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Two of the last three who decided to distribute tea at Unilever refused to take over the company’s farms out of concern for their performance, according to people familiar with the matter.
The tea section, which includes PG Tips and Lipton brands, was sold this week to CVC Capital Partners for € 4.5bn.
But the Luxembourg purchasing party remained the only one to buy the entire territory after Carlyle and Advent International decided not to take over tea plantations in East Africa, which is facing serious questions about human rights and fair wages.
Their concept emphasizes the commitment of investors, even in companies that were once bold, to things that pose a threat to the environment, culture or authority.
Advent International has finally split the tea parties, two experts say, with Carlyle resigning just days before the final date for this week.
Advent was deeply moved by the recognition of the responsibility for the health, well-being and safety of thousands of farm workers, one person familiar with the matter said. Landlords have control over not only the work of workers but also the housing and medical care, because these places are usually located in remote areas and rely on migrant workers.
The shopping group was particularly concerned that violence could erupt on their Kericho farms in Kenya following the country’s national elections which are expected to take place in August next year. Seven people were killed, 56 women were raped and many more were injured in field strikes after the 2007 election, according to a complaint filed by 218 Kenyans to two UN agencies last year.
A report on farms, compiled by Advent, “did not read well”, added one of the most knowledgeable people in the area. This prompted the buyout team to clear their fields, and pay for the sale.
The Unilever business in Kenya is also reviewing allegations that it failed to adequately support employees affected by the 2007 ethnic violence.
On Kenya’s farms, there have also been reports of some managers abusing working women. Unilever has responded with ways to include more women leaders, education and contact numbers.
Fees in the tea industry are low. PG Tips, one of Unilever’s companies, claims to pay Kericho workers almost two and a half times the amount of agricultural income in Kenya. This was raised to more than £ 53 per month in 2018.
Francis Atwoli, secretary-general of the Central Organization of Trade Unions of Kenya, said there were complaints about compensation from workers, which could mean “the consumer could have a lot of problems”.
Nearly 8,500 people are employed in Unilever farms in Kenya, Tanzania and Rwanda, and this rises to about 16,000 as temporary workers are added to the top season, Unilever said.
Carlyle quit her long-term marketing career because she complained about “ESG ideas”, one source said, about concerns about the way farms are run.
Blackstone decided to initially refrain from paying for the tea distribution, in part because of concerns over the way staff treated, one person added. He described it as “a major ESG issue”,
The CVC arranged for ESG experts to visit the fields as a source of encouragement, and thought Unilever was a good business manager, an expert said. CVC declined to comment.
Its retailers were also comforted by Unilever’s record of attracting ESG news and being a member of the Ethical Tea Partnership business, which aims to make tea companies safer and more secure, the man said.
Unilever says it has several programs to deal with “group problems” of tea. It added: “The working methods are fully compliant with the health and safety standards of companies around the world that exceed local requirements, meet their requirements, and provide additional benefits such as housing, free medical care, nursery and primary education.”
Growth is low in the Unilever tea sector, now called Ekaterra, which sells 2 billion a year.
Although some buyers were frustrated by the farms, many were drawn to the idea of taking what they saw as an insignificant part of a partnership that could be further strengthened by new marketing and advertising costs.
Unilever said the price the CVC agreed to buy the share was 14 times the amount previously received before interest rates, taxes, lower prices and refunds, “higher accounting costs for similar companies…
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