Iced Tea: Nestea vs Lipton

Cola war between two giant do not seem to be finished yet. May be it could not reach up to that level, but their JV has make them face each other once again. Yes, two majors Coke & Pepsi are again in front of each other in JV of two other giants Nestle & HUL respectively.

Hindustan Unilever and PepsiCo are reviving their seven-year-old joint venture to sell ready-to-drink teas and tea beverages by re launching Lipton ice tea, four months after Nestle and Coca-Cola brought Nestea ice tea. Lipton tea will be rolled out in ready-to-drink bottles next week in Delhi and the NCR region. The PepsiCo-HUL alliance launched Lipton ice tea in 2004, but the product was withdrawn within a year for lack of demand.
In 2004, concept was ahead of its time. There was no awareness for such product and country like India where Tea only meant if it is hot; it was difficult to change the consumption habit. That time HUL failed to connect its product with consumer and consumer didn’t accept the product. As time went on, people started shifting from fizzy drinks to healthy alternatives. Iced tea has still not caught the imagination in India despite being there for some time now and of course it will take its time established in India.

Still iced tea category is growing, and reading the trends, Coca-Cola along with its joint venture partner Nestle launched ready to drink bottled ice tea in Nov, 2010. Nestea has been positioned more as lifestyle, youthful, trendy and refreshing drink. Nestle first roll it out in Mumbai and set to launch the product in other part of country by next year. Under the 19-year-old global agreement between the two firms, the rights to manufacture, distribute and market the Nestea brand in powdered and vending machine formats are with Nestle, while Coca-Cola holds the rights to make, distribute and market Nestea in glass and PET bottles and cartons. Nestea is licensed to Beverage Partners Worldwide (BPW), a 50:50 Joint Venture between The Coca-Cola Company and Nestle S.A.

Rivalry between two firms and involvement of such big players can develop the niche segment very fast.Of course the segment will take its time to develop, but once developed, these players will get the benefit of first mover advantage. And most importantly, with changing consumer preferences and openness, segment seems to grow fast.