Dilmah targets India with luxury tea lounge expansion

Chairman/CEO 

Dilhan Fernando

Sri Lanka’s iconic global brand Dilmah Ceylon Tea Company plans to invest more than $1 million initially to establish a premium tea lounge network in India, as it seeks to tap growing demand for non-alcoholic beverages among younger consumers in the subcontinent.

The company plans to open close to 10 luxury tea outlets in India by 2030 under its Urban Estate concept, with the first flagship outlet expected next year.

 Bengaluru, Mumbai and Delhi are among the cities being considered for the initial rollout, followed by franchise expansion, according to various India-based reports.

The move marks a shift beyond Dilmah’s traditional presence in luxury hotels, where it has built partnerships with international hospitality groups including JW Marriott and Four Seasons. The company currently operates around 16 tea lounges globally across Europe, East Asia and the Pacific, while expanding in markets such as Australia and West Asia.

Dilmah Chairman and CEO Dilhan Fernando said India represents an opportunity to develop a premium tea experience by combining speciality teas, curated blends, food pairings and service.

The company plans to introduce flagship lounges of around 1,200-2,000 sq ft in premium locations, alongside smaller formats for malls, airports and office parks. The outlets will offer tea-based beverages, tea-infused food and mocktails.

The Urban Estate concept will focus on speciality teas rather than conventional tea categories, with Dilmah seeking to position tea as an experience rather than a commodity.

India will also become part of Dilmah’s sourcing strategy. The company has spent about a year developing an India-focused luxury collection, Thambapanni Naksha, using Indian speciality teas including Assam and Darjeeling varieties combined with Sri Lankan ingredients such as cinnamon.

Dilmah is working with around 26 Indian producers for the collection, which includes blends designed around the characteristics of Indian teas and Sri Lankan flavours.

The company currently derives less than 1% of its global business from India and is taking a measured approach to expansion. Fernando said Dilmah had previously rejected a proposal for 30 outlets in India, citing concerns that rapid growth could affect the customer experience.

The company said the initial investment would be used to test the market and build the concept before wider expansion.

Dilmah’s India strategy comes as consumer preferences shift towards premium non-alcoholic beverages. The company sees speciality tea as competing not only with traditional tea consumption but also with premium coffee, wine and cocktail experiences among younger consumers and professionals.

In Sri Lanka, Dilmah has built its global identity around value-added tea rather than bulk tea exports. The India expansion follows a similar approach by focusing on premium products, retail experiences and direct consumer engagement.

The company said the Thambapanni Naksha collection also reflects historical links between Sri Lanka and India, while creating a product range tailored to Indian consumers.

Tea remains one of Sri Lanka’s key export industries, but companies have increasingly sought to move up the value chain by investing in branded products, speciality blends and consumer-facing businesses.

Dilmah’s planned Indian expansion reflects that broader shift, as Sri Lankan tea producers look beyond traditional export markets and seek higher-value opportunities closer to consumers.