Unfavorable weather conditions for tea farming in Sri Lanka are hurting tea production and exports.
According to the Sri Lanka Tea Board, tea crop figures in the first two months of the year fell 20 percent against the same period in 2016. This drop has had an adverse impact on producers like Dilmah Tea that primarily harvest from Ceylon tea plantations in Sri Lanka.
"If you look at margins, it's not a good picture. Because of the drought related shortcoming there's been a big increase in prices, so margins are not something that I can tell you are very healthy at this moment," Dilhan C. Fernando, the director of Dilmah Tea, told CNBC's "Street Signs."
However Fernando, whose first name represents the "Dil" in Dilmah, said he is confident margins will improve, as the company remains focused on serving up high-quality tea to a niche market.