On Thursday, Hindustan Unilever aka HUL on Thursday said it would keep its tea business to itself in the region of India and Indonesia. The announcement holds immense importance because with it the firm finally puts a full stop to a long time of speculation about the fate of the tea business in India. The tea business is a growing unit of the local vertical of the company.
During January, HUL declared a strategic analysis of the firm’s global tea business. The company incorporates popular brands such as Lipton, Brooke Bond, and PG Tips under its umbrella. In a statement, the company said that they will retain the tea businesses as well as the partnerships in the ready-to-drink tea joint ventures.
With this review, HUL will give birth to a separate entity wholly for the rest of the tea business which valued at $2.3 billion. The other tea ventures and the India and Indonesia tea parting stand at a valuation of $1 billion currently. It is expected that the company will sell the demerged entity. Moreover, it has already reportedly received interest from some of the greatest global buyout firms. KKR, Blackstone Advent International and Bain Capital are some popular names being heard around this matter. According to reports, The demerger would be completed by the end of 2021.
On Tuesday, HUL reported its quarterly results in the April – June period, with a 52 percent rise in its year-on-year sales. The growth is seen especially in its foods and refreshments business. The growth was led by tea, coffee, and packaged food brands such as Kissan.
In the HUL Uniliver product portfolio tea is part of the essentials and constitutes 80 percent of its business and it holds a share of nearly 21 percent in the domestic tea market valued at Rs. 15,000 crores. In the above mentioned quarter tea business zoomed up 6 percent.
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