It's cool to drink tea, or is it?

Hot is what symbolises tea in India. But soft drink giants PepsiCo and Coca-Cola, along with FMCG giants, Unilever and Nestle, respectively, are hoping change this perception.

e4m by Ashish Jha
Updated: Jun 16, 2011 12:04 PM
It's cool to drink tea, or is it?

Hot is what symbolises tea in India. But soft drink giants PepsiCo and Coca-Cola are teaming up with FMCG giants, Unilever and Nestle, respectively, to change this perception. With their respective ice tea brands ‘Lipton Ice Tea’ and ‘Nestea’, the two companies are not only looking to widen their portfolio but experiment with consumers’ taste also.

Locking Horns
The Joint Venture (JV) of Pepsi-Unilever has reintroduced 'Lipton Ice Tea'. It has come up with two new flavours of ice tea, after the brand was withdrawn around seven years back when the JV entered the country for the first time. The re-launch comes at a time when rival Coca-Cola introduced bottled ice tea brand 'Nestea' in partnership with Nestle in November, last year.

Though the two players claim that their ice tea brands will help strengthen their portfolio, they first aim to test the Indian market and then intend to develop the product category. “Ice Tea is still a nascent category in India and we are focused on growing the same,” said a PepsiCo spokesperson.

Azaz Motiwala, marketing expert and CMD of IKON Marketing Consultants, a marketing consulting firm, puts the vending ice tea market merely around Rs 32 crore. But he feels that if significant growth of energy drinks market in India in last couple of years is any indication, there is a great potential for the ice tea market in the near future. “We should not be surprised if retail chains of hot and ice tea come up like Cafe Coffee Day and Barista in the coming days,” said Motiwala.

Are Consumers Ready?
The issue, however, is that are Indian consumers ready for the ice tea category? Perception seems to be the biggest hurdle, as experts feel that Indians perceive tea as something, which is hot.

PepsiCo and Unilever had to withdraw the product from the market after its launch in 2004 as the two companies felt that the product was ‘ahead of time’. A PepsiCo spokesperson admitted, as he said, “When Lipton Ice Tea was launched in India in 2004, the product was ahead of its time. Consumer insight revealed a gap between intent and action when it came to consumption of health beverages.”

So what makes them relaunch the product now? HUL says that the taste of Indian youth is gradually changing and ice tea is one of the product categories, which the young may find interesting. Arun Srinivas, General Manager – Beverages, Hindustan Unilever, added, “While tea drinking is an entrenched habit among Indian consumers, the youth in India are looking at more contemporary formats and healthy offerings. Ice tea ticks both the boxes and it can get the youth into the tea category.”

Experts feel that the product satisfies the convenience need of today’s youth. "The key driving factor of relaunching ice tea by big players in the Indian market is growing numbers of busy and health conscious consumers. Ready-to-drink ice tea can satisfy the convenience need of this market segment,” said Motiwala. Gurjit Singh Barry, a beverage industry expert, added, “As compared to ice coffee, ice tea has comparatively low caffeine content. People who like to watch and count calories also tend to enjoy it over other beverages.”

While Pepsi-Unilever targets urban, affluent and health-conscious people in the age group of 16–29 years for its brand ‘Lipton Ice Tea’, the TG for bottled Nestea is young adults in metros. Both have a similar pricing. While ‘Lipton Ice Tea’ is priced at Rs 25 for a 350-ml bottle, Nestea offers 50 ml more at the same price.

A Cautious Approach
While the Pepsi-Unilever combine is confident that the product would succeed in the Indian market now, Nestea is approaching the market cautiously. “We are here to first test the market, observe how consumers respond to our product and analyse all factors and then only we will go ahead,” said a Coca-Cola spokesperson. The Coca-Cola claim is reflected in its initial marketing strategy, as it has not launched any marketing campaign around the product. Nestea is still testing waters in parts of Mumbai.

The spokesperson, however, said that consumers will gradually get used to the beverage. “Similar was the case with ready-to-drink packaged milk. But people have gradually accepted it. The same can happen with bottled ice tea,” he observed.

Barry also feels that consumers today are much aware of the global consumption trend and this may help the product category to pick pace in the country. “Globalisation and the brain gain in today's scenario has brought with it the generation, which is not just well travelled, well read but well informed as well. Anything which is cool abroad is cool here too,” he remarked.

Experts, however, suggest that changing the concept of a product that is essentially thought of as a hot beverage in India is a tough task for marketers. Experimenting with some unusual fruit - mango chilli ice tea, strawberry pepper - flavoured ice tea may also bring some positive results for marketers.

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