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A consortium of co-operatives in Kenya claims it was ignored after expressing an interest to buy the Kenyan tea estates that private equity group CVC purchased from Unilever less than three years ago.
The group, whose combined membership exceeds 340,000, wrote to the board of CVC-owned Lipton Teas and Infusions in February expressing an interest in purchasing the estates on behalf of the local community.
“There is growing pressure for the local community to move from being passive observers to being shareholders so they can derive direct financial benefits,” the group wrote in a letter to Lipton’s board, shared with the Financial Times. The FT reported in August that CVC was exploring a sale of the plantations.
The consortium wants to buy the Lipton Kenya estates, which comprise 11 plantations and eight factories across the Kericho, Bomet and Limuru counties in western Kenya’s tea-growing heartland.
CVC acquired the estates as part of its €4.5bn purchase of Unilever’s tea division, then named Ekaterra, in 2021. Private equity firms Advent International and Carlyle had walked away from buying the business because of concerns about the working conditions on its plantations.
Questions over the community’s right to the land is a new area of environmental, social and governance concern for CVC.
The Kericho plantation had a history of violence and sexual harassment allegations before CVC acquired it. At the time of the deal, the firm said “there is a real opportunity here to act as a responsible ESG focused investor”.
Kenneth Langat, a lawyer representing the consortium, told the FT that “there has been no courtesy of a response” to their letter. He added that the group, which is led by tea co-operative Sinendet, was now seeking legal remedies, arguing that Lipton was obliged to engage with the community ahead of any future sale.
CVC and Lipton declined to comment.
In its letter, the consortium pointed out that as part of its ESG commitments, Lipton was committed to the “free, prior and informed consent” of local communities with regard to the use of and transfers of land.
“Acquiring the Kenya tea estates at a fair valuation would restore ownership of the lands to the descendants of the indigenous residents of the Rift Valley Highlands and address the ongoing debate in Kenya in respect of historical land injustices,” wrote the co-op group.
In the early 20th century, the British army evicted members of the Kipsigis and Talai clans from land in Kericho to grow crops there. In 2019, Kenya’s National Land Commission ruled that the land had been unlawfully seized.
Last year tea and coffee company Finlays sold its tea estates, which neighbour Lipton’s, to Sri Lankan group Browns Investments. Browns and Finlays agreed to offer 15 per cent of shares for public sale in the company through a local co-operative.
The consortium said it could finance the acquisition through contributions from its membership. Two co-ops within the consortium, Mau Tea and Kipsigis Highlands, have previously acquired smaller tea estates by raising capital through its members and loans from other co-operatives.
Lipton, which is the world’s largest buyer of Kenyan tea, has been taking steps to address the labour abuses that were uncovered in a BBC investigation last year, as well as the structural issues in the country’s tea sector. Tea is Kenya’s largest export industry.
In February, alongside Kenyan President William Samoei Ruto, the company inaugurated a new tea academy. “The academy reinforces our commitment to the Kenyan tea industry and the steps it is taking to raise standards in terms of quality, as well as human and environmental protections,” said Lipton chief executive Nathalie Roos at the time.
