Trouble is brewing: The beloved tea bag brand could be pulled from supermarket shelves amid a bitter dispute with Coles and Woolworths
- Price dispute with Coles and Woolworths leaves sour taste
- Sri Lankan tea farmer refuses to sacrifice quality for cost
Dilmah Tea is threatening to pull its popular products from supermarket shelves in Australia amid a bitter price dispute with Coles and Woolworths.
Chief Executive Dilhan Fernando said major supermarkets are “demanding discounts” and refusing to pay a premium for their handmade, single-origin Ceylon tea bags.
If the trend continues and a deal cannot be reached, the Sri Lankan company may refuse to supply Australian supermarket chains.
While Dilmah remains the 10th largest tea brand in the world, it has not made a profit in Australia since 2009 and its market share is declining.
In the last five years, sales in Australia have fallen from $37 million to $29 million.
Fernando said the way Australian supermarket giants operate is fundamentally an “unfair trading system”.
Dilmah Tea is threatening to pull its popular products from supermarket shelves in Australia amid a bitter price dispute with Coles and Woolworths. Pictured: A woman drinking Dilmah tea
Chief executive Dilhan Fernando said major supermarkets are ‘demanding discounts’ and refusing to pay a premium for their handmade, single-origin Ceylon tea bags (pictured)
‘The producer needs to be empowered to offer a product with passion where no shortcuts are taken. That can only happen when you pay a fair price for the product,” he said. the aussie.
‘Consumers are looking for quality. But the directions we’re being pushed in are an abandonment of this… It’s crazy. We are forced to chase ourselves to deliver the next great product when what we have in our hands is so important.”
Sold in 104 countries around the world, Dilmah has been a staple in Australian supermarkets since it closed its first deal with Coles in 1988.
The company refuses to water down its commitment to sustainability and ethical sourcing in order to offer a lower price to Australian supermarkets.
Fernando, whose father, Merrill, founded the company, said consumers want quality, single-origin (not blended) tea, but supermarkets are ignoring this and looking only for higher profits.
Another reason Dilmah is unwilling to cut corners is that she feels a responsibility for Sri Lankans to support the farms and workers that supply their produce. 95 percent of which is exported.
This has become even more important due to the difficult economic times Sri Lanka has suffered in recent years, with inflation running at 50.6 percent in February.
Dilhan Fernando, CEO of Dilmah Tea, is pictured on the left with his father Merrill, the company’s founder.
Pictured, workers pick tea leaves by hand at the Dunkeld Tea Estate, operated by Dilmah Tea in Dickoya, in Sri Lanka’s Central Province.
The tea industry employs about 10 percent of Sri Lanka’s workforce, making it crucial to the country’s economic recovery.
Mr. Fernando said that maintaining quality is critical, especially as Sri Lanka is also on the front lines of climate change.
He believes Dilmah has a ‘responsibility’ to care for soils and develop sustainable farming methods, even if it means having to remove it from Australian supermarket shelves.
By trying to force the company to cut costs and cut corners, “you would be undermining and destroying an industry that has supported millions for 150 years,” he said.
Daily Mail Australia has contacted Coles and Woolworths for comment.
