Tea Tie

Just before he sailed home on the Normandie last week, taciturn, tweedy Sir George Ernest Schuster, chairman of the board of Lipton, Ltd., received newshawks in his suite at Manhattan's Waldorf-Astoria and imparted to them a bit of last-minute information. Last February, said Sir George, he had become president of Thomas J. Lipton, Inc., when the stock of that U. S. company had been wholly acquired by his English corporation. Why his election had not been announced before he did not explain, observed vaguely: "There never has been a time when the strengthening of economic ties between the United States and the United Kingdom has been more important. ..."

Next day Thomas J. Lipton, Inc. filed with the Securities & Exchange Commission a registration statement for 52,000 shares of new $25 par 6% cumulative preferred stock and 200,000 shares of $1 par Class A common stock, which represented the second and final recapitalization made by Lipton, Ltd. since February. With SEC's permission. Hallgarten & Co., Manhattan underwriters, will exercise options on 26,000 shares of preferred and 100,000 shares of Class A common and resell it to the U. S. public. The rest, together with 200,000 shares of Class B common equal in voting rights to the Class A, remains in the hands of Lipton, Ltd., and a British financial group.

The late Sir Thomas Johnstone Lipton's English business was incorporated as a public company in 1898, but his businesses in the U. S. and Canada he kept as private enterprises until his death in 1931. Sir Thomas never went into the retail business in the U. S. as he did in England. His genial, perennial challenges for the America's Cup (in 1899, 1901, 1903. 1914, 1920, 1930), most remarkable advertising feats of a born salesman's career helped to make Thomas J. Lipton, Inc. the biggest tea-packing company in the U. S. Only Great Atlantic & Pacific Tea Co. can compare with it in volume of tea distributed. All the Lipton tea sold in the U. S. is blended and packaged in either Hoboken or San Francisco.

Since 1931 the U. S. company has been administered as part of the Lipton estate by Lord Inverforth and other Lipton trustees. Its sale last February brought it not only into closer union with the English company but into the corporate constellation of Unilever, Ltd., huge European margarine and soap combine (TIME, Oct. 15, 1934). Many a U. S. investor was surprised to learn last week that Lipton, Ltd. is among the myriad companies which Unilever dominates.

Last year gross sales of Lipton's tea in the U. S. were $6,496,437, on which the U. S. company made $466,406. Profits had been doubled since 1934. For the first four months of 1937 Thomas J. Lipton, Inc. shows a net profit of $321,598, which the company deprecates as the usual seasonal business is always followed by a decline in the last half of the year. One thing Sir George Schuster did on his tie-strengthening visit was to approve a $1,000,000 Lipton advertising campaign, biggest since 1929, planned by husky, friendly William Wigmore Shannon, general manager of the U. S. company.

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