Lipton will be brewed again – Newspaper Kommersant No. 43 (7488) of 03/15/2023

The assets of the tea producer Lipton, Ekaterra, who left Russia, have interested investors. Capacity for the production of up to 16 thousand tons of tea per year can be bought by the United Tea Company, among whose co-owners are the general director of Luzhnikov and the former top manager of AvtoVAZ Alexander Pronin. The deal will allow the investor to expand the production of tea under the brands of retail chains.

The Federal Antimonopoly Service (FAS) received a petition from United Tea Company LLC for preliminary consent to purchase Ekaterra’s production facilities and intangible assets in Russia. The notice was published in the FAS database.

Ekaterra is the world’s largest tea producer with a portfolio of brands including Lipton, PG Tips, Pukka, T2 and Tazo. The company was previously part of the Unilever concern, which sold the business to CVC Capital Partners for €4.5 billion in 2021. In Russia, Ekaterra produced tea under the brands Lipton, Saito and Brooke Bond at a factory in St. Petersburg. According to the city administration, in 2019 the factory’s capacity was up to 16 thousand tons of products per year. In August 2022, Ekaterra announced its withdrawal from the Russian market and the cessation of production in the country.

United Tea Company LLC produces Eastford, Berryford, Kama Sutra, Green Standard teas, and also packs products under a contract, including under private labels (STM) of chains. According to the Unified State Register of Legal Entities, 50% of the company is owned by Alexander Konov, director of the Pyotr Konchalovsky Foundation, created by directors Nikita Mikhalkov and Andrei Konchalovsky. Alexander and Larisa Pronin have another 25% each. Mr. Pronin is the general director of the Luzhniki sports complex, and was previously the first vice president of AvtoVAZ and was mentioned in the media as an adviser to the head of Rostec, Sergei Chemezov.

Alexander Konov confirmed to Kommersant that the company plans to acquire the facilities of Ekaterra, which he called one of the most productive and high-tech complexes for the production of tea in Russia. According to him, the United Tea Company specializes in a fast-growing market segment – the production of tea under contract, mainly for hard discounters, which requires better prices and production efficiency. He declined to comment on the terms of the deal. Representatives of Ekaterra Kommersant did not respond.

The Roschaikofe Association estimates the volume of the Russian tea market at about 140,000 tons per year. Thus, Ekaterra’s capacities will make it possible to occupy more than 10% of the market. The general director of Roschaikofe, Ramaz Chanturia, says that the factory was distinguished by its modern state, and the production volume of the main players – the May companies (Maisky, Curtis, Richard brands) and Orimi (Greenfield, Tess) – is greater. According to Kommersant’s sources in the market, only Ekaterra capacities can enter the deal, which in this case will have to be set up on a new site without losing speed and automation. According to one of Kommersant’s sources, the assets were estimated at about 750 million rubles.

David Hakobyan, director of public relations at May, says that the growth in demand in 2022 required an increase in capacity and the company purchased several pieces of equipment from Ekaterra. He considers the moment for the expansion of tea production by Russian companies to be appropriate. In “Orimi” and Ahmad Tea “Kommersant” did not answer. Kommersant’s interlocutor on the market says that the United Tea Company will have no problems loading the purchased capacities under a long-term contract for the production of private labels with one of the major networks. As Mr. Chanturia notes, in the face of declining purchasing power, private label tea is becoming more in demand due to the low price.

Marketing director of Milfoods (Poetti coffee) Mikhail Glukhov says that the company also plans to enter the Russian tea market no earlier than 2024 and is still developing a range, studying both teabags and loose tea. According to him, the tea and coffee categories are very similar, and the culture of tea consumption in Russia is more mature than that of coffee. According to NielsenIQ, for the year following the results of January 2023, tea sales in physical terms decreased by 5.7%, and in money terms they increased by 12.3% year-on-year. Tea bags account for 69% of natural sales.

Anatoly Kostyrev