Time to brew up a sustainable cuppa

Unilever, which buys 12 per cent of the world's tea, is pioneering sustainable production in the face of falling prices. By Karen Attwood

Wednesday 05 December 2007 01:00 GMT

The world's largest tea company, Unilever, which makes PG Tips and Lipton, is currently on a mission to transform the tea industry by making it sustainable, changing the lives of the workers for the better along the way.

The average Briton consumes 1,000 cups of tea a year, but how many of us give a thought to where it comes from?

The global tea industry is beset with problems. While most commodities are soaring in price, the price of tea has plummeted 35 per cent in the past 25 years, and continues to drop year on year. This is down to supply exceeding demand by 1 to 3 per cent per year as more growers, particularly small farmers, enter the market, while improved farming methods lead togreater yields.

In Kenya, the largest tea exporting country, the farmers' problems are exacerbatedby wage inflation in a heavily unionised industry, the strong Kenyan schilling, and poorinfrastructure.

To address these issues, Unilever, which buys 12 per cent of the world's black tea and sells the finished product in 130 countries, has committed itself to introducing sustainably certified tea across its brands its pledge is to have all of its Lipton Yellow Label and PG Tips bags sold in Western Europe certified by 2010, and all Lipton tea bags sold globally certified by 2015.

Certified tea should command a greater price at auction 10 to 15 per cent higher and Unilever estimates it will be paying farmers €2m more for its tea by 2010 and €5m more by 2015.

Unilever's chief executive, Patrick Cescau, said: "It will not be achieved overnight, but we are committed to doing it, because we believe it is the right thing to do for people who drink our tea, the people along the entire length of our supply chain, and for our business."

But how does this work in practice? The consumer goods giant has begun by getting its own tea plantation in Kericho, in the Rift Valley in south-west Kenya, certified independently by the Rainforest Alliance. The plantation stretches over 20,000 acres of lush fields, and at an altitude of more than 2,000m, and with rains brought across from Lake Victoria, it is at the heart of Kenya's tea industry. Employing 18,000 and supporting 80,000 dependants through schools and hospitals, it meets 20 per cent of the needs of Unilever's tea production. The rest is bought in from estates around the world, while 10 per cent of the Kenya business is supplied by small farmers.

Getting its own plantation certified did not prove too difficult, as Unilever had been practising sustainability for decades. Sustainable development is defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own". Richard Fairburn, chief executive of Unilever's Kenyan tea operations, said that in practice in Kericho this includes using energy from renewable sources, such as hydro power, planting eucalyptus trees which are used to fire boilers, ensuring the welfare of the workers and their families through free education and HIV awareness programmes, and teaching smallholders how to farm more efficiently by reducing inputs but getting better quality yields, by looking after water supply and preventing soil erosion.

Rather than choosing Fairtrade, which is more well known in the UK, particularly for bananas and coffee, Unilever opted for the Rainforest Alliance as, instead of concentrating primarily on the treatment of the workers, the alliance takes into account three key areas: profit, the planet and people. The organisation was established twenty years ago to help to halt the loss of rainforest, and went on to develop the Forest Stewardship Council (FSC) and later its certification system its first coffee farm was certified in 1996. In the UK, its certified symbol can be seen on the packs of Innocent drinks the company uses Rainforest Alliance certified bananas in its smoothies.

Meanwhile, McDonald's has also been keen to nail its green credentials to the mast the burger chain has become the largest single high-street retailer selling certified coffee in the UK, and sales have gone up 15 per cent since certification.

Anita Neville, of the Rainforest Alliance, said this year is a pivotal one for the alliance as it moves into tea for the first time. "We believe we can help tea growers around the world get a better price for their tea by virtue of certification," she said. Every farm the alliance certifies is visited once a year to check it is maintaining standards, she said.

Though it certainly represents a better deal for the grower, is sustainable tea a sound business proposition? Michiel Leijnse, who is in charge of marketing Lipton as a global brand, points out that 60 per cent of consumers say they take social and environmental factors into account when deciding what products to buy, but they are held back due to price and availability. Unilever aims to sell its sustainable teas at the same price as its regular tea.

Mr Leijinse said the company does not want to simply launch "a niche product" but wants "to move the whole market". There is no point in launching a single certified product, he said, adding that it is important to look at the whole business and see how that can be changed.

From August this year, certified single blend Lipton tea has been available in restaurants and the catering trade in Europe. "Certification will help to roll out the standards to the rest of the supply chain and credibly tell the story to consumers," Mr Leijinse said.

"We want to lead the change in the industry. We are the biggest player we can't change the industry by ourselves, but we want to point in the right direction. We want to stop this trend of tea prices going down."

However, the difficulty remains in convincing Kenya's 430,000 tea farmers who represent 62 per cent of the market, compared with Unilever's 11 per cent that sustainability is the future.

Winfred Mwaniki is an agronomist working on a sustainable tea project run by the Kenya Tea Development Agency, which represents the growers, and Lipton, and is being funded by the UK's Department for International Development. The three-year project aims to roll out sustainable practices across the country.

"If the small-scale farmer doesn't have this knowledge then he is at a disadvantage," Ms Mwaniki points out. "The market is getting very competitive, and it is critical to bring them along and to make sure they don't get locked out. Sustainability can make a real difference in their lives. It is a tremendous challenge, but we are at the start of the journey."

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