Unilever to Separate Tea Business, Completes Horlicks & Boost Acqusition

Unilever Nigeria on Wednesday announced that its parent company plans to spin off its tea business across the company’s markets except in India and Indonesia whilst maintaining partnership interests in the ready-to-drink tea joint ventures.

The move will see a €2 billion tea business become an independent company distinct from Unilever.

Unilever makes Lipton, Lipton Ice Tea ready- to-drink tea (partnership with Pepsico), Brooke Bond, and PG Tips.

“The balance of Unilever’s tea brands and geographies and all tea estates have an exciting future, and this potential can best be achieved as a separate entity,” said Unilever Global. “A process will now begin to implement the separation, which is expected to conclude by the end of 2021.”

Read also: Investors may rethink Unilever shares on plans to separate N1trn worth tea businesses

Unilever had announced a strategic review of the global tea business in January. Analysts say tea has been losing grounds to coffee and herbal tea in many of the locations affected by the tea business spinoff.

The company will also unify the Group legal structure under a single parent company, it said.

During the second quarter, the acquisitions of the health food drinks portfolio of Glaxosmithkline in India, Bangladesh and 20 other predominantly Asian markets was completed.

The acquistion of Horlicks and Boost gives Unilever a boost in the healthy nutrition market, the company said.

In the first half of the year characterized the by Covid- 19 pandemic, Unilever sales slowed by 1.9% in emerging market while revenue from developed markets grew 2.4%.

Food service declined by nearly 40% and out-of-home ice cream declined by nearly 30%. Shoppers moved from offline to online channels, driving ecommerce growth of 49%.

Home consumption of ice cream and tea increased while consumers indoors saw personal care decline except for hygiene products.

“Our focus for the rest of 2020 will continue to be volume led competitive growth, absolute profit and cash delivery, as this is the best way to maximise shareholder value,” said Unilever.