Unilever will only sell a portion of its tea business.
LONDON: Unilever PLC said that it will maintain its tea businesses in India and Indonesia and that it will carry on with its joint venture with PepsiCo, Inc., Purchase, NY, to manufacture, market, and distribute ready-to-drink iced tea beverages under the brands Lipton, Brisk, and Pure Leaf. This follows a strategic review of the company’s tea business in response to slowing category sales trends.
During a July 23 conference call with financial analysts, Unilever’s chief executive officer Alan W. Jope stated, “We believe that a separate entity is the best way to realise the potential of all of our tea estates and the balance of our tea brands and geographies.” “And now, a procedure to accomplish this separation will start, with a conclusion anticipated by the end of 2021. Additionally Just to mention, the tea industry, which we will discuss separately, brought in €2 billion ($2.3 billion) in income last year.
Among the brands to be divested are Tazo, Pukka Herbs, T2, and other brands. For $384 million, Unilever purchased the Tazo brand from Starbucks Corp. in 2017. For an undisclosed amount, the company had earlier that year acquired Pukka Herbs Ltd. The evaluation was brought about by a shift in consumer preference towards herbal tea and a decline in sales of conventional black tea in developed markets. The majority of Unilever’s global tea business is made up of black tea.
1991 saw the start of Unilever’s collaboration with PepsiCo. Over 40 nations are covered by the joint venture.
David Pitkethly, chief financial officer, stated, “Interestingly, from a market perspective, the ready-to-drink tea market is two-thirds of the global tea market when it comes to the joint venture with Pepsi.” “It is significantly larger; approximately twice the
size of the global market for leaf tea.
We have had tremendous success working together with Pepsi on this joint endeavour. This joint venture benefits from the distinct experiences of both parties: Unilever delivers its brand and marketing skills, while Pepsi offers its distribution and bottling expertise. And for a very long time, it has worked incredibly well. And for the main reason, we decided not to include that at the end of the strategic review.