Unilever Nigeria To Separate Lipton Tea Business Segment

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Further to the announcement made on 5th August 2020 about Unilever’s global announcement on the Strategic Review and planned separation of its Lipton Tea business, this is to notify The Nigerian Stock Exchange and our esteemed shareholders of the plan to separate the Unilever Nigeria Plc tea business into a separate legal entity.

The planned separation will go through the normal approval process and is expected to be concluded by the end of 2021. We shall keep the Nigerian Stock Exchange and stakeholders informed of subsequent developments on this matter.

The tea business that will be separated generated revenues of €2 billion in 2019. This was made in notification shared on the Nigerian Stock Exchange for and on behalf of the Board of Unilever Nigeria Plc.


The leaf tea business, in general, has been struggling, losing market share to coffee and to herbal tea. Spinning off the business puts Unilever in a position to sell it, possibly with a licensing-back deal.

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The disclosure is made for and on behalf of the Board of Unilever Nigeria Plc.

Background into the divestment:

Unilever executives announced the plan, which was the result of a six-month review. Unilever plans to spin off most of its loose-leaf tea business, but retain it in India and Indonesia, as well as retain its ready-to-drink tea joint ventures with PepsiCo.

The partnership between the two companies has PepsiCo focus on Lipton’s ready-to-drink beverages while Unilever handles the leaf tea. Each company owns a 50% stake.

The rest of the tea portfolio will be spun off into a separate independent entity.

Strategic review of tea

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In January 2020, Unilever announced a strategic review of the global tea business, which includes leading brands such as Lipton, Brooke Bond and PG Tips.

“The balance of Unilever’s tea brands and geographies and all of our tea estates have a very exciting future, but this potential can be best achieved we believe as a separate entity, and a process will now begin to achieve this separation, which is expected to conclude by the end of 2021,” CEO Alan Jope.

A statement from CEO Alan Jope

“Performance during the first half has shown the true strength of Unilever. We have demonstrated the resilience of the business – in our portfolio, in a continued step-up in operational excellence, and in our financial position – and we have unlocked new levels of agility in responding to unprecedented fluctuations in demand.

We have also taken action to strengthen the strategic future of the company by announcing proposals to unify our dual-headed legal structure, progressing the strategic review of our global tea business and making new commitments to help protect the climate and regenerate nature.

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From the start of the Covid-19 crisis, we have been guided by clear priorities in line with our multi-stakeholder business model to protect our people, safeguard supply, respond to new patterns of consumer demand, preserve cash and support our communities.

Our focus for the rest of 2020 will continue to be volume led to competitive growth, absolute profit and cash delivery, as this is the best way to maximise shareholder value.

I would like to thank every member of the Unilever team for the outstanding commitment they have shown in the most difficult of circumstances.”

Overall performance of Unilever Nigeria?

In its recently released unaudited FY’20 financial statements, Unilever Nigeria consolidated on its improved Q3’20 performance after an especially hard year riddled with turnover challenges.

Group topline expanded by 2% y/y to ₦61.6 billion, supported by a 9% y/y growth in Food Revenue to ₦34.7 billion, even as HPC Revenue moderated 7% y/y.

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The topline growth was supported by an impressive 84% y/y expansion in Q4’20 topline to ₦16.8 billion, albeit the line item fell just 3% shy of our expectation. Even accounting for mild price increases this year, we attribute the growth to continued recovery in volumes.

In spite of the higher topline, impairment on receivables fell further under control, printing at ₦5.0 million in Q4’20 compared to ₦429 million in Q3’20 and ₦405 million in Q4’19. We recall that Unilever Nigeria had in 2019, adopted tighter credit policies in order to temper rising impairments. The moderation in the Q4’20 impairments along with the 17% contraction in trade receivables balance suggests that the new policy is yielding fruit.

Unilever Nigeria PLC - An uphill battle to profitability Brandspurng

Source: Company filings, Vetiva Research

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