Unilever, owner of PG Tips and Liptons, is increasing its presence in the herbal tea market by acquiring Bristol-based Pukka Herbs.
Sebastian Pole and Tim Westwell, founders of the brand known for its exotic flavours such as turmeric gold and mint matcha as well as cleansing and detox teas, have sold the business to Unilever for an undisclosed sum. The pair have agreed to stay on to help drive global expansion.
Mick van Ettinger, head of tea at Unilever, said Pukka was the fastest-growing organic tea brand in the world and offered a “beautiful and great growth opportunity” by using the Anglo-Dutch group’s network to increase distribution.
The sale is likely to raise fears that the independent ethical brand will lose its values after being taken over by a transnational corporation. But Pole said Pukka had agreed “solid iron-clad commitments” from Unilever to stand by its ethical standards including 100% organic, “fair for life” Fairtrade and FairWild accreditation for wild collected herbs.
“Pukka will remain exactly the same but just be able to reach more people and have a greater environmental impact,” he said, adding that the pair had chosen to sell to Unilever partly because of its commitment to sustainability as well as social and environmental change.
Unilever’s acquisition comes as Brits are buying less traditional black tea. The volume of sales fell by about 1.6% in the past year, according to analysts Kantar Worldpanel, while fruit, green and herbal tea sales are rising by 2.8% in volume and 6.8% in value.
The value of black tea sales is rising again after five years of decline, according to trade magazine the Grocer, partly because of inflation caused by the weak value of the pound but also as people switch to upmarket brews.
In this changing market, big brands such as PG Tips have found some of their products delisted by supermarkets in favour of the likes of Pukka, Teapigs or Twinings. The company has responded by purchasing the T2 Australian tea brand and launching its new Pure Leaf variety before acquiring Pukka.
Van Ettinger said the market was changing with consumers of all ages looking for beverages to suit different needs.
“What’s happening is that people don’t look at tea as one drink now in one moment. They are discovering tea as a magical product that does different things at different times of day,” he said.
“In the morning a lot of people still drink black tea as it picks you up, but in the afternoon or evening herbal tea is wonderful with different benefits.” He said Unilever wanted a range of teas to serve people in different moments.
Pole, a herbalist, and Westwell, a business consultant who had been involved in marketing computer systems, set up Pukka in 2001 after meeting through a small ad in a Bristol magazine.
Westwell’s offer of “sales and marketing expertise to help your business grow wealthy in a sustainable and healthy way” received only one reply. The pair each invested £2,500 of their savings, asked Pole’s wife and friends to invest and borrowed £10,000 from the bank to start the firm.
The brand now has sales of about £30m, controlling just over a fifth of the UK fruit and herbal tea market as well as selling around the world, with Germany and the US its main export countries.
The company employs 110 people in Bristol and next spring is to move into Cadbury’s former Somerdale factory in Keynsham, abandoned after the chocolate maker was taken over by US firm Kraft in 2010. It uses up to 160 herbs grown by a few thousand mostly small-scale farmers in 30 countries.
Last year Pukka made a pre-tax loss of £24,000, down from a £233,000 loss the year before. Westwell said the company did not expect to become profitable for another few years but this was part of a five-year plan.
The company has been investing in marketing and distribution to drive its expansion plans. “We have to invest to grow,” he said.