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HBR Sustainable Tea at Unilever Case Write Up

HBR Sustainable Tea at Unilever Case Write Up

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Published by Dylan Bochsler
Write up on the Harvard Business case: Sustainable Tea at Unilever
Write up on the Harvard Business case: Sustainable Tea at Unilever

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Published by: Dylan Bochsler on Feb 26, 2013
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To: Michiel Leijnse From: Dylan Bochsler Date: February 13, 2013 Re: Grower Transformation in India In order for Unilever to reach

its commitment to sustainably sourcing 100% of it tea products by 2015, it must make a strong effort to change the tea growing industry in India by collaborating with other companies who promised the same thing. By doing this, the quarter of Unilever’s total tea requirement from India would be sustainably sourced, and it would establish a stronger footprint in the rapidly growing Indian market. Multiple Options, One Solution While there are many options to transform tea growing in India, the best way for Unilever to change this industry is to collaborate with all the companies using Rainforest Alliance who also promised 100% sustainability (Tetley, Twining and Yorkshire). Unilever should work with these companies to first, continue developing an alternative to the current pesticide paraquat used so widely in India. Next, the companies must establish a training program for smaller farmers. I recommend doing this by working jointly to transform eight of the top ten tea growers in India into sustainable tea growers and hoping for trickle down effect. Finally, the companies must work together to discover and then promote the benefits of Rainforest Alliance certified tea to both farmers and endconsumers in India. Major Advantages While Unilever’s competitors may be hesitant to join the cause, the list of advantages below should ease any concerns:     The capital-intensive work of developing an alternative to paraquat is shared More unified training programs will be established, pushing smallholders toward sustainable farming at a faster rate Each company moves one big step closer to it’s 100% sustainably sourced goal All will have a first mover advantage against companies who decided to use UTZ, but only if a strong message for the Rainforest Alliance can be promoted

Each company will agree to do this, because the risk of being left out is too great. If one company does decide to stay out, the others will freeze them out by not working with any of its suppliers to gain certification. Also, the companies who do join will have a major advantage in brand awareness when their tea is certified before any company who decides not to join. A major problem convincing companies to join the cause is the fact that two-thirds of all tea drank in India is unbranded. However, all must look at the bigger picture of sustaining their established customer value proposition.

and bringing added value to customers who truly value this trait. 2013 Re: Grower Transformation in India Continued Value Without transforming Indian tea growers. pushing consumer loyalty up. This segment of branded tea is the only one where differentiation from certification will matter. Unilever must work collaboratively with other companies in order to transform India’s tea growers. Therefore. Then. Jointly determining the strongest message to promote Rainforest Alliance certification to Indian farmers and tea drinkers presents another huge advantage. Gaining an Advantage By being the first to attempt a transformation of India’s tea growers. these companies must focus on growing their awareness in branded tea segment to widen this gap. This also guarantees that customers around the world see that Unilever is dedicated to fulfilling its promise. the marketing campaign for a push to sustainable tea should be very successful. It must be proactive in this. Concluding. Therefore. or any other company. The power of a united front is far greater than if each company attempted separately. it should position that tea as a more expensive higher-end variety of tea.To: Michiel Leijnse From: Dylan Bochsler Date: February 13. Unilever should no longer source any of its tea from Russia. . While this is not extremely important in India. Russia Matters While the Russian tea market is very attractive. will meet their goal of selling 100% Rainforest Alliance certified tea by 2015 or 2016. Unilever will be seen as a pioneer in this arena by customers who have placed value on certification worldwide. This would be a major hit to Unilever’s public relations. This will lock out companies like Pickwick and Carmien Tea and build market share for each company involved. This segment of the market is the fastest growing and most lucrative as it gives Unilever a strong level of differentiation against the largest Russian tea manufacturers. Unilever should focus on exporting its already Rainforest Alliance certified tea to Russia. By also playing up the increase in suicides and deaths caused by the pesticide parquat. as 25% of its total tea requirement is sourced from India. the message must be focused on a tangible environmental issue that hits home for Indian consumers. and also give them an advantage in the domestic market by making Rainforest Alliance certification a differentiating factor in India. there is no way that Unilever. since the risk of another company moving in and transforming only their supply chain would almost certainly mean lost market share in most markets worldwide. This will allow Unilever to move one step closer toward its 100% sustainably sourced promise. the process to transform domestic growers is too risky. Instead.

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