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Unilever and PepsiCo Create 'Pepsi Lipton International' RtD Tea Joint

Venture in Selected International Markets


Lipton was created at the end of the 19th century by a grocer, Sir Thomas
Lipton, in Glasgow, Scotland. In 1893, he established the Thomas J Lipton Co.,
a tea packing company with its headquarters and factory in Hoboken,
New Jersey. Lipton teas were an immediate success in the US. Thomas
Lipton was knighted by Queen Victoria, who made him Sir Thomas
Lipton in 1898 at the age of forty-eight.
Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history.
The drink is the invention of Caleb Bradham, a pharmacist and
drugstore owner in New Bern, North Carolina.
"Ice tea is a niche, but fast-growing category. In particular, young
urban adults are looking at healthier options such as ice tea," Unilever
and PepsiCo have created a joint venture to expand significantly the
marketing and distribution in selected markets of Unilever's range of
Lipton ready-to-drink (RTD) tea. The creation of the 50-50 JV - "Pepsi
Lipton International" - is in line with Unilever's Path to Growth strategy
in its focus on a leading brand, its move into new channels and its
drive into new markets for sustained future growth. It will enable Lipton
to accelerate its growth, building on its current leading share in the
global RTD tea market. The JV will target the "white space" markets
where Lipton has no current presence and it is anticipated that
significant business opportunities will come from the key high-potential
markets where Pepsi is already strong. A large number of markets with
existing Lipton RTD tea business will also be targeted in coming
months - Brazil, Spain, Greece, Poland, Czech Republic, Slovakia,
Hungary, Albania, Romania, Thailand, Singapore, Vietnam, Australia,
Turkey, Egypt, Saudi and the 6 Gulf States.
In 2003, PepsiCo and Unilever formed a global 50:50 joint venture Pepsi Lipton International - to manufacture and market Lipton Ice Tea
variants in 67 countries. Peter Thompson, president and CEO of
PepsiCo Beverages International (PBI): PEPSI LIPTON is creating a
common vision and tremendous synergies together. This new alliance
will enable Lipton to strengthen its global position. At the same time,
this strategic partnership in one of the fastest growing beverage
segments will provide consumers for Lipton in the places that Lipton is
not yet known." Unilever is one of the world's largest consumer

products companies. It produces and markets a wide range of foods


and home and personal care products, its internationally known brands
including Lipton, Knorr, Hellmanns, Dove, Axe and Surf. It operates in
150 countries and employs some 247,000 people worldwide.
PepsiCo is one the world's largest food and beverage companies, with
annual revenues of $27 billion. Its principle businesses include FritoLay snacks, Pepsi-Cola beverages; Gatorade sports drinks, Tropicana
juices and Quaker foods. PepsiCo's portfolio includes 15 brands that
each generates $1 billion or more in annual retail sales. 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. Lipton is one of
Unilever's largest food brands 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 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.

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