Notion of fine tea remains untapped in South Asia: Dilhan C Fernando, chairman, Dilmah

For tea in India, the time is now. India now has a luxury hospitality sector vibrant enough to hold a serious tea programme, with an estimated 1 billion+ potential guests in the luxury and premium segment. Premium hotels and innovative hospitality and culinary concepts are growing.

The notion of fine tea remains largely untapped. Guests are seeking experiential dining, authentic flavour discovery, wellness and conscious consumption. The sophistication of the premium Indian guest has changed unrecognisably. The same instinct that made single-estate coffee, small-batch spirits and regional cuisine significant creates an opportunity for fine teas.

Thambapanni is Indian. The teas are made in India, for India, from Indian gardens and Indian spice, with two exceptions — our Nuwara Eliya pekoe and Ceylon Souchong. The current definition of premium begins at around Rs 600 per kilo and our aspiration is to go significantly beyond in terms of quality and value. However, India’s branded tea cafés already number over 1,200, growing at an estimated 25% per annum. The opportunity appears small only because it hasn’t been addressed. We are not pursuing a market opportunity but aiming to create one. Our ambition is modest. Having 50-60 luxury hospitality properties, done properly, would be a considerable achievement in the first two years.

Thambapanni is being created exclusively for India. What influenced it?

Our Thambapanni Luxury Collection has no equivalent in India. We worked with 26 artisanal suppliers of fine tea, spices and herbs to craft a collection of taste experiences. It includes pure and single region teas such as Wild Assam Reserve, as well as Cinnamon Velvet Gourmet Tea, combining Assam tea with Ceylon Cinnamon and natural vanilla extract. Maharaja Chai combines real cardamom and ginger grown in India with Ceylon cinnamon and other spices.

Each tea is a palette of experiences designed around occasions and moods, with possibilities to elevate food through pairings and add depth to NOLO  (non-alcoholic and low ABV) drinks. Dilmah Tea Inspired initiative — Tea Gastronomy and Tea Mixology — began in 1998, evolving through the work of our Dilmah School of Tea, which we established in 2008 to help hospitality operators understand the potential in tea. It has been a long and arduous journey, and it may be no different in India, although the environment is perfect for this evolution of fine tea. For artisans who produce exceptional teas, herbs, and spices too often without an opportunity to add value to their produce, it is also very necessary.

India is one of the world’s largest tea producers and consumers. How do you position Ceylon tea against Darjeeling, Assam and Nilgiri?

I don’t believe the consumer we are engaging in India sees tea as a generic product where Sri Lanka competes against India. They have a more sophisticated expectation where Gyokuro from Japan sits alongside Nuwara Eliya, Nilgiri, Assam and Darjeeling.

Each terroir has its potential. Darjeeling makes teas that Sri Lanka, Taiwan and Rwanda cannot make. Assam has a strength and signature malt note, while Nilgiri, at its best, is one of the most underrated teas in the world.

What Ceylon offers is diversity from an island where sunshine, wind, rainfall and soils create dramatic differences in Uva, Dimbula and Nuwara Eliya teas.

Can tea build a lifestyle ecosystem among youngsters, similar to coffee?

There appears to be a universal preference among younger consumers for natural wellness, preventive health through food and beverage, flavour discovery through authenticity and conscious consumption. Tea has the potential to deliver each of these in abundance.

Tea has more to work with than coffee or wine: natural diversity, deep heritage, a genuine wellness proposition supported by clinical research, and it is the only daily ritual that is also social. The young Indian consumer is on our side. They want flavour adventure, natural wellness and to know where things come from and who made them. It is not that tea cannot do what coffee did. It is that tea has to stop undermining itself first.

What are the biggest risks for the tea business over the next decade?

The climate emergency comes to mind first. Our prized Uva Seasonal Flush depends on a dry, desiccating wind that is less reliable than it was. When the season fails, there is no version of the tea to sell. You cannot manufacture terroir in Uva, Nuwara Eliya or elsewhere. But I would put a different risk first: price and value have become entirely disconnected. For four decades the industry has been paid on price and asked to deliver value, and that does not work for India or Sri Lanka. Connecting value with price — achieving a genuinely fair and sustainable price for growers—is critical for the future of Indian tea, as much as it is for Ceylon tea and coffee.

How much does sustainability add to the cost of producing premium tea? Are consumers willing to pay more?

Consumers are prepared to pay a premium for genuinely sustainable, ethical, authentic teas that deliver taste, adventure and goodness. Tea is an affordable luxury. It has sophistication, heritage and diversity connected to nature. Genuinely ethical, sustainable and luxurious teas may cost 40%-50% more than ordinary equivalents. The challenge in retail is the margin structure, where retailers make disproportionate margins, adding trading terms and promotions to the producers’ dwindling share. Consumers will pay for sustainability, but that needs to be verified in fact.

Dilmah has remained family-owned while becoming a global brand. What are the advantages and challenges?

The challenges are many, but they are balanced by the advantages. Most important for us is my father’s legacy. In 1950, he set out to make the world a better place, aligning his passion for tea with his refusal to accept indifference towards tea growers and their families.

Today, the work of our MJF Charitable Foundation and Dilmah Conservation uses a minimum of 15% of our pre-tax profits for humanitarian and environmental impact work. Maintaining that philosophy is a challenge, although we can never compromise on the topic of compromise.

Do you believe tea is now entering its own ‘speciality’ moment?

Tea is unquestionably having a speciality moment. For decades, my father, brother and I travelled the world trying to convince customers that fine tea was worth paying a few cents per cup extra for. We failed more times than we succeeded. Consumers who value authenticity, quality, wellness, ethics and sustainability are changing that environment. What we need to be cautious of is the start-up, get-rich-quick mentality, which will see many brands with more style than substance emerge.

What does the perfect cup of tea mean to you personally?

I drink 12 to 15 cups of tea every day and brew my own tea. The perfect cup is also about companionship. Taking tea with friends and family, personalising it with a preferred garnish and pairing it with fine food are all dimensions of the perfect cup. Tea is a wonderful companion, always encouraging thought and contemplation but also inviting conversation and friendship.