After Unilever, the world’s largest tea company, decided to divest part of its tea business, its brand Lipton’s business in China has also attracted much attention.
Yesterday, we learned more about the impact of the divestiture of tea bag business in China, including the latest business plan of tea bag in China.
At the beginning of this year, Unilever confirmed that it would conduct a strategic assessment of its tea business. Last month, the company announced its decision to divest most of its tea business, leaving only “the tea business in India and Indonesia, as well as the cooperative interest in the tea ready joint venture.”.
In response to the inquiry, Unilever China confirmed to the snack agent that its tea business was part of the above strategic assessment. According to reports, Unilever mainly operates Lipton and pure leaf tea brands in China, which are specialized in catering and other b-end channels. Unilever introduced pukka, a British organic herbal tea brand, into the Chinese market last year.
As Unilever’s China tea business is within the scope of evaluation, the regional market that Unilever announced to retain its tea business completely does not include the Chinese market. This means that Unilever’s tea business in China is also within the scope of divestiture, but the Lipton instant tea cooperation with PepsiCo will not be affected.
As early as 1991, Unilever and PepsiCo set up a joint venture to operate Lipton instant tea. Subsequently, the two companies expanded their cooperation to multiple markets, including China.
Talking about the impact of the divestiture, Unilever China stressed to the snacks: “this will not affect the sustainable development of the brand.”.
“In the future, the brand will continue to provide consumers with high-quality products and services.” The company said the global tea business stand-alone process will be implemented from now on and is expected to end by the end of 2021.
At the performance meeting at the end of last month, Mr. Qiao Anlu, CEO of Unilever, noted that the brands, markets and related tea plantations of Unilever had an “exciting future”. “But as an independent entity, the tea business can maximize this potential.” He pointed out that the tea business generated 2 billion euros in revenue for Unilever last year.
Unilever global tea business (source: Unilever)
In fact, Unilever did not disclose the next step after the divestiture. And the snack generation noticed that before the assessment results of the tea business were released, there was speculation that Unilever might promote the separate listing of the tea business.
“Unilever has said that its dual ownership structure makes its trading process more complicated, while the structure of a single listed company is more convenient, such as promoting the listing of tea business as an independent entity,” the Wall Street Journal reported in June
In addition, the Financial Times recently reported that the divested Unilever tea business may be split into a new group by the end of next year, laying the foundation for the sale or listing. The value of Unilever tea business is more than 5 billion pounds.
Tea bag “dragon head”
If the rumors come true, a new “giant” tea company is expected to emerge in the industry.
According to Euromonitor information consulting data quoted by nikkei.com, the global sales of tea reached 45.4 billion US dollars in 2018. Among them, Unilever ranks first among the global tea companies with a share of 10.6%, which even exceeds the total shares of the second to fifth ranked companies.
Unilever disclosed that the divested tea business will generate 2 billion euros (about 15.45 billion yuan) in 2019, accounting for about two-thirds of its tea business revenue last year.
Back in the Chinese market, Lipton can be regarded as a representative brand in both Unilever and the whole tea industry.
According to public information, Lipton entered the Chinese market in 1992. Five years later, Lipton won the first place in tea bag sales and market share in the series of surveys of 100 shopping malls in China. According to data from Daxue consulting, a market research firm, in the Chinese market, Lipton accounted for more than 80% of similar products at that time.
This has also promoted Lipton to increase the Chinese market. Lipton announced in 2005 that it would build a factory in Anhui Province and said that “the factory will become one of the largest tea producers in the world”. In 2016, a total investment of 200 million yuan was signed and started.
This year, when Unilever China announced to invest 100 million euro (about 800 million yuan) to build a new production base, the company also revealed that more than 100 mu of land reserved in the base may introduce production lines for tea bags, condiments, food, personal care and other categories in the future.
So, will the divestiture change the planning of tea bag production in the new base? In response, Unilever China only responded to snacks, saying: “it’s too early to talk about relevant plans.”
In fact, Lipton’s success has also attracted more competitors, such as CHUANNING, a famous British tea bag brand, which entered the Chinese market in 2006, and Chali tea, an emerging brand representative. Like Lipton, these brands also focus on tea bags.
In addition to the influx of new brands, Lipton also faced the challenge of slowing down the overall growth of the industry as early as 2015. According to previous media reports, when the overall growth of China’s tea market slowed down due to the slowdown in the growth of physical channels such as supermarkets, Lipton was the same. However, before 2013, Lipton’s growth in China has been double-digit.
Lipton, who wants to maintain high growth, decided to focus more on young consumers.
At that time, Zeng Xiwen, vice president of Unilever North Asia, said in an interview that he was still optimistic about the development potential of the Chinese market. Because of the younger tea consumers, Lipton tea bag provides a convenient choice for young office white-collar workers who are not particularly particular about tea drinking and have no habit of drinking tea and are easy to accept fast food culture.
Snack generation noticed that in order to be close to the younger generation, Lipton has also made many moves in recent years. For example, in 2018, Wu Lei, a traffic star, was launched as the spokesperson. This year, it has reached a cooperation with the variety show “please the refrigerator”, which is popular among young people.
In the fali office scene, Lipton launched 80 bags of new products in large boxes last month, aiming at the needs of “meeting in the morning” and “relieving difficulties in the afternoon”. In addition, the new product also uses more vivid visual effect packaging.
After a sudden outbreak, Lipton, which has a variety of fruit tea and herbal tea, is also expected to usher in new opportunities. According to Euromonitor, a market research firm, after the outbreak, fruit and herbal tea grew faster than other tea products because consumers wanted to “strengthen the immune system.”.
“Although the World Health Organization (who) does not recommend… The strong health positioning of herbal tea has been recognized in many countries and has become a popular choice for many people.” The source said.
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