Sri Lankan tea company Dilmah Ceylon Tea Company is planning a significant expansion into India's luxury hospitality market. According to reports from Business Standard, the $550 million-plus revenue-generating company is targeting the rising demand for non-alcoholic beverages among Generation Z consumers. The company currently has established partnerships with global hospitality chains including Accor, Marriott, and Hilton, and plans to launch select tea lounges under the Urban Estate brand.
As reported by Business Standard, the company plans to invest $15-25 million over the next two to three years to revive an old production plant in Coimbatore. The Coimbatore facility will be used exclusively for exports, supporting the company's international expansion strategy. Additionally, the company will invest approximately $1 million in India for the revamped tea lounges, with the first lounge planned for Colombo and India launch scheduled for end of 2027.
According to Business Standard, Dilmah is specifically targeting Generation Z consumers who are seeking wellness and experiences while being conscious of sustainability. The company's tea range for India will be created exclusively using spices from 26 local farmers and packaged locally. Chairman and CEO Dilhan Fernando emphasized that Gen Z is moving away from alcohol-based drinks, representing a significant market opportunity for premium tea products.
As reported by Business Standard, Dilmah has partnered with Fresh & Honest for distribution in India, an important global tea market. The company plans to cater to this market, which will be among its top 10 global markets, through direct-to-consumer, quick-commerce, and e-commerce channels by May 2027. However, the chairman indicated that retail expansion is not planned for another 10 years due to challenging market conditions.
According to Business Standard, Dilmah is facing significant economic pressures from the West Asian crisis, which has impacted input costs and led to inflationary pressures. Chairman Dilhan Fernando noted that prices have not kept pace with costs, making price corrections necessary. The company is currently negotiating price hikes while acknowledging that Sri Lanka's fragile economic situation requires strategic linking with the Indian economy through power and free trade agreements.
