Is Unilever being too hasty with its tea sale?

Is Unilever being too impulsive in selling off its tea business? Given the results of a new study, based on research funded by Unilever, which confirms that drinking unsweetened black or green tea daily is good-for-you – heart health in particular – maybe potentially selling its entire tea business is a bit rash. Consolidating its interests aside, perhaps better advertising and marketing, improved packaging and a new clear, targeted demographic, could help Unilever’s lagging tea sales.

The new study (according to the report, Unilever played no role in the study design, data collection, data analysis, data interpretation, or writing of the study), which claims to be “the most comprehensive review to date of tea’s relationship to cardiovascular disease (CVD) and all-cause mortality,” was published on 19 February in Advances in Nutrition. It spans 30 years of evidence from 37 epidemiological studies.

The study, “Dose–Response Relation between Tea Consumption and Risk of Cardiovascular Disease and All-Cause Mortality: A Systematic Review and Meta-Analysis of Population-Based Studies,” suggests that daily consumption of multiple cups of unsweetened black or green tea may lower the risk of death from heart disease.

In short, the study finds that:

  • With each cup of tea consumed daily, there may be an average of 4% lower risk of death from cardiovascular disease and 2% lower risk of all-cause mortality.
  • Older adults (65 years and up) may benefit the most. In this population, each cup of tea may lower risk of death from heart disease by 10%.
  • People who drink 2-3 cups (8 oz each) of tea per day may lower their risk of death from heart disease by about 8-12%, compared to non-drinkers of tea.

Researchers say the findings mean that daily tea intake as part of a healthy habitual dietary pattern may be associated with lower risks of CVD and all-cause mortality among adults. According to the American Heart Association, CVD affects nearly half (48%) of all adults in the United States and is responsible for about one in every three deaths. While this is definitely good news for consumers, it could be positive for Unilever as well.

In its 30 January fourth quarter and fiscal year sales and earnings call, Alan Jope, CEO of Unilever PLC, said the company initiated a strategic review of its global tea business, which includes some of the UK’s, US’s and other international markets’ most well-known brands such as Lipton, PG Tips and Lyons, amid the drop in the sales of standard black tea that Unilever cannot seem to find an answer to (its premium tea business is fairing much better). But as I alluded to earlier, maybe rather than Unilever selling its entire tea business, a new strategy for promoting and selling its commodity tea is in order.

Richard Parker, principal consumer analyst with GlobalData, stated, “With industry analysts speculating that the business could sell for €6-8 billion (US$6.583-8.778 billion), yet still making sales of circa €3bn (US$3.292bn), its decline is relative. However, it reflects a change in consumer behaviour that is, at least at present, moving the opportunities for growth in tea to new segments.” He added that it could be strategically advantageous for Unilever to review and consolidate some of its interests. “However, it would be a knee-jerk reaction to think that the rise of premium coffee and alternative teas is going to lead to even a medium-term downfall of standard black tea to the extent that getting out of the market entirely is preferable.”

Parker further noted the important influence of millennials and Gen Zers, “with their bias for experience seeking and weaker affinity for traditional norms. The British cuppa isn’t as valued in a social setting or as a feature of self-actualization for the urban hipster like a Flat White might be.”

“Looking ahead, for brands similar to those in the Unilever portfolio, changes of approach and building new appeal may be needed,” said Parker. “Digital marketing, social media and accurate demographic targeting backed up by genuine understanding of the audience can be clever tools in making the old relevant to new consumers,”

Given the results of the new study, which notes that older consumers (65 years and up) may benefit the most, maybe Unilever should concentrate its standard/commodity [black] tea efforts on marketing to baby boomers (who are in that key demographic) and Gen Xers (who will soon be getting there).

I concur with Parker, who, paraphrasing Mark Twain, said, “The death of the British cuppa may be somewhat exaggerated.”

Related content

Leave a reply

Do NOT follow this link or you will be banned from the site!