View from A Farr – Brits still giving iced tea the cold shoulder
Britvic Soft Drinks has just signed an exclusive bottling agreement with Pepsi Lipton International to distribute Lipton Ice Tea in the UK. The deal offers the brand growth potential but, Annette Farr suggests, to make significant progress Britvic is going to have to change the British mindset regarding iced tea.
Why is it that the Brits just don't get iced tea? It's a dynamic and fast-growing category pretty much everywhere else in the world as analyst Canadean's quarterly beverage tracker service shows.
In the US, last year per capita consumption was 18.5 litres, in Europe 4.8 litres but in the UK a mere 0.2 litres. The compound annual growth rate (CAGR) from 2007 to 2008 was 8% for Europe, but in the UK market was down 6.7%.
It is all a bit ironic really since iced tea was first made by an Englishman. At the 1904 World Trade Fair in St Louis extremely hot weather and demand for cold drinks led Englishman Richard Blechynden to pour ice cubes into glasses filled with tea.
Yet subsequently there seems to have been rather less enthusiasm for the idea among British consumers. UK consumption figures have remained unaltered since 2004, despite a number of high-profile product launches such as the popular US AriZona brand introduced in 2006.
Worldwide, consumers are drawn to RTD iced teas because they are healthy and refreshing. New product development has embraced health and wellness issues, mirroring developments in the hot tea market, where green tea, fruit/herbal tea and other products such as rooibos, white and oolong tea have been major growth areas. It is these new variants which continue to drive growth in global RTD (ready to drink) tea.
Over the years, studies have shown that tea helps to alleviate suffering from a series of digestive and stress-related complaints. Its high antioxidant content is said to reduce the risk of heart disease and cancer.
And now further evidence adds weight to tea's healthy proposition. According to new research undertaken at the University of California in Los Angeles, funded by the Unilever Lipton Institute of Tea, drinking three or more cups of green or black tea a day may reduce the risk of stroke by more than a fifth.
The findings have been published online and in the journal, Stroke, and were presented at the American Heart Association's annual International Stroke Conference in San Diego.
No one is certain which compounds in tea are responsible for these potential effects, says Dr Lenore Arab, Professor of Medicine at the David Geffen School of Medicine, who led the research. More work is needed to determine exactly how tea affects the body. Dr Sadat Shamim, a neurologist at Baylor University Medical Centre in Dallas, says doctors believe the compounds in tea may reduce damage to blood vessels.
In Asia, RTD tea drinking is well established with China and Japan, the most sophisticated and important markets, collectively accounting for almost two thirds of global sales. The US has the third largest market where more than 80 % of all tea consumed is served as iced tea. Iced tea in Europe is one of the fastest-growing soft drinks segments, with consumption tripling over the last ten years.
Could the news that Britvic Soft Drinks has signed a new exclusive bottling agreement with Pepsi Lipton International to distribute Lipton Ice Tea, be the catalyst needed to change UK consumer tea drinking habits? Lipton Ice Tea is already established within the UK market, but its UK sales of in excess of 6m litres do not begin to reflect the brand's global importance and ubiquity.
Market analyst Euromonitor has included the brand in its Soft Drink Billionaires Club, a league table created from the company's global database of brands that sell more than 1bn litres in off-trade sales over a year. Lipton Ice Tea ranks No 21 in the 2008 league table, achieving volumes of 2.3bn litres in 2008, with 8.5% growth over 2007.
This 1bn litre milestone, according to Euromonitor, effectively consolidates a brand on the international soft drinks stage. Once established, it is rare for a brand to drop off the list. And even during periods of economic difficulties, 1bn-litre brands tend to be more bulletproof than lower-volume competitors.
It would seem that Britvic has added a very strong brand to its portfolio, acknowledged by brand director Jonathan Gatward, who describes Lipton Ice as "a great addition to the Britvic portfolio".
After water, tea is the most popular beverage in the world. By all accounts, Lipton Ice Tea should fare well and grow under the Britvic umbrella. But there's this stumbling block of the British mindset, which is going to take a lot to shift - tea, cold? No, let's have a nice hot cuppa.
Britvic Soft Drinks has just signed an exclusive bottling agreement with Pepsi Lipton International to distribute Lipton Ice Tea in the UK. The deal offers the brand growth potential but, Annette Farr...
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