Tea company Dilmah has warned that it would pull out from supermarket shelves until major retail chains agree to pay more for its handcrafted Ceylon teas – and stop asking for discounts, reports The Australian.
Dilmah is Sri Lanka’s biggest global brand and is sold in more than 100 countries. It is among the top 10 tea brands worldwide. In the Australian market, the company derives about 85 per cent of its sales from retail and 15 per cent from hotels, hospitality, and food service.
Dilhan Fernando, CEO at Dilmah, said the company has been losing money in Australia for more than a decade, and its market share continues to fall.
“The company had been unable to profit in Australia since 2009 because we have maintained an uncompromising commitment to quality,” Fernando told The Australian.
Its annual sales in the country are currently at $29 million, down from $37 million five years ago and its market share has dropped to just 7.5 per cent.
The CEO said the company is prepared to pull out of mainstream retailers and focus on hospitality and online sales until retailers stop “pushing the firm” to commoditise its brand and “compromise its unique supply chain through discounting”.
“We have been told in no uncertain terms to change our model,” he continued. “But we would rather close our doors than compromise.”
Fernando said the company is responsible for the Sri Lankan people to support farms and workers while supplying its products worldwide. Dilmah exports 95 per cent of its tea to 104 countries.
“My father said even if you close your doors, you don’t compromise,” Fernando concluded.
A Woolworths spokesperson told Daily Mail Australia, “The comments made do not reflect our engagement with Dilmah; however, we are mindful that the business works with several retailers in Australia.”
