Unilever will separate part of its tea business following a review launched in January, the company announced in its 1H 2020 results.

UPDATE, 30 July: A spokesperson from Unilver sought to clarify the company's announcement, saying it will be "separating the tea business to create a new entity which they will continue to own".

Earlier reporting by Food & Drink Business said the company was selling parts of the tea business.  

Unilever’s tea business includes Lipton, Brooke Bond, PG Tips and T2. In January, it recorded the slowest quarterly growth rate in a decade, with CFO Graeme Pitkethly announcing all parts of its tea portfolio were under review.

Black tea has been a major part of Unilever’s tea business, selling in 60 countries and generating around US$3.3 billion in annual sales. But sales of traditional black tea, the largest segment of the category, have been declining in developed markets for several years due to changing consumer preferences.

In its 1H 2020 results announcement, the company said it would retain its tea businesses in India and Indonesia, and partnership interests in ready-to-drink tea joint ventures.

The tea business that will be separated generated revenues of €2 billion (AU$3.2 billion) in 2019. It expects the separation to be completed by the end of 2021.

A spokesperson for Unilever told Food & Drink Business she was unable to provide further details on which brands, including T2, would be affected.

For the business overall, underlying sales declined 0.1 per cent with volumes declining 0.3 per cent and price growth of 0.2 per cent. Developed markets grew 2.4 per cent whilst emerging markets declined 1.9 per cent.

COVID-19 impacts varied widely across its channels and categories. Lockdowns and related channel closures negatively impacted food service, out-of-home ice cream and prestige businesses.

While food service declined by almost 40 per cent and out-of-home ice cream declined by around 30 per cent, shoppers move from offline to online channels saw ecommerce channel growth of 49 per cent.

With people spending more time at home, Unilever saw growth in home consumption of foods, ice cream and tea and a decline in personal care items, except for hygiene products. Its hygiene product range grew double digits.


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