Melbourne-based T2 chain likely to be sold as Unilever plots tea exit
Tea emporium T2 is popular among a new generation of brew lovers, but the specialty retailer is likely to be sold. And this change in consumers’ taste is to blame.
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Gourmet tea retailer T2 is likely to be sold as its owner, consumer goods titan Unilever, plots an exit from the tea business.
Unilever, which owns Lipton, Bushells and Lan-Choo, has launched a strategic review of its tea division amid slowing sales of the black variety which makes up the bulk of its business.
Changing consumer tastes — coffee continues to grow in popularity, as does premium herbal teas — are to reshape Unilever, which is the world’s biggest tea company and has been a major producer for 50 years.
The Anglo-Dutch giant snapped up Melbourne-based T2 in 2013, launching the brand internationally in London, New York and Singapore.
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Unilever chief Alan Jope announced the review as he reported a steep drop in profit and the slowest sales growth in a decade.
Mr Jope, who took over at Unilever a year ago, said efforts to boost black-tea sales had fallen flat. “Younger consumers are looking for novel experiences,” he told analysts overnight Thursday.
“The black-tea drinkers are getting older and consuming less and will start to fall over, and that is actually the fundamental problem.
“Insanity is carrying on doing the same thing expecting different outcomes and for 10 years we’ve been trying to ignite growth into our tea business unsuccessfully.”
Mr Jope said the review would consider selling all or part of the tea division, which generated €3 billion ($4.9 billion) in sales last year.
It should be wrapped up by the middle of the year, he said.
T2 opened its first store in Fitzroy, in Melbourne’s inner north, in 1996, winning shoppers over with a gourmet product, bright pink ceiling and Chinese newspapers covering the walls.
It now operates more than 60 stores around Australia, including 19 in Victoria.
The specialty retailer was generating almost $60 million a year in sales when Unilever bought it.
Sales figures have not been publicly available since then.
At the time of the purchase, Unilever executives said they hoped T2 would introduce a new generation of younger consumers, who liked fruit-flavoured tea and infusions, to its traditional black varieties.
A Unilever Australasia spokesman confirmed to Business Daily the global review would include a consideration of a T2 sale.
Speculation had been mounting for more than six months that Unilever was considering a sale of T2, and Coca Cola Amatil was expected to be sounded out as a buyer.
Research from Roy Morgan found the number of regular coffee drinkers in Australia had grown by more than 1 million in the four years to 2019.
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By contrast, the number of tea drinkers increased by 300,000.
The research does not include any statistics on the switch away from black tea but a UK poll found Britons drank nearly 870 million fewer cups of black tea in 2017 than the previous year.