Unilever to Review Global Tea Business - Earnings Review

Andrew Cummings
February 2, 2020

However, sales of traditional black tea, the largest segment, have been in decline in developed markets for several years due to changing consumer preferences, Unilever said.

Underlying sales growth was below Unilever's 3-5% target range in 2019 because of a slowdown in the fourth quarter.

Pitkethly said tea is a good performer in emerging markets and in the premium category but all regions and all parts of the business would be considered for review. "In our view, this strategic review of the global tea business by Unilever could possibly be for Unilever's business in some mature markets and for brands like PG Tips", said Abneesh Roy, senior vice president at Edelweiss Securities.

Unilever still say it will look at "all options" for the tea business, including a partial or full sale. This includes growth through cost savings. In reply to TOI's query on the outcome of Unilever's decision to review its global tea business on India, an HUL spokesperson said, "We have no additional comments to offer since we are in our closed period".

Unilever wants to drive growth by investing more in luxury make-up and skincare, as well as vitamins and supplements, such as Californian wellness firm Olly Nutrition, which it acquired past year. In 2014, Polman separated the spreads business into a standalone unit, but it wasn't sold until three years later, after Unilever rejected an unsolicited takeover approach for the whole company from Kraft Heinz Co.

"If it does come to a trade-off between margin and growth, we will certainly prioritise growth", he told analysts.

But it reiterated warnings that 2020 underlying sales will be in the lower half of its 3-5% targeted range and would be below 3% in the first half.

He said: "We are now stepping up execution against our fundamental drivers of growth".

Shares of Unilever dropped 0.3% to 4,485 pence at the London Stock Exchange on Wednesday.

"The impact of the coronavirus outbreak is unknown at this time", the Unilever statement said.

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