Brewing a new cup

Is this a case of carrying coals to Newcastle? Why is Sri Lankan tea company Dilmah brewing big plans for the Indian market?

After all, India isn't just the world's largest nation of tea drinkers. It's also the largest tea producer.

That isn't stopping Dilmah and it's country manager Tommy Joseph. Dilmah entered the country earlier this year and it has tied up with Dabur Foods.

It has already introduced a range of leaf teas and tea bags in different flavours. Also on the cards are tea bars and fruit teas in the near future.

Can Dilmah go up against muscular local tea brands like Brooke Bond and Lipton? Joseph insists that it is looking at creating a new market, not entering an existing one. "Our aim worldwide has been to redefine the tea category, and we're looking to do that in India now," he says.

Behind this claim lies the company's belief that there has been a decline in the quality of tea in India. Tea production in India is around 850 million kg per annum, while it's only around 250 to 300 million kg in Sri Lanka.

Yet, the latter is now the leading tea exporter in the world, while India has dropped to fourth. (Kenya and China are at second and third position.) One reason why India has slipped in the tea rankings is the collapse of the Soviet Union, which bought large quantities of Indian tea.

The Free Trade Agreement between India and Sri Lanka a few years ago reduced the duty on tea imports to 7.5 per cent, which made it feasible for Dilmah to enter the Indian market.

To begin with, the company has introduced its Ceylon Gold leaf tea (priced at Rs 98 for a 250-gram pack and Rs 45 for a 100-gram pack) and the Dilmah Premium leaf tea (Rs 69 and Rs 32 for the two grades respectively).

Tea bags have also been launched in the Indian market and here the company has made a nod to Indian tastes.

"We realised that India has a tradition of mixing masalas in tea," says Joseph. Accordingly, there's an Asian Spice range, currently available in ginger and cardamom flavours, priced at Rs 40 for a 25-tea bag pack.

Internationally, fruit teas are also available under the Dilmah brand, and Joseph says it is just a matter of time before these are launched in India.

"We have around 20 flavours and research is underway to determine which of these should be brought here," he says.

There's been much talk about the "cha bar" concept and Dilmah has one foot firmly in the door.

The company already has a tea bar called, well, the T-Bar, in Colombo. Here, tea is served in a way that enables the diner to choose his flavour and then brew the tea himself, at the table. Mocktails and cocktails with a tea base are also part of the menu.

Now, the company plans to open more such bars in countries that it exports tea to. "We had a party at the T-bar recently and a lot of our distributors were present," Joseph recalls.

"They were so taken with the concept that even before the night's celebrations were over, they were clamouring for similar outlets in their countries."

The modalities have not been worked out yet, but India will be on the visiting list. "We want to establish our brand here first," he says.

"Establishing the brand" means targeting the top-end segment of the market, for Dilmah is clearly not positioning itself as a tea for the masses.

The print campaign for the brand is mainly in high-end women's publications. The brand is currently available in 12 cities, with an especially strong north Indian presence, though it also entered the south Indian market last month. The eastern India market is the next destination.

Providing education to tea consumers is a vital part of the company's strategy. For instance, it is not particularly impressed by the Indian method of boiling the brew.

"Tea is practically cooked in many households" says Joseph, shaking his head. Hence a special demonstration held in Delhi earlier this month, where the country manager showed an audience how to make "the perfect cuppa".

The method includes finer points such as allowing water to boil only until the first bubbles appear, not a custom that's widely followed here.

Joseph has an explanation for why Indian tea is slipping in the world. He says it's partly a result of the CTC (cut, twist and curl) method of preparation.

This involves breaking each leaf into three or four pieces, an effective means of increasing output "" but it also means that the distinctive properties of the leaf are lost.

Dilmah's obsession with tea is better understood when one considers the background of the company. Dilmah founder Merrill J Fernando, now in his 70s, has spent a lifetime in the business, from the time he travelled as a teenager to London's Mincing Lane, the then Mecca of the tea world.

Over the years Fernando "" who trained as a tea taster "" realised some multinationals were selling diluted tea as "Ceylon tea". In 1988, he launched Dilmah, to export pure Sri Lankan tea.

The company began by exporting to Australia. Today it has a presence in 90 countries, making it the world's third largest tea brand. It owns around 10 per cent of the tea plantations in Sri Lanka, has over 35,000 employees and a turnover of $120 million.

Interestingly, Dilmah began selling tea in its home country only last year. "Domestic interest in the brand grew when we became the sponsors of the Sri Lankan cricket team," explains Joseph.

Incidentally, the brand name is a composite of the names of Fernando's two sons. The personal touch is central to the company's approach "" each tea packet contains an insert with a guarantee card signed by the chairman.

However, the company isn't above a bit of playfulness if it'll help augment the brand value.

At the tea-making demonstration, culinary experts prepared offbeat recipes for soups, souffles and cakes, with tea as the chief ingredient. Says Joseph: "It's all part of our objective to show consumers how much can be done with tea."