Unilever-owned,
Lipton is handing over its local operation –auctioning, evaluation and buying
of its tea – to Finlays as part of ensuring cost efficiency.
Lipton
seems to be constantly moving out its operations, out sourcing its business to
some of the other companies in a bid to ensure cost efficiency and in the wake
of the UK tea market itself reducing its consumption of the brew. Currently one
of the biggest tea brands in the UK, Lipton had also closed its packing and
blending plant in 2001 and shifted operations to Dubal.
In
transition in handing over their operations to the finlays , Lipton had taken
this decision based on the fact that sri Lanka is currently believed to be the
only country where the trade collectively decides that everything sold has to
be via a public auction.
According
to the complex rules for an auction and the other terms of quality involved
Lipton’s wants to ensure that another non-competitive company could be involved
in this tedious process thereby ensuring cost efficiency for the company.
Viewed
as a “very very complex” process which has increased over the years primarily
from the low grown region and Lipton predominantly traditionally buying from
the high and mid grown: as part of the
evaluation it was found that essentially based on the type of tea available in
Sri Lanka which is actually relatively small there is therefore good reason to
team up with accompany that is not a competitor to carry out buying and
auctioning.
Deeply
rooted in Sri Lanka as one of the early companies to set up office in Colombo
and purchase estates and run the factories for tea sales into the UK and other
parts of the world. Lipton has decided to shift some of its more “unproductive
part of the operations in terms of efficiency” to some other company, informed
sources said.
While
the Lipton name would continue to stay and the brand would continue to sell
teas globally some of their staff has been offered voluntary redundancy subject
to acceptance or they could continue to stay in the company. In this respect,
eight of their staffers from these affected units would be impacted by the
outsourcing of their operations to Finlays.
Sri
Lanka produces lees than 300 million kg of tea per annum, just less than five percents
of global sales and the global production itself amounts to almost 5 billion kg,
it was noted.
In
this respect, the Sri Lankan business could continue as a niche market
exporting its quality tea primarily CTCs.
But
operations of Lipton, the UK’s biggest tea brand, would be compelled to
continue to focus on its cost cutting in the wake of UK along reducing the
import of Ceylon Tea which today stands at 903,000 kg in 2016 compared to 13
million kg, 25 years ago.
With
the UK market it has shrunk, its largest marketer of tea has also been shrinking
with the biggest brands believed to have lost their passion in selling the
product.
Unilever
was packing value added teas and in doing regional exports the company wanted
to grow the activity in Colombo. However, with demand for multi origin packing Lipton‘s
decided to move to a neutral environment, in Dubal.
The
UK market is said to have created price based competition as well as continual
pressure employed by its retail chain that could have impacted the tea
consumption patterns.
Market
analysts observe that while the main brand presence of Lipton was evidently shrinking
and with their reduced role in Colombo as a sourcing center for the Unilever
group, the failure of big brand indicates a transition that is going on and the
growth of smaller brands offering a better tea experience.
It
is now believed Lipton is likely to continue as a quality control and logistics
office from out of Colombo.
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