Lipton and Tazo parent company mulls sale of tea business

The world’s largest tea maker is considering abandoning tea. Unilever announced that it is exploring the sale of its tea business after years of declining consumption.

“We are continuing to evaluate our portfolio and have initiated a strategic review of our global tea business as we continue to evolve our portfolio to higher growth spaces,” said Alan Jope, CEO of Unilever PLC, in a statement following the release of the Anglo-Dutch company’s fourth quarter and fiscal year on 30 January.

Tea saw price-led growth, however volumes declined due to lower consumer demand for black tea in developed markets such as the United States and Europe. “We continued to focus on the growing segments of premium black tea, black tea in emerging markets and fruit and herbal variants, with our premium herbal brand Pukka performing well,” said Jope. However, sales of traditional black tea, the largest sector of the category, have been in decline in developed markets for several years due to changing consumer preferences.

Unilever has a long been the leading tea business in the world with brands such as Lipton, Brooke Bond and PG Tips. In recent years it has expanded into the premium, fruit and herbal market with the purchase of Tazo from Starbucks Corporation, Pukka Herbs, a British organic herbal tea maker, as well as the premium Australian tea company T2, which sells high end loose leaf teas in innovative flavours such as red chocolate mint. Unilever has rolled T2 out internationally. Despite those efforts, the company’s presence in black tea – the largest segment of its tea portfolio – has weighed down the business.

The strategic review will consider all options for Unilever’s tea business – an outright sale, part ownership or a different structure – and is expected to conclude by mid-year.

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