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PG Tips could be sold off as Brits swap tea for coffee

Tom Belger
Finance and policy reporter
PG Tips and other Unilever tea brands are under review. Photo: PA

PG Tips and other tea brands could be sold off by food and drink giant Unilever, which blamed “subdued consumer demand” as it announced a review of its black tea business.

PG Tips is one of Britain’s leading tea brands, but figures suggest traditional tea sales have slowed in recent years as coffee and herbal tea have boomed in popularity.

British-Dutch firm Unilever (ULVR.L) confirmed on Thursday it had launched a “strategic review” of its global tea business, which includes PG Tips, Lipton, and Pure Leaf.

"We will look at all options for the business," its chief finance officer Graeme Pitkethly said, according to Reuters, including a potential sale of part or all of its tea division.

The company did not provide UK figures, but said the volume of black tea sales had fallen around the world in “developed markets” as more consumers steered clear of the traditional cuppa.

Unilever’s full-year results for 2019 said its income from tea sales still rose, as “price-led growth” offset lower overall sales.

READ MORE: Drinking three cups of tea a week ‘linked to longer and healthier life’

Tea sales make up a significant part of its food and refreshment arm, which saw volumes drop 0.2% but underlying sales revenue up 1.5%. Unilever said its operating profits on its wider business globally plummeted from €12.6bn (£10.7bn) in 2018 to €8.7bn (£7.4bn) last year.

It said herbal tea sales were increasingly popular, however. “We continued to focus on the growing segments of premium black tea, black tea in emerging markets and fruit and herbal variants, with our premium herbal brand Pukka performing well.”

Once Britain’s most popular and iconic drink, black tea’s dominance appears to be under threat as consumers have increasingly embraced coffee and herbal alternatives.

80% of tea brands surveyed last year by the organisers of National Tea Day highlighted a growing trend for health and wellness teas.

But even their report acknowledged there has also been a “coffee revolution” in Britain. The number of coffee shops and their sales has risen for the past 20 years, according to research by Project Café.

Figures suggest builder’s tea remains one of Britain’s favourite beverages despite its apparent decline, with an estimated 165 million cups drunk every day.