Unilever No Longer Wants To 'Be Mother,' In Talks To Sell Tea Business

Unilever N.V. (NYSE: UL) no longers wants to "be mother" and is looking to sell its tea business after 10 years of unsuccesfully "trying to ignite growth"

Benzinga · 01/30/2020 18:55

Unilever N.V. (NYSE: UL) no longers wants to "be mother" and is looking to sell its tea business after 10 years of unsuccesfully "trying to ignite growth"

What Happened

Unilever CEO Alan Jope told Bloomberg the company made it clear to investors late last year it will take a look at all aspects of its portfolio to see where changes can be made. On Thursday the company confirmed a strategic review of its tea business which generates sales of around $3.3 billion.

Unilever's black tea business continues to act as a "structural drag" on the company's growth, Jope said. As such, the business is viewed as being inconsistent with a pledge to accelerate growth sequentially.

"We just feel that tea might be better managed or owned in a different structure than it is today," the CEO.

Why It's Important

Jope separately said the company's decade-long quest to spur growth in tea is akin to "insanity," according to The Wall Street Journal. Unilever has been guilty of "doing the same thing expecting different outcomes."

Part of the struggles is due to younger consumers looking for "novel experiences," the CEO said. Instead, the company is left selling black tea to customers that "getting older and consuming less."

Price is also an issue as the cheap cost of making a "cupper" at home has prevented Unilever from seeing success in the premium tea category.

Unilever's tea business is comparable in terms of size and geographic reach with its spread business that was sold in 2018 for $8 billion. According to WSJ, the company is hopeful its tea business can attract interest from rival companies who are looking to lower their costs in a highly fragmented market.