The Scoop
NAIROBI — A community-led consortium in Kenya’s tea-growing region is fighting to stop a global private equity firm selling the renowned Lipton tea estates to a Sri Lankan conglomerate in a deal estimated to be worth tens of millions of dollars.
It comes after the consortium’s own bid to reclaim the estates failed last month.
The Nairobi-based agricultural firm Sasini was the other bidder for the Lipton Kenya estates which include 11 plantations and eight factories in Kericho, Bomet, and Limuru counties. Sri Lankan firm Browns won with a promise to allocate a 15% stake in the Kenya operation to the community through a cooperative society.
Luxembourg-based CVC Capital bought the Lipton estates in Kenya, Tanzania, and Rwanda in 2022 from Unilever for €4.5 billion ($4.8 billion). The tea estates in Kericho, a highland town in southern Rift Valley, sit on lands from which members of the Kipsigis community were first forcefully evicted by British colonialists over a hundred years ago. In more recent years, the community has faced off with the multinational firms running the estates over layoffs due to mechanization, as well as alleged sexual abuse violations against female workers.
Two people close to the latest discussions told Semafor Africa that the Kipsigis Community Clans Organization — an umbrella group of elders, clans and cooperative societies claiming to represent over 340,000 members — had earlier sealed a partnership with London-based management consultancy firm 101 Partners with whom they formed a consortium and sought financing for the bid. 101 Partners is owned by Guy Chambers, who spent nearly seven years as chief executive of UK tea multinational James Finlays before leaving in July 2022.
Members of the consortium claim their bid was not considered despite their willingness to match the highest offer, and that the community was not adequately consulted on the sale. They said they are planning to file an objection to the sale with the Competition Authority of Kenya (CA) and also with the United Nations Human Rights Council over alleged violations by Lipton of requirements of free, prior and informed consent from communities on use and transfer of their ancestral lands.
Browns and CVC did not respond to emails and phone calls from Semafor Africa.
“The people drinking Lipton tea should know that they are drinking blood tea,” Nicholas Kirui, a member of Kericho’s tea mechanization task force and former CEO of the Kenya Tea Growers Association, told Semafor Africa. “The land was forcefully taken from the Kipsigis people without compensation. There was an expectation that once the [colonial-era] leases expired, the community would get its land back.”
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*Corrected earlier version of the story regarding 101 Partners ownership structure.
*Updated with Lipton response.
Chambers, who was backing the community’s push to take over the estates, was a previous top executive of James Finlays, a tea company.
For the new Lipton deal, Chambers’ 101 partners and the community organizations are said to have agreed on an ownership structure that would see 101 Partners secure financing from a multilateral development bank in exchange for 45% of the newly-formed entity. The community cooperative societies would secure a 40% stake and 15% would be held by a community trust.
In the only post on its website, published in February, 101 Partners highlights the brutal history of the tea plantations of Kericho and teases its vision for a future that is more beneficial for the community.
“Social injustice sits within the DNA and founding story of these estates,” it reads in part. “So, it is no wonder that strong feelings remain today regarding land in Kericho. The quest by the local community to share in the value created on their ancestral land is existential.”
In a statement, Lipton Tea’s spokesperson pushed back at the suggestion the transaction will disadvantage local communities.“The 15% of the main Kenyan operating company being offered to local communities is at a substantial discount and will provide a guaranteed annual dividend payout and create accessible economic participation.”
On issues of land owndership the spokesperson said: “Historical land issues of over a hundred years ago are matters for the UK and Kenya governments to resolve.”
Martin’s view
Communities in Kenya’s tea-growing areas are determined to be the biggest beneficiaries of their ancestral lands, which form the heartbeat of Kenya’s billion-dollar tea industry while also being inextricably linked to a painful history of occupation and torture. The country’s tea export earnings hit a record 180 billion Kenyan shillings ($1.36 billion) in 2023, according to data from the Tea Board of Kenya.
There is a sense among many that the local communities continue to get the short end of the stick to date, particularly with mechanization-induced layoffs wreaking havoc on local economies in recent years. It is why governors from Kericho, Bomet, and Nandi counties are pushing for higher land rates to be paid by the tea companies, a resurvey of the tea estates, and reduced mechanization.
Following the Lipton announcement, the governors called for the 15% stake allocated to the community to be increased, as well as the increase of the $7.5 million community endowment fund. They also formed a committee to look into the deal and provide a comprehensive report in June.
But the fate of the deal lies in the hands of Kenya’s Competition Authority. Any objection filed at the authority will be keenly watched, particularly as the deal has the blessing of Kenya’s President William Ruto who said it would help Kenyan farmers earn more for their crop. His sentiments, however, are a far cry from those of many in Kericho.
Kenneth Lang’at, a lawyer for one of the lead co-operatives in the consortium, told Kenya’s Daily Nation that communities in Kericho and Bomet “were dejected because their offer to buy the assets was not given attention.”
“Our birthright has now been sold to a foreign firm that will now control the tea export business,” he said. “We got a raw deal of tokenism. They are making decisions for us.”
The latest addition to its portfolio is expected to make Browns the world’s leading tea exporter.
Room for Disagreement
Besides the 15% stake set aside for the community, the deal struck by Lipton and Browns also includes the establishment of a community endowment fund worth 1 billion shillings ($7.5 million).
President William Ruto on May 7 also announced plans by the firms to set up a tea-specific fertilizer plant and a tea academy to equip farmers with the tools and information they need.
“Browns is the perfect partner to work with us to raise standards in the whole tea industry; together we are setting a new precedent for transforming the global tea market,” said Nathalie Roos, Chief Executive Officer, Lipton Teas and Infusions, in a statement.