Unilever seeks to turn over new leaf for tea business

January 31, 2020: British-Dutch consumer giant Unilever said Friday it is reviewing its global tea business including Lipton and PG Tips after sales went off the boil, while eyeing the "unknown" impact of the new coronavirus outbreak.

Sales of black tea, source of the humble cuppa, have dipped in the developed world as consumers instead lap up fruit and herbal teas, the firm said as it released its annual results.

Chief executive Alan Jope, marking a year at the helm of the company, said Unilever had launched a "strategic review of our global tea business", adding that "all options remain on the table" including a possible sale.

"You're really talking here about consumer trends, there's a really quite dramatic shift from black tea to initially green tea, and now we're seeing more and more herbal teas and infusions," Jope said in a call with investors.

Unilever says it is the world's biggest tea company with brands that also include Brooke Bond, Bushells and the premium brand Pukka, which it said was "performing well".

"The harsh reality is that two-thirds of our business remains core black tea which is declining. It's not a short-term thing it's a long term trend, over a decade," said Jope.

"We've had a lot of good effort at getting the core black tea back to growth but we just don't see it happening."

Asked if some of the tea business could be sold, Jope replied: "This strategic review means we want to investigate how we can best create value for stakeholders, we have not reached a conclusion, all options remain on the table."

Unilever shares were up 1.78 percent to 52.48 euros ($64.36) at 1200 GMT on the Amsterdam stock exchange.

The firm, whose products also include Ben and Jerry's ice cream and yeast spread Marmite, reported a 38.4 percent slump in profits to six billion euros in 2019 after a disappointing fourth quarter, although profits for 2018 had however been boosted by the sale of its spreads business.

The company said there had been a "significant slowdown during 2019 in South Asia" and "some market softening" in China.

APP