Sri Lankan tea brand Dilmah brews luxury strategy for second India foray
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India has no shortage of fine tea. Yet, persuading Indian consumers to pay a premium for tea remains a challenge. For Sri Lankan tea major Dilmah, that gap presents an opportunity and a second attempt at building a business in India.
In August 2026, Dilmah launched its Thambapanni Luxury Collection, a premium range developed exclusively for India. The company is starting with luxury hotels, speciality cafés and fine-dining restaurants before expanding into e-commerce and quick commerce, followed by its own tea lounges.
The renewed push follows an earlier attempt to enter India, which ran into a price ceiling that left little room for quality. This time, Dilmah is taking a more targeted approach, focussing on premium hospitality rather than competing in the mass-market tea segment.
"We are not here to compete with Indian packers or brands. We want to try to create something very different and experiential," says Dilhan C. Fernando, Chairman-CEO of Dilmah Ceylon Tea Company.
The Thambapanni collection draws on the historical and cultural links between India and Sri Lanka. Unlike a conventional import-led strategy, it uses tea, herbs and spices largely sourced from Indian growers, with the products packed in India.
A ₹1,000-crore speciality tea opportunity
Dilmah is entering a speciality tea market that remains small relative to India's overall tea industry. And according to Mordor Intelligence, the global speciality tea market size was valued at $36.07 billion in 2025 and estimated to grow from $38.42 billion in 2026 to reach $52.66 billion by 2031, at a CAGR of 6.51% during 2026-2031. The Indian speciality tea market is estimated at around ₹1,000 crore, up from about ₹300 crore five years ago, according to reports. By comparison, India's packaged tea market was worth ₹25,300 crore in FY25, according to consulting firm The Knowledge Company. The branded tea cafe segment comprises more than 1,200 outlets and is estimated to be growing at around 25% annually, according to Fernando.
The competitive landscape includes established speciality tea players such as Makaibari, Teabox, Vahdam and Tea Trunk, alongside international premium brands such as Twinings. Dilmah will also operate in a market dominated by larger companies with portfolios across mass and premium segments. Hindustan Unilever and Tata Consumer Products together account for about 49% of India's packaged tea market, according to The Knowledge Company.
The challenge is to persuade consumers to pay for provenance, ingredients, and the experience around a cup of tea, rather than choosing a product primarily on price, say experts.
Building the India business
Dilmah has already tied up with around 15 hotels and intends to draw on its international relationships with hospitality groups such as Hilton, Marriott, Accor and IHG. Around 40% of Dilmah's global business comes from luxury and premium hospitality, according to Fernando.
E-commerce is expected to go live by May 2027. The company is also targeting the launch of its first Dilmah Urban Estate flagship by the end of 2027, with franchising expected to begin in 2028.
Dilmah has spent approximately $1 million over the past 14 months developing its India proposition. It is targeting a position among its top 10 global markets within the next decade.
Beyond premium tea
The India strategy also extends to manufacturing. Dilmah plans to revive a production facility in Coimbatore. Primarily intended to serve export markets, the facility is expected to begin exports from India in 2028, with a target of one million kg in its first year.
Globally, Dilmah generates around $550 million in sales value and is growing at 10-15% annually, according to figures shared by the company. Australia is its largest market, contributing approximately 20-25% of revenue.
Separately, Dilmah Ceylon Tea Company PLC reported revenue of LKR 22.14 billion for the financial year ended March 2026, up 4.6% from LKR 21.16 billion in the previous year, according to stock market data.
Premium tea brands have struggled to build the kind of sustained consumer interest that speciality coffee has attracted. Price sensitivity, limited consumer awareness and the perception of tea as an everyday commodity remain barriers.
Dilmah's second attempt will depend on whether its hospitality-led strategy can build a market beyond a small base of affluent consumers and whether that interest can eventually translate into a scalable business.