STiR coffee and tea magazine

26 STiR coffee and tea / Issue 4, 2021 (August / September) In a news article titled: "Unilever Must Look Mighty Tasty to Hedge Funds" Bloomberg writes that the European consumer sector "has been a fertile hunting ground for activists, with Dan Loeb's Third Point taking a stake in Nestle SA in 2017 and more recently, Bluebell Capital Partners' campaign for change at Danone SA. Outside investors see the breakup value of Unilever as substantially greater than the whole. Bloomberg estimates the food and refreshment divisions are worth US$62.3 billion (€52.5 billion). Beauty, household, and personal care brands are estimated at $144 billion, which is greater than the current $184 billion enterprise valuation. Biggest raw material cost increases in decades The food, household, and personal care goliath generated 5.4% sales growth during the second quarter of 2021, but revenue grew sluggishly in 2019 and 2020. Unilever is facing its biggest cost increase in raw materials in decades, a spike that includes logistics, fuel, labor, and tea inputs such including fertilizer, a necessity for large-scale production. The company increased the price of its goods by 2.2% in June. According to a report in Food Navigator, prices will continue to "dynami- cally" increase, accelerating through 2021. There is some urgency to closing a deal. Overall, Lipton trails rival Nestle. The valuation gap between the two companies is the biggest in 15 years, according to Bloomberg: "Unilever's shares have underperformed those of Nestle since Jope arrived (in January 2019)." Buying a division valued in the billions is a big bite, even for a hedge fund. But hedge funds, mutual funds, pensions, sovereign-wealth groups, and other so-called non-traditional venture investors were more active in the second quarter than in any previous period, according to research firm PitchBook Data Inc. The amount of investment for the first half of the year eclipsed full-year funding every year before 2020 and is on pace to nearly double last year's record. The world's largest investment funds are participating in a larger share of startup financing deals, accounting for more than three-quarters of all the invested capital. Taiwan Considers Caffeine Warning The Food and Drug Administration (FDA) of the Republic of China (Taiwan) intends to mandate red, yellow, and green warning labels on freshly made tea, including bubble tea, chocolate, and other caffeinated drinks in response to the death in January of a seven-year-old child. The draft rules published June 28 are enforceable in July 2022. Black tea based milk drinks can contain significant amounts of caffeine. A typical 16-oz serving of Taiwanese milk tea – a blend of fruit, condensed milk, and tea – contains 151 mg of caffeine according to the Caffeine Informer. A 2013 study in Hong Kong that tested 10 samples of milk tea found a range 250-490 mg of caffeine per liter. It is for this reason that bubble tea is not recommended for young children. The red label will be mandatory on beverages containing 200 mg or more caffeine. Vendors can label the product electronically with QR codes and other electronic methods or affix a label. A yellow label indicates the drink contains 100-200 mg of caffeine, while green indicates less than 100 mg of caffeine. The child, who was allergic to caffeine, died of a seizure after consuming a cup of brown sugar milk tea at a Milkstop bubble tea outlet. Current rules require warnings only for coffee beverages. Milkstop later released a statement apologizing for failing to inform the young customer that the milk beverage contained black tea. Unilever's traditional, most famous brand - Lipton Yellow Label Sampling shows that bubble teas contain high caffeine content. Taiwan is consider- ing a mandatory warning label for all freshly made tea. Publishing the new rule opens a 60-day period for public comment. FDA technical specialist Chen Yu-hsuan told Focus Taiwan that the amendment has strong public support. Chen said the revision will remind consumers that non-coffee drinks such as tea and hot chocolate also contain caffeine. Convenience stores, bubble tea shops, pharmacies, cafés, and restaurants that fail to convey the warning face a minimum US$1,000 fine up to $100,000 per violation, according to the Act Governing Food Safety and Sanitation. Labels that purposely mislead consumers face a $145,000 file (NT$4 million) per violation. Taiwan first regulated caffeine drinks in 2006, warning that coffee causes stomach aches, anxiety, and mood swings. Starbucks was required to issue caffeine-awareness pamphlets after its triple shot energy lattes earned a red warning label. Today the labels are commonplace in coffee shops. By Dan Bolton Can't Get Enough Bubble Tea: Nayuki IPO Investors could not get enough bubble tea as fruit, bubble, and cream-cheese tea chain Nayuki debuted with a US$656 million offering on the Hong Kong stock exchange. The HK$5 billion Initial Public Offering (IPO) was 190 times oversubscribed. Filings document the lucrative potential based on sustained consumer demand for bubble tea not only in China, but globally. The chain currently operates 560 locations (including stores in Hong Kong and Japan) with plans for US expansion that were put on hold due to the pandemic. Tea Report

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