USA – PepsiCo and Unilever are set to extend the long-standing distribution and marketing of the Lipton ready-to-drink tea brand to meet the growing global demand for these products.
Through this deal, PepsiCo will integrate its bottling and distribution networks with Unilever’s core tea brand, effectively doubling the global capacity of their joint venture to cater to the rising demand for RTD tea products.
The company disclosed that the agreement would enable it to expand its market reach into both Europe and Asia, addressing the increasing consumer demand for non-carbonated soft drink alternatives.
With consumers shifting away from carbonated beverages towards products offering health and nutrition benefits, PepsiCo’s CEO Michael White emphasized the deal’s importance for the growth of their global operations.
“This is a wonderful opportunity to strengthen our position in one of the fastest-growing beverage categories,” he stated.
Under the agreement, the partnership will operate in 11 new markets across Western Europe and Asia. This expansion will extend their venture into Germany, Italy, France, the Netherlands, Switzerland, Austria, Belgium, Portugal, Korea, Taiwan, and South Africa.
According to Future Market Insights, the RTD tea market is capturing a valuation of US$34.3 billion in 2023 and is projected to reach US$72.9 billion by 2033, registering a CAGR of 8% during the forecast period.
A previous agreement between the two companies has been in place since 1991, resulting in the creation of the leading ready-to-drink tea brand in the US, according to PepsiCo.
This deal was further extended in 2003 with the formation of the Pepsi Lipton International joint venture, which operates in over 40 countries worldwide.
The focus on Western Europe could prove advantageous for the group, with the region experiencing robust growth in tea-based beverage sales.
Between 2002 and 2006, the market for ready-to-drink tea products grew by 7.4% to €1.5 billion, according to consumer analyst Euromonitor.
In August, Lipton Hard Iced Tea expanded its product lineup by introducing a new flavor – Citrus Green Tea.
This launch comes as the hard tea segment has seen significant growth, with sales increasing over 130% in the past year, reaching approximately $150 million.
Featuring a malt base that is triple-filtered and brewed with green tea, this new offering contains 5% ABV and is designed to provide a smooth and refreshing drinking experience without carbonation.
The hard tea category has gained traction in recent years, appealing to consumers seeking alternatives to traditional alcoholic beverages.
The introduction of Citrus Green Tea aligns with current trends favoring lighter, fruit-infused options, particularly during summer months and holiday weekends.
In May 2024, Lipton sold its tea estates in Kenya, Rwanda, and Tanzania to Sri Lanka-based peer Browns Investment. Browns Group acquired Lipton’s investments in Tanzania, aiming to produce 87 million kilograms of black tea annually.
Browns’ estates worldwide currently cover 40,000 hectares and produce 43 million kilograms of black tea. They have also acquired various tea farms in Kenya’s Rift Valley region, 51.99% of Limuru Tea, and 100% of shares in Lipton’s Rwandan properties.
Lipton Teas was established in 1890, with its estates in Kenya dating back to 1914. As it changes its business model, the company has pledged to reinvest its proceeds in the region to boost the local economy.
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