the core values of tea lie in its health benefits. It is believed to help reduce stress by 51 percent, enhance gut health, contribute to mental focus via L-theanine, and addresses chronic diseases like dementia and heart disease.

Furthermore, the natural uniqueness of tea and its cultural respect towards China's tea heritage will bring it closer to Chinese consumers, particularly younger generations. The brand looks to communicate the sophistication of the tea, its health benefits, and ethical purpose, countering its devaluation as a cheap commodity, he explained.

"Sri Lanka is not competing with Chinese tea because you have exceptional tea, but the beauty of tea is that tea from Yunnan province is different to tea from Sri Lanka, or tea from India," said Fernando, during an exclusive interview with China Daily.

"China contributed between 4 to 5 percent of our global business, but our presence in China is insignificant because the China tea market is huge. I believe it could go up to around 7 to 8 percent if we are successful with the iced tea. But we don't want to become much bigger because for us we are a family business with focus on quality. If you really become too big, then you have to compromise and we don't want to compromise," he said.

China's tea industry is surpassing the one-trillion-yuan mark ($137.49 billion) and is heading to the directions of high-quality and sustainable development, the official Xinhuanet reported, citing Wang Qing, head of the China Tea Marketing Association.

Currently, Dilmah is available in over 600 hotels and more than 400 retail stores across 45 Chinese cities, as well as on e-commerce platforms including Tmall and JD.

"I believe China is the best position for economic growth among any country in the world. We want to grow along with China's growth," said Fernando.

"I am not telling you that because I'm here in China, but what we see around us in terms of the technological technique and the innovation capability. It's unmatched, so I think China has phenomenal opportunity," Fernando said.

Founded by Merrill J Fernando, Dilhan C Fernando's father, in 1985, Dilmah is available in 108 countries worldwide.