Lipton Iced Tea is a beverage launched by Lipton in collaboration with Pepsico. Lipton is an established brand in the tea market while Pepsico has a prominent presence in the soft drink industry.
Ever since the popularity of tea started to grow in the West, particularly in the United States of America, the tea market has evolved through various stages. In order to dominate the market, major tea producers like Lipton, Tetley and Nestea have kept on coming up with innovative varieties of tea. Lipton, which has the reputation of being the most original brand in terms of variety launched cold beverage, Lipton Iced Tea, thus adding a new dimension to the tea market. Lipton Iced Tea enjoys even more popularity after the recent researches stated the healthy benefits of consuming tea. Moreover, the iced tea was a good way of targeting those consumers who do not enjoy hotter beverages.
Lipton faces a major competition from Nestle Nestea and Snapple. However, Lipton Iced Tea successfully managed to lead the market. Considering the threat from new and existing rivals, Lipton has kept is marketing strategy quite strong an aggressive. Besides positioning its product as the healthiest and the most refreshing drink available in the market, Lipton's intelligent packaging and pricing strategy has significantly contributed to its success. Its low prices make Lipton more affordable as compared to its competitors and its packaging makes it instant and easy to use.
While Lipton Iced Tea has an overall strong position in the market, however, its synthetic taste remains its weakness. Therefore, Lipton can further strengthen its position by enhancing the taste.
On a macro level, Lipton enjoys a positive press, not only because of its efficient quality management system, but also due to its sustainable and environmental friendly production practices.
Tea is a household icon in most parts around the world. Almost in every country that has tea consumers, when you think tea, the first name that hits our minds is Lipton. Lipton tea originates from the house of Lipton, currently a major subsidiary brand of Unilever.
Lipton was founded by Thomas J. Lipton, an Irish man, who came to United States of America in the late eighteen hundreds. He started by a small grocery store and expanded it into a chain of stores around America. By the end of the nineteenth century, when demand of tea boomed in the Europe, the British tea brokers pressed Lipton to stock their tea in his stores. This gave Lipton an idea of coming up with his own brand of tea, and thus, Lipton Tea was born. Tea at that time was expensive and was considered a rich man's drink. Thomas Lipton's idea was to come up with a more affordable brand so that even consumers from less strong economical background can enjoy tea.
Lipton has continued to grow since then, which led it to go public in the early twentieth century. By late twentieth century, Lipton started operating as a subsidiary company of one of the world biggest corporate house, Unilever.
Since its birth, Lipton has been on a road to continuous growth and expansion. This growth was not just in terms of exploring new markets, but also in terms of introducing a wide range of products. Today Lipton holds major market share both, in the United States of America and around the world.
Ever since Lipton has stepped into the tea industry, tea has gone much beyond than a conventional household beverage. From time to time, Lipton is known to introduce new additions in the tea industry and one of the most innovative and popular addition is the Lipton Iced Tea. This product came into being after Lipton collaborated with PepsiCo., which is primarily a soft drink company.
As a tea brand, Lipton is the market leader both, in the United States of America and around the world. With a wide range of tea variety, Lipton serves people from all classes, social backgrounds, and regions. From students to grandparents, from China to the United States of America, Lipton is the key tea brand that serves almost all market segments.
Focusing on Lipton Iced Tea in particular, Lipton has segmented its consumers according to lifestyle. In general, Lipton Iced Tea has two major targeted groups of consumers. The first group covers those people who lead a busy life style and are hunting for "something instant." This group mainly includes, students, employees, working women and other similar consumers who live a hectic and busy life and are in need of an instant product to refresh them. Lipton's idea of selling tea in ready to dip tea bags and instant sachets has been very successful among this segment. Tea in this kind of packaging proved not only affordable but also easy and quick to use.
The second group of people comprises of the health conscious segment. Consumers from this particular segment may not necessarily lead as busy life as the first group, however, they are potential consumers because of the healthy benefits offered by the product. Ever since the researches have stated the medical advantages of tea consumption, Lipton has played on these reports in order to position its product successfully as healthy, energizer with immense health benefits.
Since Lipton has always positioned its tea as a health beverage that provides antioxidants, its market share has continued to grow with the passage of time. Moreover, many people prefer Lipton to other brands due to its affordability, quality and user friendliness.
In order to further diversify its clientele, Lipton has introduced further varieties of Iced Tea that includes, Diet Iced Tea and Flavored Iced Tea in Mixed Berry, Lemon, Raspberry and Peach flavors. Since Iced Tea is essentially a cold beverage, the integration of flavors with the beverage has made it popular in the younger groups as well.
Since Lipton recognizes the fact that its potential consumers include people that are either health conscious or are have a busy routine or they opt for Lipton due to its affordability, it continues to develop products that are healthier, easier to use and are more inexpensive.
Size and Growth of the Market
In earlier days, coffee was a comparatively more popular beverage in the United States. However, in the recent past, the tea has gained much popularity, thus resulting in a phenomenal growth in the American tea market.
The primary reason for this popularity, according to some survey reports, is the fact that tea is a healthier and more refreshing brew as compared to its counterparts such as coffee. Furthermore, the introduction of flavored tea and other tea varieties such as green tea and iced tea has broadened the consumer base. Another reason, besides the health factor, for the popularity of tea is the fact that it is instant and is readily available as a ready to drink brew.
While initially, tea was known to be a drink of colder regions, however, the innovative introduction of iced tea has made the beverage popular among the inhabitants of warmer temperatures as well. According to market surveys, 85% of the total tea market in the United States of America is made up of iced tea. It is also said that iced tea sales has seen an average annual increment of 145%.
Although the iced tea market is dominated by various top tier brands, however, Lipton holds the greatest market share of 32.6%, followed by Snapple with 26.5% share and Nestea with 10.8% share. Lipton leads the market not only in America, but also around the globe.
Lipton is known to have understood its Corporate Social Responsibility well. As an organization, it adheres to the concept of sustainability. The biggest evidence for this is the fact that Lipton grows its tea plantations in the Rainforest Alliance Certified estates. These estates are certified by the Rainforest Alliance organization, which is a non-profit entity, aiming to conserve the environment, managing farms efficiently and protecting the rights and welfare of the workers and their families associated with those farms.
Moreover, Lipton has also switched to bottles that use 20% less plastic. This is another step towards an environmental friendly business activity.
The American tea industry is mainly dominated by Lipton, Snapple and Nestle. Focusing on the Lipton Iced Tea, in particular its major competitors remain Snapple and Nestea, a product of Nestle. While Lipton teamed up with PepsiCo to launch its iced tea, Nestle joined Coca Cola to get into competition. Just like Lipton and Nestle, PepsiCo and Coca Cola are into direct aggressive competition with each other. Therefore, the objective behind Nestle's teaming with Coca Cola was to compete with the Lipton-PepsiCo partnership and to ensure a strong global distribution system. However, Nestea focused on a more packaging-based marketing strategy and unlike Lipton, it failed to offer a variety of flavors to cater various tastes. Lipton, on the other hand, not only focused on…