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Lipton Teas Case Study
Achieving longevity in the growing tea market
Reference Code: CSCM0307 Publication Date: March 2010

Unilever-owned Lipton is a tea brand that traces its roots back to Glasgow in the UK in the last few years of the 19

century. The brand’s founder Sir Thomas Lipton first diversified his grocery offering into tea production by using favorable circumstances (namely the failing of local coffee plantations) to buy his own tea plantations in Sri Lanka. Lipton tea swiftly expanded overseas to the point where today it is a global brand. Despite its long heritage, Lipton is not affected by inertia, but is instead keen to innovate its product range and customer communication.

• Lipton is a global tea brand that now operates within the Unilever portfolio of brands although it has been in existence since 1890 as an independent company. • Lipton began in the UK by offering pre-packaged tea and did so at a significant discount to the then going rate. The decision to pre-pack the tea – away from the retail environment, as was the prevailing retailing method at the time – facilitated this price drop and was one of many innovative merchandising and marketing techniques used by Lipton’s eponymous founder. • The tea market worldwide is experiencing steady growth and is leveraging well the health benefits that reputedly stem from tea drinking according to various pieces of medical/health research. • Lipton is one of many brands embracing new digital media in order to gain greater connection with its customers and to reduce the cost of advertising while achieving broad scale reach.

Lipton Teas Case Study
© Datamonitor. This brief is a licensed product and is not to be photocopied

CSCM0307 / Published 03/2010 Page 1

Lipton tea was introduced to the US market but found a notably lower degree of success. During this time he was exposed to many merchandising and marketing techniques which he later took back with him to Scotland. he opened his own grocery store and became famed for daring. In 1871.3% -0.682. attentiongrabbing marketing.379.8% 3.111. Table 1: Tea and coffee market value (US$ m). Lipton's original marketing slogan was “direct from the tea garden to the tea pot”. which allowed Thomas Lipton to access many of the world’s most-renowned tea-producing countries.202. as indeed they are today compared to their preference for coffee (as seen in Table 1). gaining employment in various posts including work in a grocery section within a New York department store.4% Coffee Tea 73.000 tea chests. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 2 .5 9. In 1890.802. The color scheme for this tea was a red shield on a yellow background.6% 1. “I'm going to Lipton's. whereas other brands had hitherto sold loose tea as part of their market offering. thereby bringing the product within reach of a far greater number of consumers.1% 68.5% -0. The Lipton brand was aided to some degree by the extent of the British Empire. He did so by buying his own plantations to bring more control over supply directly into his company: the first to do so. he sailed to modern day Sri Lanka (then known as Ceylon) to purchase high quality teas.4 8.926. which he greeted with a parade of brass bands and bagpipers.Lipton Teas Case Study ANALYSIS Introduction Sir Thomas Lipton was born in Glasgow in 1850 (and was knighted by Queen Victoria in 1898).3% 2.4% 0.2 2. along with his savings. at a similar time to its introduction in the UK.6% 1.9% 29.5% Source: Datamonitor Market Data Analytics (MDA) database DATAMONITOR Lipton Teas Case Study © Datamonitor. as US consumers were somewhat resistant to tea drinking.0% 1. demonstrating his awareness of the timeless value of freshness and authenticity.0% 70. US 2005-15 Category 2005 2010 2015 CAGR 2005-10 CAGR 2010-15 Coffee Tea Overall 6. ensuring that his tea was competitively priced in the extreme.0% 27. Upon debuting in the UK market Lipton was sold in three levels of quality.8 0. which reputedly included parading some of the largest pigs available down some of the main streets of Glasgow (one of Scotland’s main cities) bearing the legend. During Thomas Lipton’s lifetime his company supplied tea to the British and other royal families in Europe.1’.3 3.9% 0.1 2.815. At the age of 15 he travelled to the US. In.7% 31.2 9. which now forms the logo for the modern Lipton brand. The best shop in town for Irish bacon!” Lipton first sold tea in 1889 when he received a shipment of some 20. His market awareness was such that he priced the tea at nearly half the going rate of three shillings per pound.520. the highest grade being ‘Quality No. However.423.6 6. Lipton was also the first tea producer in the UK to sell tea exclusively packaged tea.3 6. 1906 Lipton became the first British blended tea brand to import into Japan: a country known for its love of tea. such was the high regard in which the company was held.

6% 10.6% 0.6% 2.6% 0. Lipton iced tea in tea bags and (ready-to-drink) RTD versions.5% 9.4% 0. Lipton is available in ready-to-drink (RTD) format but not in great volumes in its original black tea format.1% 8. is bought and sold as a commodity on global markets. The parent company Unilever states Lipton sales currently total €3bn annually.8% 9. When adverse conditions affecting Lipton Teas Case Study © Datamonitor. 2003-2008 Company Brand 2003 2004 2005 2006 2007 2008 Associated British Foods plc Associated British Foods plc Associated British Foods plc Tata Tea Tata Tea Unilever Apeejay Group Taylors of Harrogate Ltd Clipper Teas Limited Premier Foods plc Private Label Other Twinings Jacksons of Piccadilly Others Tetley Others PG Tips Typhoo Yorkshire Tea Clipper Typhoo 1.0% 100.0% Source: Datamonitor Market Data Analytics (MDA) database DATAMONITOR Tea is commonly purchased on the open-market in auction formats Coffee.1% 19. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 3 .2% 0.0% 0.1% 19.1% 10.5% 2.1% 9. and is the global branded leader (according to the Lipton website) and present in more than 110 countries worldwide. both of which will negatively affect the quantity and quality of crop yield.7% 3.0% 100. UK.4% 2.1% 2.1% 8. the Lipton Company had moved from Glasgow to London where it employed 300 clerks.1% 2.9% 11. Today.1% 8.5% 42. as Unilever markets PG Tips as its flagship brand instead (see Table 2 for details).5% 42.6% 42. Additionally.1% 0. which makes it very different to tea in terms of trading and supply.5% 42.4% 2.6% 2.5% 42.8% 3.1% 0.7% 2. the brand is owned by the global consumer packaged goods producer Unilever.3% 19.7% Overall 100.3% 11.1% 8.4% 0.6% 11.9% 10. the company employed 5.1% 19.0% 100.9% 2.5% 2.2% 0.6% 2. Table 2: Tea market brand shares by volume (Kg m).0% 100. Ironically. The Lipton product portfolio varies by national market but it includes the following general categories: • • • • Standard and decaffeinated black tea in tea bags.3% 0.1% 20.9% 2.000 people in Sri Lanka and ran more than 150 stores in England. in the UK.3% 0.7% 9. the major rival hot drink to tea.6% 0.5% 1.6% 0.5% 2.2% 0. Lipton Fruit and Herbal Infusions and Green Teas with Fruit.8% 9.1% 0.9% 0.Lipton Teas Case Study By 1892.9% 0.6% 42.6% 2.1% 0.1% 9.3% 0.0% 0.0% 0. Key supply factors for coffee include climactic variations and common agricultural issues such as pest infestation.2% 0.8% 9.7% 0. as is true of all types of commodities.2% 19. Granulated/powdered instant teas and other hot drinks. This means its price can fluctuate in line with supply and demand factors.3% 0.9% 9.0% 100.

In many industries the trend of the last two decades has been to outsource what had hitherto been considered as core functions such as supply chain management. with all Lipton following suit by 2015. Lipton. which cause fluctuations in price. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 4 . The fact that Lipton owns plantations also allows it to experiment with new growing and harvesting techniques to constantly improve its product. these supply-side problems mean a higher selling price. since its inception. By owning plantations in different countries and continents. Lipton manages the Lipton Teas Case Study © Datamonitor. Lipton as a brand is committed to becoming 100% certified as ethically sourced. has been the proprietor of its own plantations in Sri Lanka. It is still subject to the general problems that affect all cash crops. This is one of several reasons why the Fairtrade movement began in order to help farmers in less fortunate economic circumstances to a have a level and pattern of income that better allows them to invest in the infrastructure for their business and their local communities. Lipton says its tea bags can in fact contain as many as 30 different types of tea in order to achieve the right blend. Lipton has diversified its supply risk due to such factors as changing climatic conditions and political factors. which is important considering the unrest and civil war in Sri Lanka (which appears to be coming to an end after many decades of struggle). all of Lipton Yellow Label tea bags will be 100% Rainforest alliance certified. Figure 1: Fairtrade is a common label on many packets of tea Source: Datamonitor analysis DATAMONITOR Lipton sources its tea from a mixture of its own plantations and the open market Tea.Lipton Teas Case Study supply and demand remains constant the companies and brands that purchase coffee in the open market are exposed to supply uncertainty and rising prices in the open market. It is intended that by the end of 2010. Fortunately for Lipton it has resisted outsourcing its tea leave production and now has plantations in Kenya and neighboring Tanzania in addition to those held in Sri Lanka. but the quantity of yield means that they too face great uncertainty. customer care and admin tasks. is commonly purchased in open-market auctions and so is regarded as less of a commodity in economic terms because it is not widely traded in commodity markets by speculators. In order to avoid this situation. Lipton also sources tea on the open market from 35 other countries to mitigate its supply risk and to be able to blend its tea to the same flavor profile regardless of supply bottlenecks. Buying uniquely on the open market in the event of a season of adverse growing conditions entails price uncertainty for all companies using this ‘outsourcing’ of supply. However. For producers. in addition to its own plantations. as mentioned above.

emerging producers such as Dilmah from Sri Lanka explicitly makes its authenticity attributes a key part of its branding. Lipton does not extol its authenticity attributes as much as its rivals Tea connoisseurs attribute tea to have distinct flavors depending on the variety and where it is planted. Figure 2: Dilmah. pure and fresh. Elsewhere on the packaging Dilmah also announces that its tea is single origin (and is in some way localized). weather conditions and altitude. one of Lipton’s more niche competitors. The label then pinpoints the point of production (Kahawatte region of Sri Lanka) and the ethical production used by the family that owns the brand. By contrast. This corollary of influences can be likened to the different factors that feed into the notion of ‘terroir’ in wine production. all attributes closely linked to an authenticity narrative. is keen to state its authenticity attributes Source: Datamonitor Product Launch Analytics Database DATAMONITOR Lipton Teas Case Study © Datamonitor. Even the weather on the day of picking can make a difference. In this text it leverages the word ‘traditional’ and mentions traditional practices such as hand picking (which many tea estates will do in order to use the human ability to spot leaves in their peak condition). This raises the question of whether the authenticity narrative is left under-exploited by Lipton (as well as other mainstream tea producers). rich tradition it already communicates. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 5 . This further humanizes the brand by helping to make a connection between the producing family and the end consumers in a way that larger corporations cannot achieve.Lipton Teas Case Study process of blending by employing a team of professional tasters and blenders in seven regional hubs located around the world. Despite having its own plantations. This is deemed necessary given that the flavor of tea can vary widely due to factors such as: • • • country of origin. structure and quality of the soil. with perceptible differences in flavor resulting from the same area of the same plantation depending on whether or not it has rained on the day of picking. Figure 2 shows a photograph of a pack of Dilmah tea and reproduces the central text on front of packet. These examples show the untapped potential for Lipton (owned by Unilever) and other major tea brands to promote the authenticity of its brand beyond the long.

The expansion of the Lipton (and the wider Unilever) product portfolio of tea brands is tailored to each national market and helps ensure Unilever’s retention of its position as global leader in tea. While these 'other' brand shares are low individually. Lipton Teas Case Study © Datamonitor. led the global market by volume in 2008. Table 3: Tea market value (US$ m).2% 5.5% 2.8 7. global.7 4. which is explained by the high number of individual brands.2 2.3% 3.7 31.0 10. The growth of subsegments beyond standard black and green tea is interesting and shows that consumers’ tastes are fragmenting as much as the popularity of tea is increasing.839.4% 2. they amount to more than half of the market. It is closely followed by (oxidized) black tea. Unilever.617.149.1% 3. These market figures do not include iced tea – either ready-to-drink or other formats – as Datamonitor classifies such beverages as soft drinks.157.6% Source: Datamonitor Market Data Analytics (MDA) database DATAMONITOR Lipton is reacting well to this fragmentation by increasing the range and depth of its product portfolio.916.4 8.050.8% 6.3% 2. This puts it far ahead of its branded rivals and ahead of private label. among other brands.6% 3.802.7 903.862.8 1.648.508.4 6. green tea is the most commonly consumed type of tea (by volume).300. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 6 . many of which are present only in one continental region or in one country which dilutes their traceability.2 3.540.9 9.1% 2.023.6 6. However.653.6 5.2 5.Lipton Teas Case Study Green tea drives the worldwide tea market Around the world.542.5% 2.9 8.5 10. which is forecast to remain in second place until 2015 (see Table 3). the market is fragmented globally.475.9 1.6 37. 2005-15 Segment 2005 2010 2015 CAGR 2005-10 CAGR 2010-15 Green Tea Black Standard Tea Fruit/Herbal Tea Black Specialty Tea Instant Tea 8. with approaching 20% share. through its ownership of Lipton.585. as can be seen in Table 4.4% Overall 27.

6% 1.2% 1. 2003-08 Company 2003 2004 2005 2006 2007 2008 Unilever Private Label Associated British Foods plc Tata Tea Pvt Ltd Tapal Tea Ltd The Shanghai Tea Company Dogus Cay MJF Group Ahmad Tea Ltd.2% 2.2% 1.0% 3.2% 1.0% 53..6% 1.3% 100.0% 1.0% 1.4% 1.4% 1.9% 2.2% 1.0% 100.5% 1.1% 1.2% 1. it is a brand with an equally long tradition of innovation.5% 1.6% 1. Below is a brief snapshot of some of the innovations the company reports to have driven through.3% 1.0% 1. Ltd Mitsui & Co. 1972: Lipton Iced tea in a can introduced in the US.1% 1.6% 100.0% 3.3% 1.6% 4.4% 1.4% 2.0% 1.4% 4.4% 1.2% 1.0% 1.4% 1.0% 1.0% 53.5% 4.3% 1.1% 1.6% 1.8% 4.9% 3.0% 3.6% 1.2% 4.3% 1.4% 1.6% 4. • • • • • • 1910: First to use printed tags with brewing instructions. 1944: Brisk tea (an iced tea brand) launched in US.6% 1.0% 53. riven with inertia.3% 1.4% 100. However.Lipton Teas Case Study Table 4: Tea market volume share (kg m) by company.2% 1.5% 100.2% 1.5% 1.0% 1.6% 1.0% 3.3% 100. 1964: Lipton Iced tea mix introduced in the US.3% 1. 1954: The Flo-Thru double-chamber teabag introduced.2% 1.4% 1.8% 4.8% 4.3% 2.2% 1.6% 1.0% 53..3% 1.4% 1.2% 1.3% 1.1% 1.0% 3.0% 1.5% 1.7% 4.4% 1.4% 1.0% 53.3% 1.5% 4.0% 19.6% 4.0% 19.0% 19.0% 19.4% 1.5% 1.5% 2. Tata Tea Çaykur (Government-owned) Maisky Tea Company Duncans Industries Zhejiang Tea Group. Ltd.3% 1. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 7 . 1992: Pepsi-Cola and Lipton announce a joint partnership to create RTD tea drinks. Global.0% 18.0% Source: Datamonitor Market Data Analytics (MDA) database DATAMONITOR Innovations are core to the Lipton brand Lipton is a strong brand with a long history which might draw perceptions of it being a staid brand.9% 3.2% 1. Other Overall 19. Lipton Teas Case Study © Datamonitor.2% 1.1% 1.7% 2.0% 54.

This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 8 . st Lipton is also embracing social media and viral marketing Social networking sites and viral marketing have already become a preferred choice of media for ‘edgy’ youth-oriented brands. A Unilever presentation dating from 2007 confirmed that the company’s intention in the 21 century for its Lipton brand was to “Transform Lipton into the healthy beverage brand” in Asia. these benefits are not widely communicated by Lipton. and its absence of calories (if no milk or sugar is added). feature workers singing the praises of Lipton (as shown in Figure 3). Figure 3: Lipton is now embracing online media Lipton has encouraged participation with consumergenerated ‘adverts’ in China. so the impact could be said to be limited. so many of the videos submitted to Lipton. This may change as tea brands fully exploit the health attributes of their products. He will promote the range of Lipton Ice Tea products and the adverts will emphasize an alignment between his ‘positive outlook’ and the ‘Drink positive’ brand values of Lipton Ice Tea. who hails from Australia. where it has been present since 1992. Source: Datamonitor analysis DATAMONITOR Lipton Teas Case Study © Datamonitor. Mr Jackman. In China. which has a presence on the micro-blogging site Twitter. but they are also being adopted by a wider range of consumer packaged goods brands. via various online video sharing websites. This focus on health in Asia is also mirrored elsewhere by Lipton which promotes the health credentials of its teas via its own website. These benefits include the presence of antioxidants (frequently linked to cancer-fighting properties). is set to become the face of Lipton and will star in television commercials from March 2010 onwards. Karaoke is a firm favorite in China (even though it was invented in Japan). Lipton is promoting health benefits by employing the Hollywood actor Hugh Jackman as a brand ambassador. Lipton customers have been encouraged to send in their own viral videos of Lipton being consumed in the workplace. However. the hydrating effect of tea. In Asia Pacific. This now includes Lipton. or other tea brands in mainstream media. Lipton is also using the power of viral marketing combined with consumer involvement.Lipton Teas Case Study Health is a growing area of innovation interest in the tea market Another innovation for Lipton and a key future focus for the tea market is an accent on the health attributes of the various types of tea.

Nonetheless. The concrete output of hundreds and thousands of videos dedicated to Lipton negates the need for Lipton to conceive. Tentative steps in this direction are better than non-involvement. This is increasingly becoming the baseline expectation in hot drinks due to the long tradition of Fairtrade within the market. This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 9 . create and broadcast its own commercials. Conclusions Lipton is a brand in rude health that is continuing to innovate and flourish under its corporate parent Unilever. It does. due to the growing creative control of individual consumers and the ‘democratizing’ effect of the internet. Lipton is also incorporating more environmental and ethical considerations into its business practices to make it more sustainable and to create a more favorable impression among consumers. The innovations and flexibility the Lipton brand demonstrates suggest that it is well-placed to succeed further in the 21 century. this is because it is a truly global brand leader. Another problem for branded producers caused by not participating in the internet revolution is allowing potentially hostile consumers shape the image of their brand in their online absence. with the intent to evolve and adapt to emerging consumer trends. however. This approach involves consumers. it is a brand of tea that is less prevalent in the UK than other high profile tea brands. st Lipton Teas Case Study © Datamonitor. However. which can prove a worry. encourages them to share videos with friends and creates additional buzz in the market place. it is perhaps best that powerful consumer brands experiment with their usage of online media in order to experience its benefits and shortcomings before their competitors gain too much advantage.Lipton Teas Case Study The videos have been passed around from consumer to consumer. both in core products (and new spin offs) and in new ways of communicating with the end consumer. The irony for many consumers in the UK is that while the brand traces its roots to Scotland. wrest creative control over brand message away from the producer. as is the intention of viral campaigns.

This brief is a licensed product and is not to be photocopied CSCM0307 / Published 03/2010 Page 10 . This included researching the tea market in the US. the UK and globally. which explores business practices across a variety of disciplines and business sectors. retail. Each case study provides a concise evaluation of a company that stands out in some area of its strategic operations. CSCM0213) October 2008 Twinings case study (Datamonitor CSCM0189) August 2008 Lipton Teas Case Study © Datamonitor. Secondary sources • • • The Lipton tea commercials you don’t want to miss. The series covers a range of markets including food and drink. banking and insurance. Unilever (November 2007) Sir Tea. Tea Muse (February 2002) Further reading • Consumer Hot And Soft Drink Preferences: New Trends & Future Perspectives (Datamonitor. pharmaceuticals and software. with company specific information pertinent to Lipton tea products including media coverage and the progress of financial statements. alongside an extensive review of secondary literature and other in-house sources of information. Methodology A variety of secondary research was carried out for this case study. highlighting the ways in which the company has become one of the best in its field or how it deals with different problems encountered within that sector. DMCM4594) January 2008 • • Teavana case study (Datamonitor.Lipton Teas Case Study APPENDIX Case study series This report forms part of Datamonitor's case studies series. CNN Go (online) (November 2009) Tea in Asia.

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