Business with a conscience

Dilmah founder Merrill J Fernando challenges multi-national tea companies who are exploiting the Middle East market.

Strike up a conversation about tea, preferably over a cup of tea as we did, with Sri Lankan-native and Oslo Business for Peace Award winner Merrill J Fernando, and you’ll see him light up. He’ll cite terroir, climes, topographies and other stratified minutiae about the beverage that makes you wonder if he is still talking about the humble cuppa. This is a man who has dedicated two-thirds of his life to the trade as the founder of Dilmah tea.

“In the fifties, the British selected me as a tea taster trainee. I was among the very first batch of six Sri Lankans selected. Many Sri Lankans were already employed in the plantations, but none of them had the chance up until that point to be involved in the tea trade because that’s where all the secrets were,” Fernando told Global Citizen.

Three decades after he trained as a tea taster, Fernando decided to capitalise on the Ceylon tea business in Sri Lanka. But he says that he wasn’t out to develop a tea trade that was an unconscionable money-spinning machine that squeezed the most marginalised: the local cultivators. In 1988, he founded Dilmah, the first tea that was grown, picked and packed at the source itself– challenging the big corporations who employed a number of middlemen that eventually resulted in a smaller share of the sale price actually trickling down to the cultivators.

Today, the trade to which Fernando alludes to has become a multi-billion dollar operation. “The global tea trade today is worth about $6billion. The majority of it is concentrated in China – they have a huge crop – followed by India where they grow about 1.3billion kgs annually, but they drink most of it,” according to Fernando. He says, “Each region in India has its own specialty teas such as Assam and Darjeeling tea but Sri Lanka who produces around 330 million kilos annually, is famed worldwide for its Ceylon tea.”

The Dilmah brand quickly expanded into the global market as a premium brand and Fernando was keen to share his success. “If you’re a successful businessman, everyone envies you. One way to not create that envy is that if you extend that business success towards poverty alleviation, those same people will not envy you but rather say that he’s a rich man and a good man. The rich have a duty to dispel the notion that being rich is a rotten thing.”

This meant Fernando went one step further beyond focusing on those directly impacted by the trade and channelled his profits into socially responsible projects. “Ten per cent of the profits before tax from all my companies are donated to the Dilmah Foundation,” he said. The Dilmah foundation supports disabled children as well as abused women in its vocational training centre in the Sri Lanka capital Colombo to help them develop a skill set that they can use to generate employment. And his work hasn’t gone unnoticed. Last year, Fernando received the prestigious Oslo Business for Peace Award conferred by the Award Committee of Noble Laureates in Peace and Economics.

Today, Dilmah is a family-run business with Fernando’s eldest son, Malik, running the group’s leisure business, while younger son Dilhan is lined up to oversee the foundation’s work along with a group of trustees. However despite being in his mid-eighties Fernando is still the company’s driving force and was in Dubai earlier this month to promote the brand.

The Dilmah brand is already a familiar one in the region – Emirates Airlines has been serving it on their flights and in their lounges across the world for the last 21 years. But even now, as he tries to make further in-roads into the region, he’s up against the giants. “The Middle East is a major consumer of tea and a very important market for tea. But unfortunately, the consumers here are also victims to multinationals who promote and advertise ordinary tea. This part of the world tends to be very loyal to old colonial brand names, and those marketers exploit them fully. Where we spend $5 to promote our brand, they’ll spend $50,000. The retailers also support these bigger brands because they get more money.” Not that this bothers Fernando too much. He’s forging on with creating a stronger retail presence for his brand in the Middle East and will open up a tea tasting lounge in Ibn Battuta Mall with over a hundred different types of tea available to customers.

Fernando says that his company sells about 9,000 tonnes of tea annually at an end-retail price that totals $500million. Business is booming, and consequently his philanthropy activities are too. There’s more than one reason to raise a cup to the man who’s challenging the collective conscience of his fellow entrepreneurs.