Forming teams

Forming teams

Despite the small size of the iced tea market, the big players noticed the growth rate and jumped in. Coca­Cola made the first move by teaming up

with Nestle to form Coca­Cola Nestle Refreshments, combining Coca­Cola's powerful distribution network with Nestles tea expertise and its Nestea

brand. Pepsi­Cola followed by joining forces with Thomas J. Lipton Company. Barq's energized its Luzianne tea brand, A & W announced it would make and distribute Tetley tea, Cadbury uncovered little­known All Seasons to serve ­AS its tea partner and Perrier joined forces with Celestial Seasonings.

Lipton was already no. 1 in the tea market, but like Coca­Cola, Pepsi's top management argued that the company's alliance with Lipton would leverage Pepsi's distribution strength with Lipton's leadership in tea to produce a can't­miss proposition. Upton's president observed that the new partnership would make Lipton 'as widely available as Pepsi'.

The entrance of Pepsi, Coea­Cola and their competitors should invigo­ rate the ready­to­drink tea market. One observer noted that the iced­tea market was still a small market despite growing 50 per cent between 1990 and 1991. And it was getting very overcrowded. Indeed, all this attention produced almost 200 new ready­to­drink teas during 1991 and 1992. The tea category leaped another 50 per cent in 1992 and the same again in 1993. The competitors generated this growth by dusting off tea's boring image and recasting it as a natural, better­for­you beverage. Further, scientific evidence emerged that tea inhibited certain types of cancer in laboratory mice and seemed to be linked to lower cholesterol rates. Lipton, Nestea and Snapple lured customers with new flavours and pointed out that lack of carbonation makes iced tea easier to drink rapidly and in quantity.

Although Coca­Cola/Nestles Nestea sales soared, Snapple's and Lip ton's grew even faster. As a result, Nestea narrowed its promotion to target 18­ to 29­year­olds witb a promotional blitz consisting of sponsorships and sampling. It dispatched five 18­wheeler demonstration trucks, which it called its 'Cool Out Caravans' to sporting events, theme parks and beaches

in 60 markets, Pepsi continued its cola­style marketing for Lipton teas. Its radio ads argued that Snapple is 'mixed up from a powder', but Lipton is 'real brewed'. Pepsi also promoted Lipton in supermarkets by offering customers 'value packs' that contained one bottle each of three new drinks: Lipton Original, Ocean Spray Lemonade and AllSport sports drink. Pepsi also pur­sued spon­ sorship of a Rolling Stones concert tour, to which it would link a massive sampling programme.

Because of its efforts, Lip ton's teas seemed ready to unseat Coca­Cola/ Nestle, despite its early market entry, was falling behind in the iced­tea wars. Lipton was taking market share from both Snapple and Nestea. One

Case 3: Look Out Lipton, Here Come* Oolong! 129

selling hot tea. Having spent £10 million developing hot cans to be sold In convenience stores and petrol stations, it was ready to test market the

product in Manchester, England. Brooks Bond's PG Tips will be sold in ring­ pull tins kept at 56'C in a heated cabinet on shop counters. On sale along­ side PG Tips, with or without sugar, will he Red Mountain coffee, sweetened or unsweetened, and Choky, the leading Freneh hot chocolate brand. Watch

out Oolong, Rrook Bond's waiting!