Recently the world’s largest tea brand Lipton has been put on the block by FMCG giant Unilever, sounding the final note for a century-old company. Despite its tragic end, how the 131-year-old tea brand emerged from the slums of Glasgow is a fascinating tale of the entrepreneurial spirit of the iconic founder Thomas J. Lipton.
Born on May 10th, 1850, to Thomas Senior and Frances, Thomas Johnstone Lipton was the youngest of five children. His parents were of Irish origin, but they emigrated to Glasgow (Scotland) to escape the Irish potato famine which lasted from 1845-1852 and wiped out a population consisting of millions of people. As emigrants, they lived in a four-room tenement at 10 Crown Street-Hutchesontown, in the poverty-stricken Gorbals area of Glasgow. Growing up in a penny-pinching environment, a young Lipton managed to attend St. Andrew’s Parish School paying a fee of 3 pence/week. It is there that he mastered the basic three Rs of education- reading, writing, and arithmetic.
EARLY LIFE & WORK
However, given the dire circumstances of the family, he was soon forced to leave school, early on in 1860. Needing to support his family economically he got his first job as an errand boy in A & W Kennedy, Stationers at half-a-crown. But, the desire for more had already taken root in young Lipton who soon left to cut shirt patterns for double the wage at Tillie & Henderson. Despite a raise, the overtaxing work left him feeling underpaid leading him to demand a whopping 25% increase in wages. Denied the much-needed raise, he quit & in 1864 went on to work as a cabin boy on the Burns Line between Glasgow and Belfast. It earned him a wage of 8 shillings a week. The job held much appeal for the young Lipton as stories from seasoned sailors steadily built his fascination with America. The job enthralls him and it is here, with stories from seasoned sailors, his fascination with America first begins.
In Lipton’s words, his experience with the Burns Line company, “it was good to be alive and better still to be a cabin-boy on a gallant Clyde-built steamship”. The joy of the job was short-lived as he was soon dismissed for allowing a cabin lamp to smoke and discolor the ceiling. His main takeaway from the job, however, was his lasting fascination with America and after his dismissal, he used his savings to buy a steerage passage to New York. At the time he leaves for America, he is barely 17 years old!
LIFE IN AMERICA
In America he soon immerses himself in a plethora of jobs available to immigrants, working in tobacco and rice plantations of Virginia and South Caroline. He gains finance and book-keeping skills at Coosaw Island, skills that later serve as a good grounding in running his enterprise. Later he returns to New York in search of another adventure. A chance encounter with another Irish entrepreneur Alexander Turney provides an opportunity, working at a departmental store, that would change his life later. Working in the store, he picks up the American way of salesmanship & advertising, that would serve him a lifetime.
It is in 1869, that he again goes against the grain. At a time when immigrants were traveling to America seeking opportunities, he displays an unconventional streak and decides to return back to Scotland.
RETURN TO GLASGOW & A NEW BEGINNING
Lipton’s arrival to Glasgow has remarkable historical significance. On his arrival, he hires a cab & places on top a rocking chair & a barrel of flour for his mother. He would later use this in his adverts. Soon after his return, he takes over his parent’s shop & turns its fortunes around using all his learnings. In 1871, at the age of 21, Lipton went on to open his first store – Lipton’s Market at 101 Stobcross Street in Glasgow.
His store brings a new experience of retail in Scotland! Using attractive bright lights and displays, the store serves as a great attraction. Using another selling technique, learned from his mother, he cuts off middlemen & directly deals with Irish farmers for fresh farm produce.
He uses ‘fresh’ as bait to attract more customers.
Spending an average of 18 hours in his shop, often sleeping on a makeshift bed under the counter, his efforts paid off in heaps, with his shop at Stobcross doing so well that in 1876 he moved to larger premises at 21/27 High Street. By 1882 he had shops in Dundee, Paisley, Edinburgh, and Leeds.
It was with stunts and advertising that Lipton went on to make his mark. He employs the talents of Willie Lockhart, a leading cartoonist. Willie produces weekly posters for him that leads to a huge surge in popularity.
TURNING TO THE TEA TRADE
By 1890, with nearly 300 stores, Lipton turned his attention to the tea trade. By then, the growing demand for tea in England had caused much stir and traders of all kinds began to see it as a profitable venture. Lipton with this keen sense of business soon started learning more about the tea trade from London brokers. That led him to the decision to do what he had been doing with much success- “cut out the middleman, with profit alike to myself and my customers”.
With his eyes on the next venture, he secretly booked a passage to Australia but disembarked at Colombo, Ceylon to visit the tea plantations. The tea industry was still in its early years in Ceylon when Lipton arrived on the island in 1890. Originally, Ceylon had coffee plantations, but beginning in 1869, an outbreak of the fungus Hemelia vasatrix led to a decline. By 1878 the fungus had wiped out coffee cultivation in Ceylon resulting in increased tea production.
Lipton wanted to reduce the price of tea, with the explicit aim of providing the poorer working classes in Scotland with an affordable product. He decides to cut out the middleman wholesaler; he buys his own tea estates, or ‘tea gardens’ in Ceylon, Sri Lanka. He smartly decides to enter into a partnership with another Scot (James Taylor). Within a short period of time, he owns five plantations with his favorite being Dambatenne, seizing the manufacturing process.
To attract blenders he offers them to double their current salary and they soon start working for Lipton. The tea was fresher and, of course, he had a new slogan ready, “Direct from the tea garden to the teapot.” Drawing upon his grocery experience, he decides to modernize the packaging. Earlier, tea was sold straight out of large chests, by weighing the requested amount for each customer leading to poor quality. Lipton introduces standard sizes – in ¼lb, ½lb & 1lb
He uses ingenious marketing to drive demand for the tea such that his 300 shops could not satisfy. In the process, Lipton became the trademark of a national commodity and a household name. His shops had made him a millionaire but tea made him a multi-millionaire.
GOING PUBLIC AND LIPTON TODAY
In 1898 Lipton “yielded to the public clamor” to become a limited company. The professional view of the company was that while it was rock solid, slow and steady growth would help to make overall expansions.
Public affection for the brand leads to an unprecedented rush, with police regulating crowds in the National Bank of Scotland. Applications are received for almost £50m (WHOPPING £10B in today’s terms). On 2nd June 1898, Lipton directed his first shareholders’ meeting. In the same year of 1898, Lipton at the age of 48 travels to the Isle of Wight to be knighted by Queen Victoria. He is also given a baronetcy in 1902, making him the Baronet of Osidge in Southgate, Middlesex. As a public company, Lipton’s continues to prosper, increasing turnover and dividends as predicted.
However, the situation changed in the 1920s. Large companies such as Home and Colonial Stores and Van den Berghs (later part of Unilever) enter the competition. In 1927 Van den Berghs acquired 25% of the shares. Lipton, now Sir Thomas, hands the chair to Sir Ferguson, retires as life president.
However, within two months he sold his interests to the Meadow Dairy Company (controlled by Home and Colonial). He is reputed to have been paid £1,000,000.
However, he does not relinquish control of his American company, Thomas J. Lipton Inc., or his tea interests in Ceylon. He passed away peacefully in his sleep at his home in Osidge on the 2nd October 1931. In 1937, a High Court order allowed his trustees to sell his interests with the proceeds going to the Lipton Trust for the benefit of the poor in Glasgow. By 1946, The Lipton trust had donated a total of £821,000 to the City. In 1972, the CPG giant Unilever bought the brand.
The legacy of Sir Thomas Lipton lives on, especially in Sri Lanka’s highlands, in Dambatenne Plantation. A statue and a seat, dedicated to his memory, facing the plantation still exist to this day. The place where the Glaswegian maverick decided to build his empire of tea.