Unilever offloads black tea business to European private equity

FMCG giant Unilever has decided to sell its global tea business, including the PG Tips, Lipton and Pukka brands, to private equity firm CVC Capital Partners for €4.5bn on a cash-free, debt-free basis.

Pointing to falling sales of black tea, Unilever’s chief executive, Alan Jope, said fans were “getting older and consuming less and starting to fall over”. Traditional “builder’s tea” drinkers were “not into experimenting and trying new products”.

Unilever’s tea business, which is known as Ekaterra, houses 34 brands and generated revenues of around €2bn in 2020. The deal excludes Lipton ready-to-drink teas, which Unilever operates as a joint venture with Pepsi.

Unilever – which owns a raft of household brands including Marmite, Dove and Ben & Jerry’s – is said to be shifting its energies on the segment where demand is rising, such as plant-based foods and high-end skincare.

PG Tips was the UK’s most popular brew for many years but more recently it has been under siege from Twinings, which is owned by Associated British Foods.

PG Tips was launched in 1930 by Brooke Bond and Company, a Manchester firm founded by the tea dealer Arthur Brooke, under the name “Pre-Gest Tea”.

“We are proud of the place that our tea business has in our company’s history. We look forward to seeing Ekaterra, with its strong brands and global footprint, prosper under CVC’s ownership. I would like to thank our tea colleagues around the world for their passion and commitment to our tea business and wish them well for the future,” CEO Alan Jope said.

Completion is subjected to a works council consultation process and regulatory approval but is likely to be completed in the second half of 2022. The deal excludes Unilever’s tea business in India, Nepal and Indonesia.

Last year, Jope had complained that traditional tea drinkers were dying off, while younger consumers preferred coffee and fashionable herbal teas.

While Unilever is happy to turn its back on traditional tea drinkers, the FTSE 100 company has hung on to a joint venture with PepsiCo that makes Lipton iced tea and Pure Leaf – a “fresh brewed ice tea”.