Unilever Looks to Move Beyond Black Tea With Tazo Buy

By Saabira Chaudhuri Features Dow Jones Newswires

Unilever PLC's $384 million deal to buy Tazo tea from Starbucks Corp. is its biggest move yet in a pivot from slower growing black tea toward higher-growth brands it hopes will help it foster more discerning -- and more profitable -- tea drinkers.

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The Anglo Dutch consumer-goods giant sells Dove soap, Axe deodorant and Ben & Jerry's ice cream, among other mega bands. It is also the world's biggest tea maker by sales. Its global tea brands include Lipton, Pure Leaf and PG Tips. But it has been working to shift its footprint away from black tea, which makes up about 80% of its portfolio, to green, herbal and specialty tea. It is selling new varieties under its existing tea brands, while also buying up small, fast growing competitors.

In September, it agreed to buy U.K. herbal tea brand Pukka, and in 2013 bought premium Australian tea company T2 -- which sells pricey loose leaf in flavors like beetroot and broccoli and red chocolate mint. It has since rolled the brand out internationally, opening stores around the world.

Tazo, which had sales of $112.5 million over the past year, sells specialty black, green and herbal teas, as well as liquid concentrates to make chai lattes. It is sold in Starbucks outlets and grocery stores in the U.S. and Canada.

Thursday's deal is the latest in a string of small and medium-size acquisitions by Unilever, which has been aggressively increasing its exposure to a range of high-growth areas. It fended off an unsolicited $143 billion offer by Kraft Heinz Co. earlier this year and has promised investors better returns. Over the past 18 months it has bought high-end ketchup maker Sir Kensington's, subscription shave service Dollar Shave Club and eco-friendly household products maker Seventh Generation.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

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(END) Dow Jones Newswires

November 02, 2017 19:08 ET (23:08 GMT)