8,660.2518.8
Stock Analysis, IPO, Mutual Funds, Bonds & More

Unilever's tea biz review may not affect India unit

Hindustan Unilever, the Indian unit that sells Lipton and Brooke Bond teas, is the market leader in India, controlling over a fifth of the country’s tea segment.

, ET Bureau|
Last Updated: Jan 31, 2020, 11.21 AM IST
0Comments
Unilever is initiating a strategic review of its global tea business, a decision that analysts said might not affect its Indian business.

The review is expected to conclude by mid-year, Unilever said on an investor call on Thursday. The strategic review of the tea business, which clocked about $3.3 billion in sales last year, comes after the company posted its slowest quarterly growth in a decade. The volume of tea sales declined due to subdued demand for black tea in developed markets, Unilever said.

Hindustan Unilever, the Indian unit that sells Lipton and Brooke Bond teas, is the market leader in India, controlling over a fifth of the country’s tea segment.

“We do not expect HUL to evaluate selling its tea business in India given that HUL is the market leader and has gained market share over the past few years. In our view, this strategic review of the global tea business by Unilever could possibly be for Unilever’s business in some mature markets and for brands like PG Tips,” said Abneesh Roy, senior vice president at Edelweiss Securities.

Over the years, Unilever and its Indian unit have struggled in the packaged food segment, especially in the low-margin commoditised categories. HUL has been focusing on core packaged food and beverage brands with higher margins and exited the tea plantation, oil, fats and biscuit businesses. It also moved out of the bread and bakery business under the Modern brand.

Tea in India is still a growing segment and is one of the largest within HUL’s food and refreshment business. HUL had earlier pointed out that the company’s share in the country’s value-added foods — which is less than 10% of the €500-billion food market — was "very small at 5%."

The bulk of its foods business is tea, a segment that is highly unorganised, even as the company has been trying to get consumers to upgrade to packaged tea from loose tea. Unilever said global sales grew 2.9% in the fourth quarter and India performed well in a slowing market.
Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service