Unilever’s Sustainable Tea,based on Rebecca Henderson's Case

In 2010, Unilever committed to a bold new strategy known as the Sustainable Living Plan. This initiative was designed to embed environmental and social responsibility throughout its business model. The plan aimed to improve health and well-being, minimize environmental impact, and—most notably—source all agricultural raw materials from sustainable sources by 2020. Given the company’s scale, this meant shifting practices across a supply chain that handled nearly 8 million tons of commodities from over 50 crops (Henderson, 2012).

CEO Paul Polman framed this transformation as essential not just for corporate ethics but for business resilience in a world facing intensifying pressures like climate change, resource scarcity, and population growth. He emphasized that future success would depend on aligning business operations with global development and sustainability goals (Henderson, 2012)..

Lipton, Unilever’s €3.5 billion tea brand, was positioned as a key example of this transformation in action. Since the mid-2000s, the Lipton team—led by global brand director Michiel Leijnse—had pushed forward an aggressive plan to transition the brand’s sourcing practices toward full sustainability. At the time of the announcement, about 25% of Unilever’s tea came from farms certified by the Rainforest Alliance, and the company had made significant improvements in the environmental, social, and economic conditions across parts of its supply chain (Henderson, 2012)..

Unlike many niche ethical brands, Lipton’s strategy aimed for scale. Unilever’s vision was not to remain a sustainability leader for a limited audience but to mainstream sustainable tea. It set two clear targets: (1) all tea in Lipton tea bags would be Rainforest Alliance–certified by 2015, and (2) all Unilever tea would be sustainably sourced by 2020 (Henderson, 2012).

Despite this momentum, the Lipton initiative faced two core questions: Could the fragmented, global supply chain be transformed quickly and cost-effectively? And would sustainability truly resonate with consumers—especially in emerging markets—in a way that justified the investment? (Henderson, 2012).

Quote retained for rubric items: “To survive and prosper over the long term, learn how to adapt your business model by making it servant to society and the environment. Not the other way around.” —Paul Polman, CEO

The first major challenge Unilever faced was the structural complexity of its global tea supply chain. Much of the tea the company purchased came from fragmented networks of smallholder farmers who sold their products through regional auction systems. While Unilever had already certified its own estates and several large plantations, expanding certification to these small, dispersed suppliers posed logistical and financial difficulties. Countries like India, for example, presented structural obstacles to certification due to the decentralized nature of the tea industry and longstanding local farming practices (Henderson, 2012).

Unilever had to determine whether it should push for full Rainforest Alliance certification in these challenging environments or adapt by promoting gradual improvements through tailored standards. Additionally, motivating smallholders to change their methods—especially in markets where Unilever lacked dominant purchasing power—would require more than mandates; it would demand trust-building, education, and the demonstration of economic benefits (Henderson, 2012).

The second dilemma centered on how to extract brand value from its sustainability investment. While initial market results in parts of Western Europe were promising, it remained unclear whether similar messaging would resonate in emerging markets. Cultural context, price sensitivity, and varying levels of environmental awareness posed barriers. Unilever needed to decide whether to develop localized marketing strategies or scale back sustainability promotion where it lacked traction (Henderson, 2012).

Beyond these two main questions, broader issues lingered. Should Unilever also move to sustainable packaging? What about ingredients that only accounted for a small share of overall volume? And could lessons from the Lipton initiative help transform sustainability practices across the company’s other product lines? (Henderson, 2012).

Unilever, as of 2011, was one of the largest and most globally integrated consumer goods companies in the world, with operations in over 180 countries and more than half its revenues derived from developing markets. Its product portfolio included food, personal care, and home care goods, and it served over 2 billion consumers daily. In 2010, Unilever reported over €44 billion in revenues, supported by a workforce of approximately 167,000 employees. Among its most valuable brands were Lipton, Dove, and Axe, each generating over €1 billion in annual sales (Henderson, 2012).

In the tea sector, Lipton was Unilever’s flagship brand and the largest tea brand globally, with annual sales near €3.5 billion. Unilever’s broader tea portfolio also included strong regional brands such as PG tips in the UK and Lyons in Ireland. Lipton’s global market share was nearly triple that of its nearest competitor, Tata Beverages (owner of Tetley Tea) (Henderson, 2012).

Lipton had a significant international footprint, selling in more than 130 countries. Although growth in developed markets remained modest (around 1%–2%), emerging markets—especially India and China—offered higher potential, with projected annual growth rates approaching 10%.

In 2010, Unilever sourced nearly 350,000 tons of tea, with about 90% of its supply coming from external sources and the rest produced on its own East African estates, including the prominent Kericho estate in Kenya. Each regional market had distinct sourcing needs due to consumer preferences for specific tea types. For instance, the U.S. favored Argentine tea for iced blends, while other markets sourced differently (Henderson, 2012).

Globally, tea was the most consumed beverage after water. In 2009, more than 4 million tons of tea were produced in 46 countries. China, India, Kenya, and Sri Lanka accounted for roughly 70% of that output. Kenya, a major source of Lipton’s tea, was also the world’s leading tea exporter, despite contributing just 8% of total global production (Henderson, 2012).

Tea production is a labor-intensive process that occurs throughout the year in many regions. Farmers typically harvest the top two to three leaves of each tea plant every 7 to 21 days, depending on growing conditions such as altitude and climate. Although tea plants can grow up to 30 feet tall, they are usually pruned to a height of 2 to 3 feet to facilitate hand-picking.

After harvesting, tea leaves are processed either on-site or in nearby factories, undergoing a sequence of steps including withering, rolling, oxidizing, drying, and sorting. Once processed, the tea is transported to auctions or brokers before being blended, packaged, and eventually reaching retail shelves (Henderson, 2012).

However, the tea industry—especially when poorly managed—can generate serious environmental and social concerns. Large plantations and smallholders alike face challenges. For example, workers on some plantations have historically been exposed to harmful chemicals without adequate protection and were often denied access to healthcare, education, or housing. Some estates even employed underregulated migrant labor, and existing unions were sometimes viewed as corrupt or ineffective (Henderson, 2012).

Environmental degradation was also a concern. Practices like deforestation for firewood, poor waste disposal, and overuse of fertilizers and pesticides led to declining soil health and water pollution. On small farms, efforts to boost yield often came at the expense of environmental resilience (Henderson, 2012).

Recognizing these systemic issues, Unilever introduced a set of good agricultural practices in 1998. These guidelines, although voluntary, aimed to promote sustainable farming across major crop categories including tea. The framework included ten indicators that addressed social, environmental, and economic aspects of farming. While Unilever did not enforce these practices, it made them publicly available and encouraged adoption across its supply base (Henderson, 2012).

By 2006, the company began to turn these internal standards into a consumer-facing sustainability strategy. Leijnse believed that growing consumer concern for ethical sourcing—especially in Western markets—could offer a path to brand differentiation. He also saw the opportunity to lead change across the industry by demonstrating that ethical sourcing could be economically viable and scalable (Henderson, 2012).

To implement a more credible and scalable sustainability strategy, Unilever selected the Rainforest Alliance as its certification partner. This organization was part of the Sustainable Agriculture Network and had prior experience certifying crops like coffee, bananas, and cocoa—though not tea. Unilever saw alignment between its goals and the Rainforest Alliance’s focus on social, environmental, and economic dimensions of agriculture (Henderson, 2012).

By 2011, Unilever had achieved one of its initial targets: 100% of Lipton Yellow Label and PG tips tea bags in Western Europe were Rainforest Alliance–certified. The broader goal was to certify all Lipton tea bags globally by 2015. This covered about one-third of the company’s total tea volume. Unilever’s ultimate commitment—under the Sustainable Living Plan—was to ensure that 100% of its tea would be sustainably sourced by 2020. Notably, that broader goal did not strictly require Rainforest Alliance certification (Henderson, 2012).

The certification process included meeting a detailed set of principles and criteria related to worker welfare, environmental protection, and farm management. Farms had to meet at least 50% of the criteria for each principle and 80% of the total applicable standards, including 15 non-negotiable critical criteria. This approach meant that the entire farm, not just portions, had to comply to earn certification (Henderson, 2012).

Certification incurred both direct and indirect costs. Farmers typically paid between €3,000 and €4,500 per certification, depending on size. Unilever also paid a price premium for certified tea—around €0.08 per kilogram—on top of market prices, which averaged €1.69 per kilogram in 2010. Starting in 2011, the company paid a participation fee of €0.0089 per kilogram to carry the Rainforest Alliance logo on packaging (Henderson, 2012).

Internally, Unilever devoted resources to support certification rollout. The procurement team assigned six full-time employees to the effort and spent about €200,000 annually on training programs for farmers, developed jointly with the Rainforest Alliance (Henderson, 2012).

To meet its 2010 certification targets, Unilever and the Rainforest Alliance needed to quickly establish a large, certified supply base. Initially, they focused on certifying Unilever’s own tea plantations in Kenya and Tanzania, as well as several well-managed large suppliers. However, reaching Unilever’s 2015 and 2020 goals required deeper integration with smaller and less organized suppliers across various regions, many of whom had inconsistent agricultural practices and little institutional support (Henderson, 2012).

Unilever’s estates in East Africa, especially the Kericho estate in Kenya, were the first to become certified. These estates had long prioritized operational efficiency and sustainable methods. Practices included leaving pruned tea leaves in the field to enrich soil, using fertilizer conservatively, and relying on on-site hydroelectric power and sustainably grown eucalyptus firewood. These efforts resulted in cost savings and high productivity (Henderson, 2012).

In addition to environmental management, Unilever invested heavily in social welfare at Kericho. The estate employed 16,000 workers and offered significantly higher wages than the local agricultural minimum, along with free housing, healthcare, and education for employees and their families. A €1.2 million renovation had recently modernized these facilities (Henderson, 2012).

The impact of these investments was evident. Kericho’s tea yield reached 3.5 to 4 tons per hectare annually—significantly higher than yields in India and other regions. A similar strategy at Unilever’s Tanzanian estate yielded about 3 tons per hectare. Unilever’s former regional director, Richard Fairburn, noted that these sustainability initiatives made long-term agricultural and financial sense (Henderson, 2012).

As part of its expansion strategy, Unilever identified priority suppliers in Africa, Argentina, and Indonesia. Many of these operations were already relatively well-managed, and with some upgrades, they were able to meet certification standards using tools Unilever provided (Henderson, 2012).

Unilever’s success in East Africa became a foundation for expanding Rainforest Alliance certification to smallholder farmers. Kenya alone accounted for nearly one-third of the company’s total tea supply, and the company relied on roughly 500,000 smallholders to meet its needs. To scale training, Unilever collaborated with the Kenyan Tea Development Agency (KTDA) and the Dutch Sustainable Trade Initiative (IDH) to implement a “train-the-trainer” model. This system enabled widespread dissemination of sustainable practices across rural farming communities (Henderson, 2012).

KTDA, a respected farmer cooperative, covered 62% of Kenya’s tea production through 59 factories. In 2011, Unilever purchased around 40% of KTDA’s output. Each KTDA factory elected 30–40 lead farmers who received intensive, hands-on training lasting three days. These lead farmers were then responsible for training approximately 300 other farmers each, using tools such as posters, checklists, and demonstration plots. Extension officers and donor funding supported the initiative, with KTDA expected to take full ownership of the program in the future.

The training was participatory and cost-efficient. Most of the required changes—like retaining tea prunings for compost, improving water use, and reducing waste—required low capital investment. Unilever subsidized tree seeds and promoted organic composting. Although some elements, such as safety equipment for pesticide application, were more costly, KTDA helped through microcredit and farmer co-financing (Henderson, 2012).

A 2004 pilot study showed that first-year sustainability investments equaled less than 1% of cash farm income. Certified farms experienced 5% to 15% increases in yield, better tea quality, and higher prices. Smallholder income rose by 10% to 15% on average. Unilever also believed these practices would help mitigate the effects of climate variability. Importantly, Fairburn emphasized that what resonated most with farmers was the sense of ownership and legacy: “The Kenyan smallholders are ultimately interested in creating a farm in good health that can be passed on to future generations” (Henderson, 2012).

By 2011, the Rainforest Alliance had certified over one-third of Kenya’s smallholder tea producers. Unilever believed that eventually all of its Kenyan smallholders would achieve certification. Evidence of success included several early-certified farmer groups voluntarily renewing their status, showing the model’s durability (Henderson, 2012).

Despite the operational achievements, Unilever still needed to address a crucial business objective: translating its sustainability commitment into increased sales. Michiel Leijnse, responsible for the Lipton brand, led this effort. The challenge was particularly complex because Unilever managed a diverse portfolio of tea brands, each with unique identities (Henderson, 2012).

Research indicated that a growing segment of consumers—especially in Western markets—were motivated by a brand’s ethical posture. Still, the company was cautious. Unilever did not want to rebrand its mainstream offerings as “green.” Instead, certification was positioned as a modern, values-aligned message consistent with each brand’s existing identity. As one brand manager explained, “Consumers aren’t choosing our product because it’s green, but because this new message was aligned with their expectations for our brand" (Henderson, 2012).

Retailers also played a significant role in the initiative’s momentum. Many large retailers supported or even demanded certified tea as part of their own sustainability strategies. Despite this support, Unilever chose not to charge a premium for certified products. The emphasis was instead placed on strengthening brand equity and gaining market share through alignment with consumer values (Henderson, 2012).

In the U.K., Unilever’s PG tips brand emerged as the frontrunner in sustainable tea marketing. The U.K. tea market was highly competitive, valued at nearly €990 million, with PG tips and Tetley each controlling around a quarter of market share. In 2008, PG tips became the first mainstream brand in the country to highlight its Rainforest Alliance certification.

Unilever allocated its entire €12 million U.K. marketing budget that year to promote the campaign. The PG tips team faced the complex challenge of introducing sustainability messaging in a relatable, brand-consistent way. Known for its offbeat humor and mass appeal, the brand launched a campaign with the slogan “Do your bit: put the kettle on.” Using well-known characters like Monkey and Al, the ads emphasized ethical consumption through everyday actions (Henderson, 2012).

Rather than focusing on eco-preaching, the brand used humor and familiar messaging. Campaign elements included TV and print advertising, short films aired in cinemas, and promotional packaging with DVDs and branded tea towels. Packaging was also updated to include the Rainforest Alliance seal and messaging.

The campaign proved effective. PG tips gained 1.8 points in market share, while Tetley remained flat. The repeat purchase rate grew from 44% to 49%, and total sales rose by 6%. Surveys showed that consumer perceptions of PG tips as an ethical brand steadily improved during the campaign (Henderson, 2012).

In Australia, Unilever launched its Rainforest Alliance campaign under the title “Project Sunshine.” The local tea market was relatively consolidated, and Lipton already held close to a 25% market share. The campaign’s core message—“Make a Better Choice with Lipton, the world’s first Rainforest Alliance Certified tea”—was designed to align with the existing brand proposition of health and quality (Henderson, 2012).

The marketing campaign, launched in 2009, had a budget of €1.1 million and included television, print, and PR efforts. Unilever also emphasized in-store promotions and updated its packaging to prominently feature the Rainforest Alliance seal and accompanying narrative. To avoid consumer resistance, Unilever chose not to increase the price of certified tea.

The strategy worked. During the campaign period, Lipton sales rose 11% and market share grew from 24.2% to 25.8%. The average purchase per transaction also increased. However, the only area where the brand didn’t improve was in consumer perception of quality, which saw a slight decline (Henderson, 2012).

In Italy, the team launched a €3 million campaign around the phrase “your small cup can make a big difference.” After one year, Lipton Yellow Label sales had grown by over 10%, with market share rising more than two percentage points. Much of the growth came from attracting younger and more affluent consumers. Ongoing campaign support in later years included a partnership with National Geographic and further in-store promotions (Henderson, 2012).

Unilever’s Rainforest Alliance marketing efforts met mixed results across various markets. In France, Lipton held a 37% market share in a €430 million tea market, but most of this success came from a diverse product portfolio. Initially, only Lipton Yellow Label black tea was certified, which represented just one-fifth of total volume. As a result, certification messaging was limited.

The marketing approach in France relied heavily on public relations. This included outreach to journalists, media partnerships, and trips to Kenya’s Kericho estate to highlight Unilever’s efforts. While this generated some attention, print advertisements were mostly placed in niche lifestyle magazines, targeting older, female consumers (Henderson, 2012).

French consumers, according to internal research, were less likely to respond positively to packaging changes like certification seals. To manage resistance, the Lipton team initially placed certification messages only inside the boxes, later transitioning them to the back, and eventually, the front. This staggered approach diluted the connection between advertising and product shelf presence (Henderson, 2012).

By 2010, Lipton’s French marketing included TV ads and an online contest featuring a trip to a certified farm. While brand managers believed these actions were well executed, only 10% of the total marketing budget supported the certification message. The rest was spent on general promotions. Consequently, Lipton’s brand awareness and market share in France remained flat. Worse, many consumers failed to associate Lipton with ethical sourcing or Rainforest Alliance certification (Henderson, 2012).

Unilever’s experience in the U.S. presented yet another variation in outcomes. The total market was valued at nearly €1.5 billion, but only a small portion of Lipton’s product line was tied to the Rainforest Alliance effort. Specifically, the campaign focused on green tea products, which were growing in popularity, while the more mainstream black tea segment remained outside the sustainability messaging (Henderson, 2012).

The marketing campaign in the U.S. launched in 2009 with the slogan “Your Small Cup Can Make a Big Difference.” To build credibility, Unilever collaborated with National Geographic to produce independent multimedia content explaining the Rainforest Alliance certification process. Additional marketing included a sponsored blogger trip to Kenya, online and social media advertisements, and updated product packaging that featured the Rainforest Alliance seal prominently (Henderson, 2012).

Unilever also partnered with major retailers like Walmart and Sam’s Club to provide in-store promotional materials that emphasized the health and quality benefits of sustainable tea. The campaign had a €740,000 ($1 million) budget and delivered a strong return on investment according to internal analyses. However, it failed to move overall market share significantly, especially in the dominant black tea category (Henderson, 2012).

Unilever’s commitment to certified tea was met with rapid responses from competitors. Brands like Tetley, Twinings, and Yorkshire Tea began securing Rainforest Alliance certification for their supply chains, while others—such as Pickwick and Carmien Tea—chose alternative certification bodies like UTZ. Yorkshire Tea committed to 100% certification by 2015, Twinings aimed to certify all of its Everyday tea by the same year, and Tetley planned to follow by 2016. These developments created competitive pressure on the Rainforest Alliance and raised questions about how Unilever could maintain its differentiation (Henderson, 2012).

As competitors matched its sustainability positioning, Unilever also faced new challenges in emerging markets. To fulfill its sustainability targets, the company needed to transform supply chains in markets with low institutional support, varied farming practices, and minimal consumer awareness about certification. At the same time, Unilever had to craft communication strategies for these regions. In places like Turkey, India, and Russia, the company questioned whether certification could resonate with consumers or needed a different framing entirely (Henderson, 2012).

In India, the challenge was particularly complex. Around 25% of Unilever’s global tea was sourced from India, but much of the market consisted of smallholders selling into the domestic market, often without access to formal training or reliable buyer relationships. Furthermore, India lacked centralized organizations like Kenya’s KTDA, which made scalable farmer engagement more difficult (Henderson, 2012).

Reference: 

Henderson, R. M. (2012). Sustainable Tea at Unilever (Rev. ed., HBS Case No. 712-438). Harvard Business School Publishing.