Sustainable Tea at Unilever

Group H
Why did Unilever commit to
sustainable tea?
Sustainable strategy -
Company would be better
suited to survive in the
future; Create a health
supply chain

Social factors and Commitment to

Environment factors Sustainable Living Plan

Product differentiation
Western consumers
Commoditization of tea
concern about
sustainability
 Has the introduction of certified tea
been a success for Unilever?
Country Market Increase Strategy
size in Sales
U.K. 1.8 bps 6% Do your bit: put the kettle on
Usage of characters in ads
Australia 158 bps 11% Make a Better Choice with Lipton, the worlds first
Rainforest Alliance Certified tea
Instore promotions, package updation,
Italy 200 bps 10.5% TV, press online, public relations, instore promotions
and packaging updates
Editorial partnership with National Geographic
magazine
France - - Press release, media and press conference
Print ads with message your tea can make a
difference, announcing in the inside of packages
initially, online competition
U.S. No - Your small Cup can make a big difference, online
significant content about certification, packaging updation
changes
 Economic Analysis
Headers Costs
Premium per kg of tea $0.09
Participation fee per kg of tea $0.0125
Average market price per kg of tea( after 15% $2.622
increase)
Total cost per kg of tea $2.7245
Total amount of tea for Unilever 350000 tons
Amount of tea for Lipton from Kenya in 2010 116666 tons
Expected yield in 2011 due to Rainforest 134166 tons
alliance practices
Amount to be paid to farmers $365,537,083.3
Cost of hiring employees for rollout of global $236890
certification
Total cost of the scheme implementation in $365773973.3
Kenya
Cost if the scheme had not been implemented $266000000
in Kenya
 Challenges
Would the
sustainability
Majority production message resonate
with consumers in Other materials that go
controlled by
developing/emergi into making the
smallholders; small
ng economies product paper in tea
scale of farms made
bags, packaging,
certification a
Chamomile are not
significant challenge,
sustainably procured
E.g. India

Other companies
Supply chain is
have also gone for
geographically
certified tea, how
diverse and highly
to maintain point
fragmented
of difference

Ethical brands had

Could make
failed to grow
Unilever a bigger
beyond niche
market positions in Challenges target for scrutiny
and criticism from
the beverages
activists
industry
 Challenges in India / Emerging
Economies
Developing a organizational
Majority of production cam
model that could handle
from small producers, it is a
training could be difficult in
challenge to convert small
contrast to Kenya there were
producers to sustainable
no government sponsored
practices
tea cooperatives

2/3rd of market, by volume,

was sold as unbranded loose
Child Labour and Pesticide black tea; 1/3rd was branded
use tea and most was sold in
packets; less than 2% were
tea-bags
 Tea in India
Two major brands
Brooke Bond
(19%), Lipton
(6%) Competitors
Tate Tea (26%),
Branded coffee regional tea
shop chains are companies which
popular especially catered local
among young preferences and
Indian consumers competed
aggressively on
price

Tea in
3/4th sold through
small grocers but
supermarkets are
India An alternative
standard for India
increasing as the
incomes rise

Green tea a high Implementation

growth category, partners local
urban areas NGOs