Dilmah profit jump strengthens case for branded tea exports

• Shows Sri Lanka tea’s future may lie in brands, not bushes

By Shabiya Ali Ahlam

A sharp jump in profits at Dilmah Ceylon Tea Company PLC is reinforcing a long-standing argument within Sri Lanka’s tea industry: that the sector’s future growth may depend less on producing more tea and more on extracting greater value from every kilogramme exported.

The premium tea exporter reported a 161 percent increase in profit after tax to Rs. 1.84 billion for the year ended March 31, 2026, despite revenue rising by a relatively modest 4.6 percent to Rs. 22.14 billion, according to its latest annual report.

The divergence between revenue and earnings growth highlights the growing importance of branding, product innovation and premium positioning in an industry traditionally driven by production volumes and auction prices. For decades, Sri Lanka’s tea sector measured success largely through crop output and export volumes. However, with rising labour costs, land constraints, climate pressures and increasingly volatile global commodity markets, the economics of the industry are changing.

Accordingly, Dilmah’s performance suggests value addition is becoming a more important growth driver than volume expansion.

Founded in 1985 by the late Merrill J. Fernando, the company built its business around a then-unconventional proposition: exporting tea as a Sri Lankan-owned global brand rather than as bulk tea destined for blending and repackaging overseas.

Today, the company sells in more than 100 countries and has expanded beyond traditional tea bags into speciality teas, wellness infusions, tea extracts and ready-to-drink products, reflecting changing consumer preferences in global beverage markets. The strategy appears to be translating into stronger financial returns.

Dilmah generated Rs. 6.54 billion in value creation during the year, up 47 percent from a year earlier, while retained earnings rose 138 percent to Rs. 1.84 billion. Dividend payments increased 150 percent to Rs. 414.8 million.

The results come at a time when the wider tea industry continues to face structural headwinds.

Sri Lanka’s tea production has remained under pressure in recent years, particularly in the low-grown segment that accounts for the bulk of export volumes. Industry stakeholders have increasingly argued that expanding branded exports offers one of the few viable pathways for raising export earnings without relying solely on larger harvests.

Dilmah itself has consistently positioned value retention within Sri Lanka as a core part of its business model, arguing that packaging, branding and product development at origin allow a greater share of export value to remain in the country.

The company’s annual report noted that around 3,000 products and innovations have been developed to cater to health-conscious and convenience-seeking consumers, underscoring how far the business has evolved from a conventional tea exporter.