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Analysis on Uniliver Case: Sustainable Tea

In: Business and Management

Submitted By brianding
Words 376
Pages 2
Why did Unilever commit to sustainable source for its tea?
First of all, there is a companywide strategy to launch a new “Sustainable Living Plan”. This plan includes goals to source 100% of agricultural raw materials sustainably by 2020. According to Unilever CEO Paul Polman, he believed that these goals would drive savings, product innovation and differentiation across the company’s portfolio. By committing to this plan, Unilever ensures to be more competitive in the future. If this transformation did not start, they would not be able to get the quality and quantity of the tea they need for their products. To adopt this plan Unilever faced two major issues. The first one was to start the transformation on the supply chain, due to the fact that the current supply chain does not yet comply with the “Sustainable Living Plan”. The alignment of the supply chain includes certification of tea production. In order to do that, Unilever worked with local NGOs and Kenyan Tea Development Agency (KTDA). Those parties ensure that the smallholders get educated and certified on sustainable agriculture. This approach makes sure that Unilever’s own production in Kenya and Tanzania as well as the small farmers in East Africa implement the new guidelines and recommendations and have been certified by the Rainforest Alliance. The second issue was how to address this internal commitment to consumers. The global brand director for Lipton Tea Michiel Leijnse, believed that Western consumers had become sufficiently concerned about sustainability. This might help product differentiation. This task was especially complex, because the company’s brand portfolio and the respective brand proposition. However, none of the brand managers liked to ask for a price premium for sustainable tea. The certified tea should instead enhance brand equity and result in higher market shares. Therefore,...

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