Steaming ahead

Stepping into his spacious office at Unilever’s MENA headquarters in Jebel Ali, chairman Sanjiv Mehta’s appreciation for a good cuppa is obvious. Finishing his first, he immediately asks his assistant for another, stirring it meticulously before making light of that one too.

This passion for a drink widely considered the most consumed on the planet has transcended his professional life. One of Mehta’s career highlights, he says, is during his former role as head of the consumer products giant’s operation in the Philippines, where Mehta claims he helped convert a nation of coffee drinkers to Unilever’s Lipton tea brand. Mehta, who took on his current role in 2008, says he is now determined to do the same in the Middle East.

The Anglo-Dutch company’s refreshments division, of which tea and its related products are a major constituent, turned over €8.8bn ($11.5bn) in 2011, just under a fifth of the group’s total of €46.5bn. On a regional basis, tea accounts for about a quarter of Unilever’s $1.5bn MENA sales.

“Tea is a highly penetrated category — nearly everybody drinks it,” Mehta explains, adding that Unilever’s Lipton currently has about 70 percent of the tea market in the region, while products under the Lipton umbrella make up “one fourth” of Unilever’s portfolio in MENA.

Given the high penetration Unilever holds in the tea market, Mehta says one of the firm’s focus is on increasing profitability on existing products in this segment.

“But if you were to peel the onion, it’s only 40 percent of our tea that is going in tea bags and 60 percent goes in packet [loose leaf] tea,” he continues. “We get a much higher value out of tea bags — it’s nearly a factor of three for every cup consumed.”

Mehta says that Unilever conducted extensive market research across the region is to find why most consumers preferred packet tea over tea bags, and what the company could do to address this.

“People aren’t soulless users — in most of the households you’ll find tea bags and packet tea,” he explains. “For us it was very important to understand when you use a tea bag and when you use a tea packet, and we got some very interesting insights.”

Unilever researchers found that in Saudi Arabia, for instance, female consumers would drink from tea bags predominantly in the day time, but would then switch to packet tea from 5pm to 10pm in the evening.

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