STiR coffee and tea magazine

STiR coffee and tea 27 T By Dan Bolton he tea industry has recently witnessed a significant strategic shift. In a move to realign its operations, Rotterdam-based Lipton Tea and Infusions announced the sale of its east African estates in May. This divestment included all its properties in Kenya, Rwanda, and Tanzania, which Sri Lanka-based Browns Group Investments acquired. As part of the agreement, Browns committed to meeting quality standards and implementing social and environmental protections by 2025, becoming Lipton's primary supplier in return. Lipton will shift to blending, packing, and selling tea. Lipton CEO Nathalie Roos told Bloomberg, "We are really shifting from volume to quality of tea." The acquisition propels Browns Investments to the elite league of global tea produc- ers, boosting mainly black tea production to 87 million kilos annually. Browns, owned by Sri Lankan holding company LOLC Holdings, will add 11 Kenya tea plantations, 8 tea factories in western Kenya, and 100% of Lipton's Rwanda and Tanzania tea plantations and factories to its portfolio of 49 Sri Lankan tea gardens. Browns' Sri Lankan estates span 40,000 hectares and produce 43 million kilos of tea annually. Last May, Browns acquired 9 tea farms in Kericho and Bomet, owned by James Finlay Kenya. The 10,300-hectare parcel included 5,200 hectares under tea. After the sale closes, Brown's total acreage under tea will be nearly 89,000 hectares or about 220,000 acres. Kenya will become the company's biggest holding. In 2023, Kenya exported 523 million kilos of tea. Tanzania exports a fraction of that but intends to increase production to 60 million kilos by 2025. Lipton, which employs 17,000 worldwide, purchased its first tea estate in 1890. During the past century, the brand established vertical supply chains in several geog- raphies, managing every aspect of the business from leaf to cup. Gardens currently ac- count for 15% of Lipton's annual turnover of $1.9 billion, most of which is generated by its 36 storied brands, including Brooke Bond Red Label, Lipton Yellow Label, PG Tips, Red Rose, and Salada, as well as modern tea brands Laojee (Sri Lanka), T2 (Australia), TAZO (USA), and Pukka (UK). Lipton's Kenya tea properties date back to 1914, when Calcutta-based Brooke Bond director Tom Rutter, on safari, recognized the Rift Valley as ideal for tea growing. He opened a sales office in 1922, acquired 400 hectares to plant tea in Limuru, and then built the Mabroukie Tea Factory. Between 1920 and 1939, Brooke Bond controlled all critical stages of Kenyan tea production, marketing, and distribution. When Unilever acquired Brooke Bond in 1984, the venture became Unilever Tea Kenya, the largest Divesting Tea Gardens Signals Change in Strategy for Lipton Kericho Tea Estate and surrounding tea lands. "The farming systems are currently facing a lot of low productivity," says Madhuri Nanda, Rainforest Alliance's di- rector for South Asia operations covering India, Sri Lanka, Nepal, and Bangladesh. "We are facing extreme weather events. We are facing pests, infestations. All of these things are leading to farm produc- tivity levels really going down." So, the partnership is focusing more on how farmers can make their farming systems more efficient and enhance pro- ductivity, which will directly affect their livelihoods. "In India," Nanda explains, "we are facing up to 40% productivity loss due to the pest infestations. So, we are using a lot of agrochemicals as well in the tea sector, which is resulting in higher input costs. So, ultimately, the profitability or the livelihoods of the smallholder farm- ers is becoming really challenging in to- day's climate perspective." The regenerative farming practices growers are encouraged to put into place to improve soil health parallels what a person would do to improve their im- mune system. "If your immune system is good," says Nanda, "you are less likely to be in- fected with different diseases. On a cel- lular scale, I can say that the soils that are healthy are less infected with pests and diseases, which therefore reduces the cost input for the farmers." "In this holistic view, the system can become more regenerative, and that's the reason why it's called regenerative agri- culture," explains Nanda. "And there is a lot of interest coming from the buyers who want to source regenerative tea or regenerative crops." The second big recent move was Browns Investments' acquisition of Lip- ton Teas and Infusions, making Browns the world's largest black tea exporter— around 87 million kilograms each year— as well as one of the largest suppliers to the world's largest tea company. The long-term partnership's stated plan is to raise tea quality globally and accelerate the application of responsible farming methods across the industry to drive sustainable growth. Browns will invest in estates in Kenya and Sri Lanka to meet the new standards by 2025 and create additional skilled employment op- portunities in Kenya.

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