British multinational consumer goods company, Unilever, has reportedly decided to part ways with its tea business, Ekaterra, and has inked a €4.5 billion ($5.1 billion) deal with European private equity firm CVC Capital Partners for its sale.
Unilever had kicked off its plans to sell the tea business back in 2020, when its chief executive, Alan Jope, had complained that not only were traditional tea drinkers decreasing in number, but much of the younger consumers also preferred drinking the more ‘fashionable’ herbal teas or coffee.
With the sales of black tea falling, Jope stated that ‘fans’ of the tea, now consisted of an older generation, were consuming less tea, and that those who liked the traditional ‘builder’s tea’ would not experiment and buy new products.
Ekaterra, the collective tea business division which includes brands such as Lipton, Brooke Bond, PG Tips, and the recently acquired Pukka, had reported sales of €2bn (~$2.3 bn) last year. the bid made by CVC Capital Partners had won out on rival offers made by private equity firms Advent International and Carlyle Group.
CVC managing partner, Pev Hooper, while talking about the buyout, stated that Ekaterra is a great business that is has a strong foundation with leading brands and that the team at CVC is looking forward to working with its management team in order to help the brand reach its full potential.
This is not the first time that Unilever has dealt in business with a private equity firm. Under former CEO Paul Polman, the company had sold its spread business to US investment firm KKR & Co. in 2017.
Jope expects that with the sale, estimated to be completed by the second half of 2022, the company’s share would see a rise as well, having reported a 13 percent downfall this year. He further added that the evolution of the company portfolio into higher growth spaces will be an integral part of its growth strategy, with their decision to sell Ekaterra a sign of progress in their plans.