Dabur Foods to distribute Dilmah Tea in India

Dilmah, the world's third largest tea brand owned by Sri Lanka's MJF Group (with turnover of approximately Rs 8 billion in 2000), has entered into a distribution tie-up with Dabur Foods. Under the arrangement, various brands of packaged Dilmah tea would be shipped to India (from Sri Lanka) and distributed by Dabur using its 45,000-strong distribution network. The target is to make Dilmah available in 15,000 retail outlets this year.

To begin with, Dilmah will be launched in the markets of the north and the west, and by September 2003, it would be rolled out in the south. Early next year, it would hit the markets of the east.

Dilmah tea is being launched in five premium ranges - Ceylon Gold, Premium Leaf Tea, The Asian Spice Range (tea bags), Classic English Breakfast Tea (tea bags) and Dilmah Premium Tea bags. Of these, Ceylon Gold is the most expensive. It would be available in 100-gm and 250-gm packs, priced at Rs 45 and Rs 98 respectively. The 100-gm and 250-gm packs of Premium Leaf Tea, on the other hand, are priced at Rs 32 and Rs 69. The Asian Spice Range will cost Rs 40 for a pact of 25 tea bags. A pack of 25 enveloped tea bags of Classic English Breakfast Tea would cost Rs 65, while a 25-bag pack of Dilmah Premium Tea bags would cost Rs 32.

Dilmah founder and chairman Merrill J Fernando believes there is tremendous opportunity in India. But is Dilmah geared up to face the competition in India? While there is very little information available on the segment-wise share of the tea market in India, it is a fact that the premium market for tea is not very large. MJF Group director Malik J Fernando admits as much "The premium segment in India is very tiny. A player like Green Label of Lipton clocked a turnover of just Rs 23-25 crore last year."

The Dilmah brass is confident that the brand will make inroads in the market without much hesitation. "Our strategy is to simply focus on the experience of drinking Dilmah tea. We are confident about our product, which is why we have limited our communications to the print media." As agencyfaqs! reported yesterday (St Luke's wins Dilmah Tea's creative duties; breaks into Dabur club, June 5), the campaign, which has been created by St Luke's, is likely to break in mid June.

Incidentally, this is not Dilmah's first encounter with the Indian market. In 2000, a company by the name of Stanes MJF Teas was incorporated in India as a joint venture between the MJF Group and the Amalgamation Group based in Tamil Nadu. This company has full-fledged production facilities of modern tea blending, packaging and tea bag production in Coimbatore. Stanes MJF Teas started operations in 2000 to primarily service the demand for medium quality CTC teas from the former Soviet Union. However, after the fall of the Soviet Union, the company stopped exporting tea to that country.

While Dilmah officials were not very open about their business plans in India, Malik J Fernando did mention that the company might look at the possibility of manufacturing and packaging a blend of an India tea brand. © 2003 agencyfaqs!