As Carbonated Drinks Sag, Tea Spree Persists

Lipton and Nestea Ready Marketing Blitzes for Ready-to-Drink Beverages

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NEW YORK (AdAge.com) -- Carbonated soft drinks may be flagging, but there's no stopping ready-to-drink teas.

The market for teas, of which ready-to-drink varieties account for 75%, was valued at $7.4 billion at retail in 2007, according to research firm Packaged Facts, and is expected to reach nearly $15 billion by 2012. Just four years ago, sales were $4.6 billion.
Lipton's ad for read-to-drink green tea
Lipton's ad for read-to-drink green tea

"Tea is one of the most underdeveloped beverages in the U.S.," wrote Packaged Facts Publisher Tatjana Meerman in a recent report. "The potential is enormous, as tea barely compares in market size to beverage categories such as carbonated soft drinks, coffee and water."

As brands big and small acknowledge those opportunities for growth, they're stepping up their marketing and fine-tuning their public-relations efforts. This summer will see an influx of tea marketing, with Coca-Cola doubling its media spending, PepsiCo homing in on target customers, and up-and-coming labels such as Honest Tea and Sweet Leaf Tea blanketing the country with field-marketing teams.

Doubled spending
"We are doing significantly more this year with Nestea and Gold Peak," said Penny McIntyre, senior VP-general manager of coffee and tea at Coca-Cola North America. "In addition to sampling, we are spending well over double in media vs. [the] recent past."

Even so, teas are a relatively small portion of Coca-Cola's overall budget; the company spent just $5.9 million on measured media for the Gold Peak and Nestea brands in 2006 and 2007 combined, according to TNS Media Intelligence.

Nestea is introducing new graphics and packaging, as well as two new green-tea products this month. That will be supported by a digital campaign and sampling at sporting events and concerts this summer. Gold Peak, meanwhile, is focusing on chef endorsements and will have a presence at food and wine festivals in the coming months.

Nestea is handled by Venables Bell & Partners, San Francisco, and Gold Peak by Anomaly, New York.

Sampling is also a key focus at the 10-year-old Honest Tea label, as the brand hopes to rack up 2 million tastings this year. Founder Seth Goldman said Coca-Cola's recent 40% acquisition of the brand has fueled an increase in spending on marketing, which is handled in-house. Similarly, Sweet Leaf Tea will use much of its recent $18 million infusion from a private-equity firm to drive tasting in its emerging markets of Boston, New York, Atlanta and Chicago.

'Cup-to-mouth' sampling
Getting beverages into consumers' hands, according to marketers, is even more key today, given the increasing number of competitors in the category. Between July 2006 and June 2007 alone, 957 new tea products were introduced in the U.S., according to Packaged Facts.

Tea charts
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DATA: Consumers thirst for tea
"How many messages are people hit with every day? It's the quality of impressions [that are important], if you were to look at conversions to consumers," Mr. Goldman said. "I would trade 100 media impressions for one person-to-person, cup-to-mouth sampling impression."

As more consumers are converted, Christiane Paul, director-marketing for the Pepsi-Lipton partnership, said eventually tea could step up to compete with the big boys. "It's been growing at a healthy clip over the last few years, and we think that there's actually even more upside to be had," she said. "You talk about carbonated soft drinks and the like; they're pretty ubiquitous. But when you look at tea globally, it's actually the second-most-consumed beverage in the world."

Lipton is marketing accordingly. It spent $43 million on measured media in 2007, according to TNS Media Intelligence. Although Ms. Paul said the company's marketing levels are "healthy" and will remain about the same, she did say the company is beginning to more carefully target its media.

In preparation for the busy summer season, Lipton Green Tea with Citrus, the most mainstream of the labels, launched a TV campaign May 5. Lipton White Tea, which Ms. Paul said has a "more youthful attitude," is being promoted with an online-video contest. DDB, New York, is Lipton's main agency but San Francisco-based Real Branding is handling the white-tea digital effort.
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