People: The Dilmah story

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A tea taster’s dream has morphed into one of Australia’s biggest brand names in tea

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When the Dilmah Tea Bar was launched at the Radisson Blu Hotel in Hyderabad’s swanky Banjara Hills area in India recently, it seemed too good an opportunity to pass up. Familiar with Dilmah tea during my years in Sydney, I was keen to meet its founder and find out how he created a brand that is now synonymous with 100% pure tea. Merrill Fernando and his son Dilhan readily agreed to meet me and through an hour-long conversation with interesting anecdotes and details, the story of Dilmah in Australia came to light.

Born in 1930 in the village of Pallansena, near Negombo town in South Western Sri Lanka, Merrill J Fernando hails from a rural, middle class background. He moved to the capital Colombo, seeking better prospects. He wished to become a tea taster, which was then the domain of British expatriates who guarded their profession keenly. Merrill was fortunate to be selected to join the first batch of Ceylonese (Sri Lanka was then called Ceylon) to be trained in tea at what was then the ‘mecca’ of tea – Mincing Lane, London.

He recalls, “When I was in London, I was horrified to see how tea was being mixed and blended, and being marketed as pure Ceylon tea. Tea, a finished product that was handpicked and produced according to a traditional and artistic process in Sri Lanka, was treated as a raw material and shipped at nominal value to Europe where value addition, branding and packaging took place. This meant that the producer received a tiny fraction of the profits from the sale of Ceylon Tea, whilst middlemen – mainly a handful of large corporations – benefitted disproportionately.”

This bothered him no end, and Merrill persevered with his dream of setting up his own company that manufactured and sold pure Ceylon tea. He established the Dilmah brand – the first producer-owned tea brand – after 30 years of being in the tea business. It is named after his two sons Dilhan and Mallik.

When he started out, the competition was tough and the challenges ahead were immense. He says, “In the early stages the Sri Lankan government was promoting Ceylon tea, and the marketing was aimed at multinationals and the big traders. The UK alone bought 180 million pounds of tea, and my biggest challenge was that I was competing with my own country’s tea. But I was convinced about my product and persisted. I started small with one estate, but expanded later as the government gave us local manufacturers tax benefits”.

The tiny, upstart tea company that Merrill dreamed of in the 1950s, to change the exploitation of his country’s crop by big traders, has today grown to become one of the top 10 tea brands in the world.  Today, 20% of his total production is sold in Australia, and it is the number one brand in New Zealand.

Intrigued, I ask him how the sales in Australia came about.

He replies, “When I started, Australia was importing only 8 million pounds of tea, and the quantity had dropped from 52 million pounds. Big names like Bushells and Unilever were selling blended teas along with 20 other family owned companies”.

In spite of the stiff competition, Merrill approached Coles in Melbourne. It took him two years to convince them, but they agreed to take two of his packs.

“I think that was more to get rid of me as I was really pestering them,” laughs Merrill. “But then they got a very good response and asked for more of my tea as they got several calls asking about it. The big boys in the business dropped their price to destroy my brand. But I was producing and marketing single origin 100% pure Ceylon tea and it was done ethically and in a manufacturing process that was different from the usual CTC. I was using the traditional methods”.

Gradually Woolworths came on board too, and sales in Australia went beyond Merrill’s expectations. Today Dilmah is sold in 101 countries with Russia importing huge volumes and countries like Chile, Argentina, Uruguay, Mexico, Vietnam and Bhutan among others, are all customers.

Dilmah has, of course, expanded its ouvre and one can sample various kinds of teas at the Tea Bar at the Radisson, which also has an extensive high tea menu, and offers various kinds of eatables along with the hot and cold teas.

As for teas worldwide and on the company website, there is a vast range on offer – Gourmet teas, Very Special Rare Teas which features some of Dilmah’s rarest teas; Seasonal Flush teas – where twice a year, if weather conditions are perfect, one can enjoy the rare indulgence of the Seasonal Flush.

A family-owned firm has managed to topple the big boys in the tea business and convert several coffee drinkers to a cup of chai.

So what is the best way to drink tea, I ask the tea master in conclusion to our conversation.

“Depending on how strong or weak you want it, boil some fresh water and place one tea bag or one teaspoon of tea in a kettle that is completely dry. Then pour the boiling water over it and let it stand for 3-5 minutes. Stir and serve hot. Do not add milk or sugar – that is heresy. Tea is best enjoyed when its natural flavours come through. Even the health benefits of its antioxidants are most effective when imbibed in this way”.

Taught to share from an early age by his mother, Merrill has also set up the MJF Charitable Trust which uses some part of the company’s profits to help the poor, the disabled, women and children.

While multinationals continue to advertise with Bollywood stars and celebrities endorsing their tea, Merrill decided to talk to the viewer himself in the advertisements made by the company. It worked wonders and people were convinced about the sincerity and the genuineness of the brand. But, as Merrill says, his Dilmah will always be a small, family brand because it represents integrity, which in the world of tea requires quality, commitment and passion. Those are not qualities that can be extended to the mass market.