1. January 11, 2003 Global Tea Industry Lenore Weich

2. What is Tea? Tea Market Overview Tea Consumers Tea Producers A World of Tea Bibliography 8131621324 Table of Contents

3. WHAT IS TEA?

4. Tea Definition …a beverage produced by steeping in freshly boiled water the young leaves and leaf buds of the tea plant, Camellia sinensis. Two principal varieties are used, the small-leaved China plant (C. sinensis sinensis) and the large-leaved Assam plant (C. sinensis assamica) 1 Tea… Major Tea Categories 2 …for example Black:Assam, Darjeeling, Ceylon Green:Bancha, Gyokuru, Oolong Instant:Granulated Black Tea Herbal:Chamomile, Mint FlavoredEarl Grey SpecialtyDigestive/Medical Preparation Methods Infused (Hot) Iced (Cold) Instant* “Ready to Drink”* *Manufactured

5. Processing Tea Leaves 3 PLUCKINGWITHERINGROLLING FERMENTATION DRYING all tea leaves Fermentation is the critical stage— except for green tea Black, Oolong, Pouchong Green Tea PACKAGING, etc Oolong Pouchong Black Processing Time Source: Encyclopedia Britannica

6. Alternatives to Tea 4 While total per capita beverage consumption remained flat, per capita tea consumption declined 8% from 1995-2000 In contrast, Bottled water consumption grew 50% over the same period Equitable global data not uncovered Source: Food Processing

7. 2001 World Tea Production 5 India: 840 Data in thousands of metric tons China: 670 Sri Lanka: 290 Kenya: 290 Indonesia: 180 Turkey: 130 Japan: 100 South America: 70 Bangladesh: 60 USSR: 10 Vietnam: 30 Others: 240 Total: 2.9 million metric Tons! Source: Tea Basics

8. TEA MARKET

9. Global Tea Sales, by region, 1993-1997 6 14% Growth Rate of Global Tea Market Size from 1993-1997 17% Growth Rate of the North American Tea Market Market Size Source: Euromonitor

10. Global Tea Consumption, by Type Black32% Green18% Herbal51% Instant24% Flavored*16% Specialty*26% GLOBAL32% Volume Growth Rates 1993/1997 * Growth rate 1995-97 Volume consumed growing faster than Value of market Source: Euromonitor “The green tea market has been growing more slowly than the black tea market in recent years, with the result that green tea represents a declining proportion of demand for leaf tea as a whole.”

11. Top Tea Consuming Countries, 1997 8 India consumes the most black tea by volume; China consumes the most green tea Source: Euromonitor

12. Market Growth Projections (US) 9 Global growth data not found 1997 – 2001 Growth:19% 2001 – 2006 Projected Growth18% US Market growth stagnant, perhaps declining—mature market Source: Euromonitor

13. TEA CONSUMERS

14. Tea - Global Consumer Profile 10 A drink for the ill Staple Beverage Loose leaf predominant Black, with Sugar/Lemon A drink for any time of day Black, with milk/sugar Tea bag predominant Loose leaf considered “old” Staple Beverage Green Predominant Tradition-driven Green Ready-to-drink emerging Second to Coffee Black, Sugar/Lemon Ready to Drink popular Pockets of Specialty/Organic United States United Kingdom Japan China Latin America India Source: Euromonitor

15. Tea Consumer Facts 11,12 On an average day, 62% of US women drank tea, compared with 59.5% for ground coffee and just 24.2% for instant coffee. Consumption of all hot drinks is lowest in the West, due partly to the increased popularity of healthy diets in the region and warmer climates for most of the population. Tea tends to be perceived as a premium beverage, with consumption highest among the wealthiest consumers with an income of above US$75,000. Tea has been gaining increasing acceptance among US consumers, who have turned to the sector as a lower caffeine alternative to coffee. The proliferation of herbal and medicinal teas has also played a major role in tea sale increases recently. A continuation of these trends is expected to drive volume growth 12. Source: HOT DRINKS IN THE USA (JULY 2002), Euromonitor …Tea is increasingly acquiring a more sophisticated image in Europe and North America. 13. Source: INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998), Euromonitor

16. TEA PRODUCERS

17. Tea Supply Chain—Macro View Growers Distributors Manufacturers Retailers Consumers Cultivate, Process Import/ Export Package, Market, Retail Distribution Sell Drink

18. Tea Competitive Landscape 13 CompanyCountry of Origin UnileverNetherlands/ UK Tata TeaIndia Cay-KurTurkey ShemtoEgypt TetleyUK Beijing Tea Administration China Sara LeeUS MaiRussia The tea market is fragmented and region-specific, with multiple companies comprising 49% market share Unilever is the largest manufacturer of tea world-wide with 26% market share Tea Global Market Share, 1997 Source: Euromonitor

19. Unilever Profile 14,15 Source: Hoovers, Yahoo Finance One of the top global consumer product companies in the world Dually operated by two holding companies (for tax reasons): Unilever PLC (UK) and Unilever N.V. (the Netherlands) 2001 Revenue: $45.9B 279,000 Employees Besides Lipton (tea), manufactures Dove, Sunlight, Country Crock, Hellman’s, Lever 2000, Degree, Surf, others Organized Geographically, then by food and non-food Currently working to consolidate brands General Unilever Global Presence 2001 Revenue Distribution Market Cap$27B Gross/Net Margins49%/4.8% Current Ratio1.61 Debt/Equity3.58 52-week low: $28.82 (Jul 02) 52-week high: $39.64 (Nov 02)

20. Unilever—Tea Facts 17 Global tea brands include Lipton, PG Tips (UK) Brooke Bond (India) Small portion of Unilever’s brand portfolio (between 5-9%) Overall Lipton brand grew 6% in 2001 Japan market for ready-to-drink tea grew strongly Lipton Cold Brew rolled out in the US Central Asia market declined due to competition with Indian tea Ready-to-drink product expansion to Europe quoted successful Green tea launch continues in North America and Europe Recent marketing campaign “Paint the World Yellow” continues to raise awareness of Lipton Brand Source: Unilever 2001 Annual Report

21. A WORLD OF TEA

22. Recent Facts Industry “Alliances” – both in the “ready to drink” sub sector of tea Unilever joint venture with Pepsico to market/distribute Brisk in the Americas 17 Coke and Nestle joined forces to market “Nestea” 18 “The tea tradition is sustaining the established markets, but there is increasing competition from soft drinks…” 16 Euromonitor Ready-to- Drink Teas Gaining Momentum in the US: According to Beverage Digest, the category’s volume increased 1.8%, year to year, to 637 million gallons. Retail sales of ready-to-drink teas advanced 3.8% to $3.31 billion in 2001 from $3.19 billion in 2000. 19 --Standard and Poor Current Marketing Strategies: 20 Tetley—market tea as healthy, to attract younger drinkers PG Tips (Unilever) responds with “Slice of Life” and “Tea Moments” to consolidate tea’s role in our lives Tea linked to many health benefits Rehydration less caffeine powerful antioxidants

23. Future Trends Tea is predicted to be the fastest growing sector in volume terms over the forecast period, gaining 11.1% between 2002 and 2006, to reach a level of 41 thousand metric tons in 2006. 21 Euromonitor Products like iced chai and bubble tea in the US promise to add further variety and vitality to tea selling. 22 --Restaurant Business Bubble tea is tea with Tapioca “bubbles” and optional flavoring added

24. BIBLIOGRAPHY

25. Bibliography (1/2) 1.Encyclopedia Britannica, “Tea.” 2.Tea Basics; Rasmussen, Rhinehart; 1999. 3.Encyclopedia Britannica, “Tea Production” 4."Beverages Were Healthier in 2001," Food Processing, August 2002 5.Tea Basics; Rasmussen, Rhinehart; 1999. 6.INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 7.Ibid. 8.Ibid. 9.HOT DRINKS IN THE USA (JULY 2002), Euromonitor 10.INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 11.HOT DRINKS IN THE USA (JULY 2002), Euromonitor

26. Bibliography (2/2) 12.INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 13.Ibid. 14.Hoover’s Online Profile: Unilever, accessed Jan 2003 15.Yahoo Finance Online Profile, accessed January 2003 16.INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 17.Unilever 2001 Annual Report 18.European Report, Sept 29, 2001 p344 “COCA-COLA-NESTL? DEAL PRODUCES NO STORM IN COMMISSION'S ICED TEA CUP” 19.Standard and Poor, Food and Non-Alcoholic Beverages Industry Survey, Dec 2002 20.Marketing, Oct 31, 2002 p13 “BRAND HEALTH CHECK: Tetley - How can Tetley sell the virtues of drinking tea?” 21.INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 22.Restaurant Business, “SPECIAL-TEAS,” Feb 15, 1999, JAMES SCARPA.