In the face of
declining group sales growth, Unilever will conduct a review of its global tea
business, including the PG Tips and Lipton brands, in an apparent strategy that
Chief Executive Alan Jope is rethinking.
Jope said the group had previously invested in turning around the tea
sector over the longer term, but the change of plan could ease the fears of
investors who criticised the lack of urgency in transforming Unilever's struggling
business of food and refreshment.
Pitkethly said
tea is an excellent performer in emerging markets and the premium segment, but
it would consider for review for all regions and all parts of the business. The
company said the analysis caused by traditional black tea sales slowing down in
developed markets as customers turn to herbal tea. Black tea, Pitkethly said,
is the dominant part of Unilever's tea market, distributed in 60 countries and
producing annual sales of 3 billion euros ($3.3 billion).
Unilever also
struggled elsewhere with stuttering growth in India and China, two of its main
emerging markets, while intense competition in North America and Europe also
hindered attempts to meet growth targets for the full year. The food and
refreshment company which produces teas from Lipton and mayonnaise from
Hellmann among others and contributes 40% to group sales-has been hit
particularly hard in North America and Europe as customers look for healthier
options.
Joe announced
that he is concentrating on sustainability instead of topline growth. Nonetheless,
Joe's focus is on growth, and he said on Thursday after the results from his
first full year in charge showed a 2 per cent increase in annual turnover and
2.9 per cent improvement in underlying sales.
OSL Take: Sri
Lanka’s tea sector has been recording continuous growth with increased recorded
in the export sector as well. The proposed merger and acquisition opportunity
avails the range of business opportunities towards the astute investor.
The government
of Sri Lanka has also offered many incentives to promote the country’s tea
industry. Foreign businesses/investors could explore business/investment
opportunities in Sri Lanka’s tea industry.
The latest
report by the Central Bank of Sri Lanka highlighting the decrease in the trade
deficit, increase in the tea export revenues, and the easing of pressure on the
rupee is all indicative of an economy on a buoyant growth path. International
lending agencies have recognised Sri Lanka's economic policies like the IMF,
World Bank, and ADB, which have expressed confidence in Sri Lanka and expressed
willingness to assist the country.
The country’s
economic policies have also helped the growth of several key industrial sectors
in the country. Hence, this has resulted in the opening of many
business/investment opportunities along with the aggressive development program
undertaken by the GoSL. The country is, therefore, a hotbed for foreign
investments, and interested businesses/investors could explore opportunities in
Sri Lanka.
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