Tea business carve-outs brewing at Unilever
Third Bridge Forum spoke to a former executive at the company to find out why its tea business is struggling, potential carve-out scenarios, and tea market growth rates and drivers.
The Interview started with the expert painting a picture of the global tea market, noting that it represents 13.5-14% of soft drinks and then breaking this down regionally. Overall, the market is “highly fragmented” and Unilever is not in the right places. For example, the company has “very minor” market share in Japan and China — two of the biggest tea markets in the world. It also lacks a presence in all three of the highest-growth segments: luxury tea, super premium and premium.
The Interview ran through some scenarios of how easy it would be to separate the tea business from the broader Unilever group, addressing the complexities involved and risks that could arise for smaller brands. The expert also shared his views on what type of company might be interested in buying the leaf tea and ready-to-drink business assets. Asked what a new owner could bring to the former division, he emphasised: “This is a category which needs focus and dedication.”
Overall, it emerged that a mix of factors including low scale, seasonality and an increasing tilt towards the personal care side of the business are the main reasons why Unilever is mulling putting the lid on its tea business. Other considerations touched on in the Interview include whether there is scope to enter the luxury or premium tea market, and the key assets, functions or people that are critical to the business.
To access all the human insights from Third Bridge Forum’s Unilever’s tea portfolio – potential carve-out Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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