Published: Sun, February 02, 2020
Markets | By Otis Pena

Unilever misses its growth target and begins reviewing the global tea business

Unilever misses its growth target and begins reviewing the global tea business

Unilever has initiated a strategic review of its global tea business, which includes popular brands Lipton, Tazo and PG Tips. For calendar year 2019, Unilever delivered an underlying sales growth of about 3%, and witnessed growth from emerging markets and its home care unit.

However, sales of traditional black tea, the largest segment, have been in decline in developed markets for several years due to changing consumer preferences, Unilever said.

"If Unilever chose to sell tea, we see few willing buyers for a declining black tea business", he said.

A representative from Unilever has not returned request for comment. In foods and refreshment underlying sales grew 1.5% with volumes down 0.2%.

Net profit at the Anglo-Dutch company whose brands include Lipton tea, Dove soaps and Ben & Jerry's ice creams, dropped 38% to 6 billion euros ($6.6 billion) from 2018, when profit was boosted by the sale of the company's spreads division.

He told reporters previous year that Unilever was taking a close look at such brands as Marmite, Magnum ice cream and Pot Noodle.

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There have been no disposals as yet, though rivals Nestle and ABInBev have each sold food operations worth billions of dollars over the past year to refocus on their core businesses.

According to a report published by Reuters, AJ Bell investment director Russ Mould said that "The decision to launch a strategic review of its tea business reflects an attempt under CEO Alan Jope to reposition the company towards areas of higher potential after a period in which growth has been harder to come by".

Consumer goods giant, Unilever, has reported a modest rise in sales for 2019 and is cautiously confident for 2020.

Six months after taking the helm in January past year Jope announced his attention to target sustainability rather than topline growth.

Shares in Unilever were up 1.1 percent at 44.85 pounds at 1017 GMT. China contributes 5 percent to Unilever's total sales.

"In 2020, our underlying sales growth is expected to be in the lower half of the three to five per cent range".

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