Brand Ambassador for Sri Lanka bringing high visibility for the Island

Merrill J. Fernando

Founder of Dilmah

01. It was a paradigm shift when you launched Dilmah in Australia in 1988, offering the product directly to the customer. What made you make this decision?

My access to plantations created awareness of the plight of our farmers and other workers. My visit to London’s Mincing Lane brought to me face to face with the ruthless exploitation of our Tea Industry. The sweat, toil and tears of our plantation workers created millionaires and multimillionaires in England Often, Ceylon tea reputed for its high quality was mixed with tea from other countries and sold to consumers as Ceylon tea. Marketing in England, as I saw was exploitation of our Tea Industry and consumers around the world. In my youth I was inspired with the brash thought of some day developing my own brand of single origin pure Ceylon tea to bring integrity and quality back to tea and offer consumers the finest tea on earth.

02. Whilst Ceylon Tea is the most expensive tea in the world, how does Dilmah maintain its premium positioning in the International Market?

Ceylon tea enjoyed a high quality image among consumers world wide. Consumers willingly paid a high price for the quality. Dilmah tea was launched with the promise of it being the finest quality and priced accordingly. Into price I built in R&D and A&P margins which were generously used to promote Dilmah. As single origin pure Ceylon tea  with quality. Ceylon tea gained in imporftance through excellence. While all multinational  brands were faceless Dilmah had a face to it, so said consumers!

03.              Can you share some of your unforgettable moments in nearly 60 years of your long journey, which will inspire young entrepreneurs?

It was a very painful, humiliating and thankless mission while I expected opposition from the big guns in Australia the worse form of opposition came from my own country. All other exporters turned against me and tried to convince the Government that I should not be allowed to export value added tea on the assumption that our bulk tea exports will be affected. I proved to Government officials that several of our important markets had deserted Ceylon tea and others were buying only a fraction of what they purchased 10 years ago. Today these big multinational brands which became popular by using the name  Ceylon tea, their products contain no Ceylon tea, perhaps a tiny segment only.

If one has a good knowledge for the product backed by total commitment and passion one can overcome all obstacles ambitiously.

04.  Shortage of labour in the industry is a major concern. How could we better manage this?

Shortage of labour is of serious concern, we should be permitted to import labour from neighbouring countries until drones can be developed to pick tea on our different terrains specially in high grown regions.

05.  What should the government do to prevent low quality tea exports illegally which damage the Ceylon Tea brand equity?

Some Ministers in the past were very indifferent to harmful activities of some traders who thrived on selling tea cheaper than others, this damaged the image of Ceylon tea.  Ministry regulations provided moving of tea from plantations to export prices, sadly they are not implemented. I have brought this up over and over again with some Ministers, but they failed to initiate corrective action. It is only by implementing current regulations and bringing in a few new ones that this exploitation of our Tea Industry can be prevented. When this is done tea prices will improve.

06.   An integrated approach is essential to identify the possible strategies for the Sri Lankan Tea industry to improve the competitiveness in the Global market. What is your expert view about this?

If all exports are brought under one authority including representatives from Customs and Ports, some headway can be achieved provided severe penalties such as  jail sentences and cancellation of import licences are introduced. Political interference should be tabooed. Ceylon tea and Ceylon spices are globally reputed for their unique quality and as such consumers will readily pay a high price for our products.

07.              The Industry analysis reveals that the intensity of competition in the Global Tea industry is very high. As a pioneering nation in Tea industry how do we overcome these challenges?

Our marketing strategy should be developed accordingly. Our A&P strategy and price structure should be developed strictly on strength of our unique quality with competing mass market products.

08.              Innovation and readiness to respond always gives enough confidence to be a competitive brand. What did Dilmah do to keep a very high demand in over 100 countries in the World?

Dilmah tea is the only innovator of tea. The comments of William Gorman, Executive Chairman, UK Tea Council “Dilmah is a very interesting company. This is an industry which has been incredibly slow to innovate, and relatively tiny Dilmah has showed  how.”

Dilmah introduced a variety of hot teas, cold teas, mocktails, cocktails, food parings and numerous others. Some five-star hotels serve seven course meals each one with Dilmah tea content. The revolution of Dilmah started 33 years ago and is continued in the hands of the 2nd generation.

09.              Sri Lanka is still regarded as a bulk tea exporter! In your view how can we value add when it comes to tea so that we can be globally competitive?

The truth about our Tea Industry is, that, it is dominated by traders who have no interest or investment in the Industry or in consumers. Their only interest is PROFIT. How it comes and from where it comes is of no concern to them. If they are persuaded or pressurized upon to have a stake in plantations their approach to exports may change. Our traders are no different to multinational traders who exploit products and consumers. Our approach is different. We are world’s only vertical integrated company in the Tea Industry. We have substantial investments in all three segments of the Industry, in Plantations, Brokering and in Brand Marketing. Our interest is the Tea Industry not just the trade, that is the significant difference between Traders and Tea Farmers who take their crop direct to the market with love and care.

Bulk tea exports bring quick profits and the consistent pressure from the tea traders to allow import of cheap tea is to make our tea cheaper and cheaper for their personal benefits. Their pressure was so strong that one Finance Minister permitted imports in his budget speech. I was a strong opponent of these imports and on this occasion, I took it to the highest level supported by one other Company and imports were disallowed. Imports should never be allowed for love of money! The future of our Tea Industry is in the hands of a few companies which are trying to build brand names. They should be assisted by the Government in a very special way tied to some basic regulations. Government officials have no clue about marketing and Ministers and official frame marketing strategies. Our Tea Industry if managed well and RPCs role redefined after reviewing their past performance. It is now a free for all industry. Ceylon tea has no problems in the global market but we are creating problems ourselves by unhealthy competition trying to make Ceylon tea cheapest in the market place.

10.       What are your thoughts on the current tea promotion campaign? What should be our strategy on this?

I gave the previous Minister and Chairman of the Tea Board a perfect document – The State of Ceylon Tea. Sadly, they were unable to grasp its contents and the document was ignored. The current campaign will only help numerous brands selling “Ceylon Tea” owned by foreigners not real Ceylon tea brands.

Over the years Sri Lanka Tea Board handed its revenue from exports to the Treasury. If these funds were used to promote Ceylon tea in important markets our tea prices would be higher today and will be in greater demand. 

11.       Share with us something about the MJF Charitable Foundation

When I launched Dilmah in Australia one of the promises I made was to share my earnings with the poor, needy and the underprivileged. As consumer support grew for Dilmah tea I began to earn more revenue than I was used to. I came to the crossroad of a successful entrepreneur and I had the option of becoming a wealthy strong businessman or to share my earnings with the poor, needy and the wider community. Having come from a humble beginning I chose the latter. I give my staff and their family lavishly and providing their children with text books, clothes, all their needs for schools and introduced a scholarship for brighter children. I had only 18 staff, so I could afford to be lavish but today we have 1400 staff at the Dilmah production facilities and several thousand workers on our plantations. Every one of those children receive these benefits. Today tea pickers’ children who were destined to be the next generation of tea pickers are Doctors, Lawyers, Engineers and other professionals – beneficiaries of the scholarship programme.

We have MJF Centres in some parts of the country, the main Centres are in Katubedda and in the Eastern Province. Activities of the Charitable Foundation change 10,000 to 15,000 lives every year.

All this is possible through the blessings of Almighty God who taught me and my children to conduct our business with integrity and quality, building on the strength of Ceylon Tea Industry.

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