Unilever & Pepsico to expand ready-to-drink tea joint venture

PepsiCo and Unilever today announced they have agreed to expand their International partnership for the marketing and distribution of ready-to-drink tea products under the Lipton brand, the world's best-selling tea.

  • Agreement will double current International Joint Venture volume
  • Leverages complementary strengths of Unilever's Lipton brand and tea know-how with Pepsi bottling and distribution network

The new agreement adds 11 countries to the partnership's existing Lipton ready-to-drink tea business. The business in these countries – eight in Europe ( Germany, Italy, France, Netherlands, Switzerland, Austria, Belgium and Portugal) as well as Korea, Taiwan and South Africa - had combined systems sales to the trade of around €300m in 2006. The new agreement effectively completes the partnership and creates the leading global ready-to-drink tea business.

The new agreement builds on the original 1991 Pepsi Lipton Tea Partnership (PLTP) North American joint venture that established Lipton as the leading ready-to-drink tea brand in the United States, and on the subsequent 2003 Pepsi Lipton International (PLI) joint venture that currently spans more than 40 countries and has enjoyed strong double-digit volume growth.

The new agreement will more than double the volume of the companies' current PLI joint venture and positions both companies to capture more of the growth opportunities associated with the rapidly expanding global ready-to-drink tea market.

Under the terms of the agreement a mechanism is established for PLI to open new ready-to-drink tea markets. Each company will continue to own 50% of the joint venture, with PepsiCo paying Unilever an undisclosed sum for its share of the businesses in the new markets being transferred.

"This is a wonderful opportunity to strengthen our position in one of the fastest-growing beverage categories," said Michael White, chief executive officer of PepsiCo International and vice chairman of PepsiCo. "Lipton is one of the world's great beverage brands, and will continue to be a key pillar of our strategy to offer international consumers a portfolio of convenient beverages to address a wide range of needs."

Vindi Banga, Unilever's president for Foods & Refreshment, said: "This agreement gives us the opportunity to build on the tremendous success of the joint ventures to date. It provides an excellent opportunity to realise the long-term potential of the Lipton ready-to-drink brand, and Pepsi's expertise in the drinks sector will help us drive innovations faster and more competitively."

The agreement is subject to receiving approvals from the relevant regulatory authorities, employee consultations, and, for Portugal and South Africa, agreement with Unilever's existing partners. The transaction is expected to be effective from the beginning of January 2008.

Unilever PLC

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