UK tea giant Lipton to sell 15pc stake to local farmers in deal

President William Ruto and Lipton Teas and Infusions Chief Executive Officer Nathalie Roos, during the launch of the Lipton Tea Innovation and Technology Academy at State House, Nairobi. [PCS]

Lipton Teas and Infusions has agreed to sell its operations in Kenya to Sri Lanka’s Browns Investments for an undisclosed amount.

The deal also includes Lipton’s tea estates in Rwanda and Tanzania.

This is even as Lipton yielded to pressure from the local communities in Kericho and Bomet, agreeing to sell 15 per cent of its Kenyan operation to them at what it said was a high discounted rate.

It is, however, short of the entire stake that a consortium of farmers’ cooperatives had wanted to buy but claimed that their bid had been ignored by the owners of Lipton Teas and Infusions when it put up the tea estates for sale.

In the agreement, the two firms said in a statement, Browns Investment will continue selling tea grown in Kenya to Lipton as well as undertake practices that uphold human rights and environmental protection. 

“Lipton Teas and Infusions has agreed terms of partnership which will result in the transfer of its tea estates in Kenya, Rwanda and Tanzania to Browns Investments alongside an agreement that all teas sold by Browns worldwide will be grown and harvested to a new set of standards covering quality, social and environmental protections,” said the companies in a statement Tuesday.

Largest supplier

The agreement, they said, would make Browns one of the leading tea exporters globally, with about 87 million kilogrammes annually, and also the largest supplier to Lipton Teas and Infusions, which is a leading tea company in the world. “The proceeds of the transaction will be reinvested into the East Africa region to drive local industry-wide progress in relevant areas such as skills development and climate change mitigation.”

The terms of the agreement, which is subject to regulatory approvals, were not disclosed.

Before the announcement, there had been grumbling among a group of local cooperatives.

The cooperatives, which say they have a membership of more than 340,000 farmers, said they had written to Lipton and expressed interest in acquiring the tea firms but did not get a response.

In the statement yesterday, Lipton said it had set aside 15 per cent of the stake in the Kenyan operation to the local community. The firm has 11 plantations and eight leaf processing factories in Kericho, Bomet and Limuru.

“The government of Kenya has supported the companies in identifying opportunities for local communities to benefit from the partnership and future growth of the industry,” said the statement.

“Shares totalling 15 per cent of the main Kenya operating company will be offered to the communities of Kericho and Bomet, where the estates are situated, at a substantial discount to create accessible communal equity and mutually aligned economic participation.” 

CVC Capital Partners, which owns Lipton Teas and Infusions, acquired the tea estates from Unilever’s tea division in 2021. There have been concerns of human rights abuses including claims of poor working conditions and sexual harassment.  Lipton said it has taken measures to address the issues and the agreement with Browns will require the firm to continue with the safe practices.

“Developed together with producers across East Africa, Lipton Teas and Infusion has established a series of rigorous standards that span critical careers of tea quality, human rights, climate mitigations and nature protection. A scorecard-based approach that recognises tangible progress by producers has been designed to encourage rapid and meaningful action,” said the joint statement.

“Browns has committed to meet these new standards worldwide by 2025. This includes initiatives on its existing Sri Lanka and Kenya estates, such as factory modernisation and crop diversification.”

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