Unilever to review tea business after reporting full-year results

Unilever has reported its slowest quarterly growth in a decade and has initiated a strategic review of its global tea business.

Today, in its full-year result announcement, Unilever reported a 2.9% growth in sales compared to 2018 led by strong performance in home care and emerging markets.

“Overall growth was slightly below our guided range for the year due to the slowdown we saw in the fourth quarter,” said Unilever CEO Alan Jope, who took up the role last year.

In its last quarter, sales grew by 1.5% with a 4% increase in revenue.

The company’s food and refreshment unit similarly grew its full-year sales by 1.5%,

Ice cream witnessed growth however volumes declined due to strong results thanks to a good European summer in 2018. Growth in this sector was supported by plant-based and ‘better-for-you’ offerings including Magnum vegan and its Ben & Jerry’s lighter Moophoria variants.

According to Unilever, its Hellmann’s dressing grew well with the US business returning to growth in the second half of 2019. Hellmann’s vegan mayonnaise is now stocked in over 20 countries. Meanwhile, Sir Kensington’s premium ranges of mayonnaise and salad dressings have now more than doubled in size since Unilever bought the condiment brand in 2017.

However, Unilever has launched a review of its tea business, which includes the PG Tips and Lipton brands, after witnessing volume declines due to “subdued demand for black tea in developed markets”. Instead, Unilever has witnessed its consumers shift towards herbal tea shown through a good performance by its Pukka brand that it acquired in 2017.

Unilever stated that it witnessed significant slowing performance in South Asia as well as some markets in China. Developed markets, in particular Europe, remained challenging

In its full-year results, Unilever recorded a 2% increase in revenue with a positive impact from currency offset by negative impact from its disposal of its spreads business.

The company reported a revenue of $19.3 billion in 2019 and a 1.5% growth compared to that of 2018.  

Jope added: “While we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first half underlying sales growth will be below 3%. As we near the completion of our three-year strategic plan, we expect continued improvement in underlying operating margin and another year of strong free cash flow, remaining on track for our 2020 goals.”