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deals - November 19, 2021

Can Nigeria Match up to Other African Countries in Tea Business?

Unilever Sells-off Global Tea Business for over $5 billion to CVC Capital Partners Fund VIII.

Nigeria faces many challenges as opposed to other African countries when it comes down to the tea business. A recent Statista report shows that Nigeria is no where on the ranking in the list of countries of top tea producers in Africa. This makes the country one asset short of revenue generation.

In 2018, a survey of 86 tea producers was done using a random sampling technique to discover tea production issues in Nigeria. Using structured questionnaires and descriptive statistics to examine data on tea growers’ socioeconomic characteristics. This survey also included planting materials, soil management, pest control, harvesting, and marketing. In deduction, rehabilitation of old tea farms was needful. Alongside adoption of appropriate agricultural techniques, and frequent soil testing as a reference for fertiliser application for sustainable production.

One may think that even with several leading production firms in Nigeria like Acreage Integrated Food, Promasidor Nigeria Limited and Unilever Nigeria, the country is ranking high alongside other African countries in the tea business, but it is not. The recent move by Unilever Nigeria in selling its global tea business ekaterra to CVC Capital Partners, one can expect a disruptive shift in this sector for the country.

More about Unilever Tea Sell-Off

According to the news announcement released on Unilever’s website titled, “Unilever will sell its Tea business, ekaterra, to CVC Capital Partners Fund VIII for over $5 billion”. This is in connection to an earlier report this year when Unilever Nigeria announced its intention to spin off its tea business into a distinct legal corporation. 

The company’s Food Products division, which comprises its tea and savoury section, generated revenue of N34.71 billion in 2020, up from N31.91 billion in 2019. This record shows this move could affect one of Nigeria’s top-line income.

Alan Jope, CEO of Unilever said, “The evolution of our portfolio into higher-growth spaces is an important part of our growth strategy for Unilever. Our decision to sell ekaterra demonstrates further progress in delivering against our plans”.

“We are proud of the place that our Tea business has in our company’s history. We look forward to seeing ekaterra, with its strong brands and global footprint, prosper under CVC’s ownership. I would like to thank our Tea colleagues around the world for their passion and commitment to our Tea business and wish them well for the future”.

The closing of the transaction is dependant on the acquisition of relevant regulatory clearances. The project is planned to be completed in the second half of 2022. 

Pev Hooper, a Managing Partner at CVC Capital Partners said: “ekaterra is a great business, built on strong foundations of leading brands and a purpose-driven approach to its products, people and communities. ekaterra is well positioned in an attractive market to accelerate its future growth, and to lead the category’s sustainable development. We look forward to working with the team to realise ekaterra’s full potential”.

John Davison, CEO of ekaterra, said: “ekaterra is a strong business with positive momentum and has an exciting future ahead under the new ownership of CVC. We look forward to the next stage of our journey as the world’s leading Tea business”.

Unilever’s Tea business in India, Nepal and Indonesia, as well as Unilever’s holdings in the Pepsi Lipton ready-to-drink Tea joint ventures and associated distribution businesses, are not included in the transaction perimeter. 

READ ALSO: Climate Change Threatens Kenya’s Tea Production – Africa’s Largest

 

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