Dilmah Tea threatens to pull its products from Australian supermarkets Coles and Woolworths

Dilmah Tea is threatening to pull it’s 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 hand-crafted, single-origin Ceylon tea bags.

If the trend continues and an agreement can’t be reached, the Sri Lankan company may refuse to supply Australian grocery chains.

While Dilmah remains the 10th biggest tea brand in the world, it hasn’t made a profit in Australia since 2009 and is seeing its market share dwindle. 

In the past five years sales in Australia have dropped from $37million to $29million.

Mr Fernando said the way the Australian supermarket giants operate is fundamentally an ‘unfair trading system’. 

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Dilmah Tea is threatening to pull it’s 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 hand-crafted, single-origin Ceylon tea bags (pictured) 

‘The producer needs to be empowered to offer a product with passion where corners are not cut. That can only happen when there is a fair price paid for the product,’ he told The Australian.

‘Consumers are looking for quality. But the directions we are being pushed in are an abandonment of this… It is crazy. We are being forced to chase our tail to deliver the next big thing when what we have in our hands is so substantial.’ 

Dilmah, which is sold in 104 countries across the world, has been a staple in Australian supermarkets since it did its first deal with Coles in 1988. 

The company refuses to dilute its commitment to sustainability and ethical sourcing in order to provide a cheaper price to Australian supermarkets.

Mr Fernando, whose father Merrill started the company, said consumers want quality, single origin (not blended) tea, but this is ignored by supermarkets just looking for higher profits. 

Another reason Dilmah is not willing to cut corners is it feels a responsibility to Sri Lankans to support the estates and workers that supply its products, 95 per cent of which is exported.

This has become even more important due to the tough economic times Sri Lanka has suffered in recent years, with inflation running at 50.6 per cent in February. 

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Dilhan Fernando, Dilmah Tea’s chief executive, is pictured left with his father Merrill, the company founder

Workers are pictured hand-picking tea leaves at the Dunkeld Tea Estate operated by Dilmah Tea in Dickoya, in the central province of Sri Lanka

The tea industry employs around 10 per cent of the Sri Lankan workforce, making it crucial to the country’s economic recovery. 

Mr Fernando said maintaining quality is critical, especially as Sri Lanka is also at the front line of climate change. 

He believes Dilmah has a ‘responsibility’ to look after the soils and build sustainable farming methods even if it means having to be removed from Australian supermarket shelves.

In trying to force the company to cut corners and costs, ‘You would be undermining and destroying an industry that has sustained millions over 150 years,’ he said.

Daily Mail Australia has contacted Coles and Woolworths for comment.