03/07/2008 (Lankan Business Online) - Sri Lanka's Watawala Plantations is diversifying into fruit cultivation, dairy farming and marketing bottled water, given the growing need for food and rising prices, a senior official said.

The company, a joint venture with India's Tata Teas, also sees huge potential for palm oil, said Vish Govindaswamy, managing director of Watawala Plantations.

The company has tied up with Dole, a well-known plantains brand, and has set up a 25 hectare plantation on one of its estates.

"We expect to do the first harvest and make the first shipment shortly," Govindaswamy told the Sri Lanka Economic Summit 2008 organised by the Ceylon Chamber of Commerce.

Watawala Plantations has also set up a dairy farm as part of its non-traditional diversification strategy to meet growing requirements for food.

"We're still in the learning stage but you can be sure we'll get to the value addition stage especially given the way powdered milk prices are rising."

The company has also expanded oil palm cultivation and now produces seven million kilos of crude palm oil.

"We identified huge potential for palm oil as a food product especially in the Middle East, China and India," Govindaswamy said.

The company is also selling Watawala coconut oil and begun bottling water under its Zesta brand name.

Its teas were selling well in the local market and it had struck a deal with Woolworth to sell its Zesta brand tea in the Australian supermarket chain of 600 outlets.

Watawala Plantations employs 14,000 people and grows tea, rubber and palm oil.

The share of profits from value added tea products, exports and retail sales has been growing while the share from the sale of tea as a commodity has been coming down, Govindasamy said.

This was because of the company's effort to move away from the traditional plantations culture into a more marketing-oriented approach.