Disclaimer: Lean Investments is a financial education and entertainment website. None of the content below should be misconstrued as investment advice or a recommendation. The author holds none of the positions mentioned below.
Quick summary Lipton Tea has been owned by conglomerate Unilever (UL) since the 1970s. However, this will be changing in 2022 as Unilever has agreed to sell the vast majority of its tea business to private equity company CVC Capital Partners. This means stock market investors will only be able to access the limited parts of the Lipton Tea brand though Unilever, or PepsiCo, as part of their joint partnership promoting Lipton “ready to drink” products.
Introduction: Shifting Ownership in 2022
The Lipton Tea Company is a classic brand and their tea is staple product of many households worldwide. Consistent and well-known consumer staples brands such as Lipton can make for attractive conservative investments due to their consistency and ubiquity on grocery store shelves.
Like many classic consumer staples brands, Lipton Tea is not an independent company today. Instead, the brand is currently owned by the conglomerate Unilever. Unilever stock is available on Robinhood under the stock symbol UL.
However, investors should be aware that Unilever has recently agreed to sell the vast majority of its Tea business (ekaterra, which also includes brands such as Tazo) to a private equity firm called CVC Capital Partners. The deal, worth an estimated $5.1 billion, means Lipton Tea will be uninvestable for stock market investors for the foreseeable future.
However, as with most private equity transactions, we can expect to see Lipton Tea brand resurface in the next decade perhaps as its own stock or part of a broader, more diversified company. This is potentially good news for investors seeking a “pure play” on the Lipton Tea brand in the future, but patience will be required.
While Unilever will still retain the Lipton Tea brand in select international markets such as India and Indonesia, the impact of the remaining tea business will likely be very marginal to its bottom line considering the size of the conglomerate and its large, diversified portfolio.
Beyond Lipton Tea and Tazo, which Unilever also currently owns, the conglomerate’s portfolio includes brands ranging from Ben & Jerry’s ice cream, Dove soap, Axe body spray, Hellman’s Mayonnaise, Vaseline, and many other well-known consumer staples brands.
However, Unilever will still retain the Lipton brand for its ready to drink partnership with Pepsi, such as the bottled iced tea that is easily found on grocery store and convince store shelves, so one can argue that Unilever will still remain a reasonable play to have some exposure to the Lipton brand, even if it is divesting from most of the actual business itself.
Lipton Tea: A Brief History
Lipton Tea was founded by Thomas Lipton, a UK grocery store entrepreneur who did much to help popularize tea by stocking it in his grocery store chain as the beverage board in popularity in the late 1800s.
He saw the potential of the beverage and ended up purchasing tea gardens in Ceylon (modern day Sri Lanka). The tea found immediate success when introduced in the US, in part due to its low cost shipping and packaging innovations that helped make the tea an affordable, everyday beverage.
Lipton Tea began its long association with Unilever in 1938, when the conglomerate bought the Lipton Tea Brands in North America. Unilever finally bought the rest of the global Lipton business in 1972.
In 1991, Unilever formed a joint partnership with Pepsi to market the Lipton brand in ready-to-drink bottles, such as iced tea. This partnership first focused on the North American market and has since expanded to include the UK and Europe. Investors more interested generally in beverages could select Pepsi as an alternative way to gain some limited exposure to the Lipton Tea brand.
Tea Companies on Robinhood
While fans of Lipton Tea may be disappointed to learn that the ability to profit from the iconic brand has been limited by its upcoming private equity sale, for those more interested in gaining exposure to tea generally, there are some potential options on Robinhood to investigate.
However, most popular tea brands, as was the case with Lipton, are owned by larger, diversified companies. It’s important to evaluate the overall mix of businesses in any of these investments, as well as the fundamentals and health of the company before deciding to invest because you favor one particular brand the stock happens to own.
- Coca Cola (KO) – Owner of Gold Peak and Honest Tea brands
- Starbucks (SBUX) – Owner of Teavana.
- PepsiCo (PEP) – Part owner of Lipton Ice Tea, and owner of Brisk and Pure Leaf brands.
- Hain Celestial (HAIN) – Owner of Celestial Seasonings.
- Nestle (NSRGY) – Owner of Nestea and Sweet Leaf.
As with so many globally recognized consumer brands, it is difficult for stock market investors to gain pure play exposure to a single brand such as Lipton Tea. Large consumer staples companies such as Unilever and its major competitor Procter & Gamble, large beverage players such as Coca-Cola and PepsiCo, as well as private equity firms all see the value in name brand companies with high levels of consumer trust.
Investors looking for an opportunity in Lipton Tea in the future should monitor developments with the CVC Capital acquisition and hope the private equity firm exits from the brand in the coming decade. This could be the best opportunity to gain pure play exposure to a major tea brand for those patient enough to wait.