Why Did Unilever Commit to Sustainably Source 100% of Its Tea?

Why did Unilever commit to sustainably source 100% of its tea?

Unilever sought to transform the tea production industry in order to increase the quality and quantity of tea needed to supply consumers. This would help improve brand equity and market share while diversifying their portfolio. Furthermore, farmers were experiencing abnormal rainfall which is a consequence of climate change, these sustainability practices would help farmers adapt to these changes.

Has Rainforest Alliance certification been successful for Unilever –why or why not?

Both Unilever and the Rainforest Alliance have an overlap in approaches to sustainable practices thus the implementation of the Rainforest Certification is clear. Unilever experienced some successes in Africa, where Unilever had a lot of experience in tea estates, when training the farmers to produce tea sustainably even though the Rainforest Alliance did not have any experience with tea nor with Africa. Unilever spent roughly $280,000 per year on the development and deployment of farmer training for the certification. Unilever had to pay $0.0125 per kilogram of tea to the Rainforest Alliance to have their logo on its packaging. They also invested $1.72 million to update facilities in their Kericho estate. In Africa, most farms saw yield gains of 5-15% from the implementation of sustainable practices, there was improvements in the quality of the tea, reductions in operation costs, and prices of their tea rose. The lives of farmers also improved besides having better benefits overall, the average income rose 10-15%. In other countries such as Tanzania, Unilever tea estates yielded more tea compared to other tea estates, such as 3 tons per hectare to less than 2 in the rest of the country.

The implementation of the Rainforest Alliance certification has led to market share growth in some markets. Sales in countries such as the United Kingdom, Australia, and Italy rose after large sums were invested in marketing. However, one of the challenges lies in selling the concept of sustainability in developing markets. After spending a great deal time and money marketing in France, sales remained stagnant and in the U.S. they had similar results. In countries like India and Russia became an evident challenge to promote sustainability and complete with the domestic market. It is a great challenge to certify smaller, less organized suppliers around the world with different practices, politics, and institutional capacity.

What should Unilever do with its tea business in India?

The small scale of many farms, domestic business competition, and the nature of local farming practices have made Rainforest Alliance certification a challenge in India. Unilever should bring awareness to India about the pesticide Paraquat that is highly used there and is highly toxic when absorbed or ingested by a person not wearing the correct protective equipment. They could also bring to light other major unsustainable issues in tea production in the country. However, Unilever should not invest too much if these steps do not work. They should not introduce a new sustainable standard for India as mentioned in the case study since that could cause some issues with other countries that are following the Rainforest Alliance certification standard for sustainability.