Sri Lankan tea company Dilmah is stepping up its India expansion strategy by targeting the country’s luxury hospitality sector with its new Thambapanni tea collection. The company plans to work with luxury hotels and hospitality groups to create premium tea experiences, while also preparing to introduce its Urban Estate tea lounges in India as it looks to benefit from growing interest in wellness, experiential dining and non-alcoholic beverages among younger consumers.
Dilmah, which generates more than $550 million in revenue, already has relationships with global hospitality groups including Accor, Marriott and Hilton. Its India strategy will initially focus on luxury hospitality, direct-to-consumer sales, quick commerce and e-commerce rather than conventional retail. The company also plans to revive an old production facility in Coimbatore with an investment of $15 million-$25 million over the next two to three years, primarily for exports.
Dilmah Targets India’s Luxury Hospitality Market
The company’s immediate focus in India is its Thambapanni Luxury Collection, which has been designed specifically as a premium tea experience. Dilmah is pitching the collection to luxury hotels and hospitality companies as a product that can be incorporated into culinary experiences, tea pairings and other premium guest offerings.
Dilmah Chairman and CEO Dilhan Fernando recently met hospitality executives in Mumbai, Bengaluru and New Delhi to present the range and discuss potential partnerships. The company believes premium tea can become part of the broader experience economy rather than being treated simply as another beverage on a hotel menu.
Dilmah’s own description of the Thambapanni collection emphasizes tea-inspired experiences such as tea-and-cheese, tea-and-chocolate and tea mixology, reinforcing the company’s strategy of positioning premium tea as part of gastronomy and lifestyle.
Key Numbers In Dilmah’s India Strategy
| Metric | Details |
|---|---|
| Dilmah revenue | More than $550 million |
| Planned Coimbatore investment | $15 million-$25 million |
| Coimbatore investment period | 2-3 years |
| Planned India lounge investment | About $1 million |
| Planned Urban Estate India launch | Likely by end-2027 |
| Global hospitality relationships | Accor, Marriott, Hilton |
| Local farmers contributing spices | 26 |
| India target among global markets | Top 10 |
| Target timeframe for top-10 position | May 2027 |
| Planned India retail entry | Not planned for another 10 years |
The figures show that Dilmah’s India strategy extends beyond importing and selling tea. The company is considering manufacturing, hospitality partnerships, experiential outlets and digital distribution as separate parts of its expansion.
Urban Estate Tea Lounges To Enter India
One of the most visible elements of Dilmah’s strategy will be the expansion of its Urban Estate tea lounge concept.
The company plans to open its first revamped Urban Estate lounge in Colombo before bringing the format to India. The Indian launch is expected around the end of 2027 and is likely to operate through a franchise model. Dilmah estimates that investment for its India lounge expansion would be around $1 million.
The lounges will showcase the company’s premium tea range and are intended to create an environment where consumers can experience tea rather than simply purchase it.
Urban Estate Expansion Timeline
2026
│
├── Luxury hospitality discussions in India
│
├── Thambapanni positioned for premium hotels
│
└── Distribution partnership with Fresh & Honest
│
▼
2027
│
├── First revamped Urban Estate lounge in Colombo
│
├── India lounge launch targeted for end-2027
│
└── India aims to enter Dilmah's top 10 global markets
│
▼
2028+
│
└── Potential expansion of luxury tea experiences
The franchise approach could allow Dilmah to expand the concept without having to fund every lounge directly, although the eventual pace of expansion will depend on demand and partnerships.
Why Dilmah Is Targeting Gen Z
Dilmah believes changing beverage preferences among younger consumers create an opportunity for premium tea.
According to Fernando, Gen Z consumers are increasingly interested in wellness, experiences and sustainability and are moving away from alcohol-based beverages. The company wants to position premium tea as an alternative beverage that can be integrated into social occasions, gastronomy and hospitality experiences.
This strategy fits with a broader evolution in the premium beverage market, where consumers are increasingly looking beyond traditional alcoholic drinks for sophisticated alternatives.
For Dilmah, the opportunity is to move tea from a routine beverage category into an experiential category.
From Tea Product To Tea Experience
| Traditional Positioning | Dilmah’s New Approach |
|---|---|
| Everyday beverage | Premium experience |
| Tea served on its own | Tea paired with food |
| Standard blends | Luxury and curated collections |
| Supermarket-led distribution | Hospitality and D2C |
| Product-focused | Experience-focused |
| Conventional tea service | Tea lounges and mixology |
This positioning could give Dilmah a way to compete in India’s premium beverage segment without directly relying on mass-market retail.
India To Become A Top-10 Dilmah Market
Dilmah wants India to become one of its 10 largest global markets by May 2027. To achieve that objective, the company has partnered with Fresh & Honest for distribution and plans to use direct-to-consumer channels, quick commerce and e-commerce.
The company is deliberately keeping this range separate from its luxury hospitality offering. That means Dilmah’s India business could eventually have distinct product and distribution strategies for premium hotels and online consumers.
Planned India Distribution Strategy
DILMAH INDIA
│
┌──────────────┼──────────────┐
▼ ▼ ▼
Hospitality D2C Quick Commerce
│ │ │
▼ ▼ ▼
Luxury Hotels E-commerce Fast Delivery
│
▼
Thambapanni
Luxury Collection
The strategy gives Dilmah multiple routes to reach Indian consumers while maintaining a premium positioning for its luxury hospitality business.
Dilmah Plans To Revive Coimbatore Plant
Manufacturing is another important part of the company’s India strategy.
Dilmah plans to revive an old production plant in Coimbatore over the next two to three years, investing between $15 million and $25 million. The facility is expected to be used primarily for exports.
The planned investment could strengthen Dilmah’s operational footprint in India while giving the company additional production capacity closer to international markets.
The investment also indicates that India is being viewed not only as a consumer market but potentially as part of Dilmah’s wider manufacturing and export network.
Thambapanni Range Uses Indian Ingredients
The Thambapanni range being developed for India will incorporate spices sourced from 26 local farmers. The collection is expected to be packaged and created specifically for the Indian market.
This gives Dilmah an opportunity to combine its Ceylon tea heritage with ingredients and flavors familiar to Indian consumers.
The company’s official Thambapanni collection describes the range as a celebration of the historical connection between Sri Lanka and India, while positioning the teas around taste, tradition and ethical sourcing.
Luxury Hospitality Partnerships Are Already A Global Strategy
Dilmah’s push into India’s hospitality industry is not an entirely new direction for the company.
The tea maker already works with major international hospitality businesses. In 2026, Marriott Bonvoy and Dilmah launched an India-exclusive tea collaboration as part of a limited-edition loyalty campaign.
Dilmah has also expanded tea experiences through hospitality partnerships in other markets. For example, Naumi Hotels announced a group-wide partnership with Dilmah to introduce curated tea experiences across its portfolio.
These relationships provide a foundation for Dilmah’s attempt to develop hospitality-led growth in India.
Why Dilmah Is Avoiding Traditional Retail
Interestingly, Dilmah does not currently plan to enter India’s conventional retail market aggressively.
Fernando said the company does not intend to enter retail for another 10 years, describing the environment as highly competitive. Instead, it wants to prioritize direct-to-consumer channels, quick commerce and e-commerce while building premium hospitality partnerships.
That strategy allows Dilmah to avoid competing immediately for supermarket shelf space against established Indian and international tea brands.
It also gives the company greater control over how premium products are presented and priced.
Rising Costs Add Pressure
Dilmah’s expansion plans come against a challenging operating backdrop.
Fernando said rising logistics costs linked to disruption caused by the West Asia crisis have increased input costs. He also indicated that tea prices have not fully kept pace with rising costs and that the company is negotiating price increases.
For a premium tea company, maintaining margins while preserving product quality will therefore be an important consideration as it expands into new markets.
The planned manufacturing investment in Coimbatore could eventually help strengthen the company’s supply-chain efficiency, although the facility is primarily intended for exports rather than the Indian domestic market.
The Bigger Picture
Dilmah’s India strategy represents a broader shift in the premium tea industry from selling packaged beverages toward creating experiences around tea. By combining luxury hospitality partnerships, tea lounges, curated collections and digital distribution, the Sri Lankan company is attempting to build a premium ecosystem rather than compete directly in India’s mass-market tea segment.
India also gives Dilmah access to a large consumer market with an established tea culture and a growing premium hospitality industry. The company’s decision to invest in manufacturing, distribution and experiential formats suggests that it sees India as both a strategic market and a potential component of its wider regional growth strategy.
Looking Ahead
The next major milestones for Dilmah will be the expansion of its luxury hospitality partnerships, the launch of its revamped Urban Estate concept in Colombo and the planned India lounge rollout toward the end of 2027. At the same time, the company will work with Fresh & Honest to expand its digital and direct-to-consumer presence, with the goal of making India one of its top 10 global markets by May 2027.
The planned $15 million-$25 million Coimbatore investment could add another dimension to the company’s India strategy by creating an export-oriented production base. If Dilmah can successfully combine premium hospitality, digital distribution and experiential tea formats, India could become a much more important part of the company’s global growth story while helping the brand establish a stronger position in the country’s premium beverage market.
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