Unilever puts tea business under review as annual profits slump

PG Tips and Lyons group Unilever has launched a review of its global tea business as it revealed a slump in annual profits.

The consumer goods giant announced the strategic tea review as it reported a 33% drop in pre-tax profits to 8.3 billion euro (£7 billion) for 2019, having suffered a marked slowdown in its South Asian business and weaker trading in China.

Unilever, which also owns Lipton ice tea brand, said it would be looking at its tea business across all worldwide regions.

The group – which is also behind well-known brands such as Magnum and Hellmans – posted a better-than-feared 1.5% rise in underlying sales over the fourth quarter.

But it reiterated warnings that 2020 underlying sales will be in the lower half of its 3-5% targeted range and would be below 3% in the first half.

Alan Jope, chief executive of Unilever, pledged to ramp up turnaround efforts, including cost-saving plans and the global tea review.

He said: “We are now stepping up execution against our fundamental drivers of growth.

“These are to: increase penetration by improving brand awareness and availability; implement a more impactful innovation programme; improve our performance in faster growing channels; drive purpose into all our brands; and fuel growth through cost savings.”

He added: “We are continuing to evaluate our portfolio and have initiated a strategic review of our global tea business.”

Across Europe, including the UK, it saw underlying sales fall 0.6% as ice cream sales were impacted following two previous years of hot summers.

In the UK and Ireland, it said it battled against “difficult and often deflationary retail environments”.

Given its operations across China, the firm has been closely watched for signs of a hit from the coronavirus outbreak, but it said any impact of this was still “unknown at this time”.