Lipton's lead position within the fast-growing ready-to-drink global tea market is to get stronger after Unilever and PepsiCo announced a joint venture to expand marketing and distribution of the RTD range.
"We are creating a common vision and tremendous synergies together. This new alliance will enable Lipton to strengthen its global position. At the same time, we are rounding out our portfolio with a strategic partnership in one of the fastest growing beverage segments and providing consumers with Lipton, the world leader in tea," said Peter Thompson, president and CEO of PepsiCo Beverages International (PBI).
Lipton is one of Unilever's largest food brands. With sales to the trade well in excess of €2.8 billion it is the world's third largest beverage brand as measured by volume. The creation of the 50-50 joint venture, Pepsi Lipton International, will enable Lipton to accelerate its growth, building on its current leading share of the 16 billion litre global RTD tea market.
The joint venture is claimed by the companies to leverage the strengths of both parents to create significant value. The company will principally sell RTD tea concentrate to franchise bottlers, thereby augmenting Pepsi's portfolio of healthy refreshment beverages. Pepsi is also to contribute access to its extensive bottling and distribution network of strong customer relations.
The joint venture will target new markets for Lipton where Pepsi is already strong. A large number of markets with existing Lipton RTD tea business are also to be targeted in coming months, including Brazil, Spain, Czech Republic, Slovakia, Thailand, Singapore, Vietnam, Australia and the six Gulf States.
"We have a strong presence in the developing and emerging markets yet there is plenty of white space to move into. These markets are the next in our planned rollout and we see Pepsi as the best partner to help us achieve this. This new joint venture marks a truly significant step in the expansion of the brand, bringing it within the reach of many millions of new consumers," said Patrick Cescau, director of Unilever foods division.
Pepsi Lipton International is seen as a logical expansion of an earlier joint venture, the Pepsi Lipton Tea Partnership, set-up by the two companies for the North American market some 10 years ago and firmly established as the leading RTD tea player in both the United States and Canada.
Unilever is one of the world's largest consumer products companies with annual sales in excess of €48 billion. It produces and markets a wide range of foods and home and personal care products, its internationally known brands including Lipton, Knorr, Hellmann's, Dove, Axe and Surf. It operates in 150 countries and employs some 247,000 people worldwide.
PepsiCo is one of the world's largest food and beverage companies, with annual revenues of $27 billion. Its principle businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. PepsiCo's portfolio includes 15 brands that each generate $1 billion or more in annual retail sales.