Unilever will review the global tea business
Mumbai: He said he has initiated a strategic review of his global business. Industry analysts, however, do not expect the Indian subsidiary Hindustan Unilever ( HUL ) to evaluate the sale of your tea business in India.
Tea is part of HUL’s food and refreshments (F&R) portfolio, which contributed about 19% to the company’s 2018-19 revenues (see graphic) of around Rs 38,000 crore. , a key tea brand of HUL, is an over Rs 2,000-crore brand, and is one of the leading players in India’s beverage category. Other brands include the iconic ‘ Taj Mahal ’Tea under Brooke Bond, which is marketed as a brand closely linked to heritage culture, while focusing on the tastes of emerging consumers, such as Green Tea .
With tea in its portfolio, HUL’s connect with consumers goes beyond personal products, opening new opportunities in foods and refreshments in addition to growth in the out-of-home channel. In a statement on Unilever’s fourth quarter and full year performance, CEO Alan Jope said, “We are continuing to evaluate our portfolio and have initiated a strategic review of our global tea business.”
Unlike India, where tea consumption is well established, in developed markets, there is a decrease as consumers are said to be moving towards other alternatives.
Edelweiss Securities said it does not expect HUL to evaluate selling its tea business in India, given that HUL is a market leader and has gained market share over the past few years. “We continue to see HUL being on acquisition mode in India (acquired Indulekha hair oils, Aaditya ice cream, GSK Consumer). In our view, this strategic review of global tea business by Unilever could be possibly for Unilever’s business in some mature markets and for brands like PG Tips, ”said Edelweiss Securities research analyst Abneesh Roy.
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.” HUL is slated to announce its third quarter results (October-December 2019) on Friday.
“We expect HUL to see volume growth of approximately 3% YoY on a high base of 10% YoY (Q2FY20 saw volume growth of 5% YoY on a similar base of 10% YoY),” said Roy. For calendar year 2019, Unilever delivered an underlying sales growth of about 3%, and witnessed growth from emerging markets and its home care unit. Overall growth was lower than the guided range due to the slowdown in the December quarter.
While Unilever said that India performed well in a decelerating market, he added that in the fourth quarter (October-December 2019), price growth slowed, driven by price reductions in India.