INSTRUCTIONS: Read the case study below which is The case study focused on the emergence and growth of the market for canned iced-tea while laying much attention on the Western markets and answer the questions that follow. Look Out Lipton, Here Comes Oolong! Heating up an old product Chinese Emperor Shen Nung was boiling water under a Camellia Sinensis tree in 2,737 BC. When some leaves fell into the pot, he found the resulting infusion pleasant. So, the legend has it, tea was born. From this accident flowed the Opium Wars, the annexation of Hong Kong and rituals that have made tea far more than just a drink in the great tea-drinking nations of China, Japan and Britain. Thomas J. Lipton Company has been in the tea business ever since Cutty Sark and other tea clippers raced Cape Horn and The Cape of Good Hope to be the first to the European and American coffee houses with their crop from the Orient. By the 1990s the excitement had left the declining tea market. To enliven the old-fashioned product market leader, Unilever resorted to selling Lipton, along with its other leading brands, Brook Bond, PG Tips, Red Label and Taaza, using frantic sales promotions and comical characters. Then, the boring business heated up by cooling down. Chalk up the change to those fickle consumers. Forget soft drinks. They were the rage of the 1980s, as the cola companies added 'diet everything' to their lines and experimented with all sorts of flavours. Forget sports drinks. They became the glamour drinks of the late 1980s and early 1990s as the soft-drink market levelled and the cola companies searched for growth opportunities. Forget those flavoured sparkling waters, like Oasis and Perrier. They had a wild ride in the early 1990s and became a health sensation. Forget coffee. After being battered by soft drinks, the venerable standby has risen as people have begun to turn away from alcoholic drinks and entrepreneurs have rediscovered the coffee house. However, today's hot drink is iced tea. Yes, iced tea. In fact, it's iced tea in a bottle or can, already prepared and ready to drink. No fuss, no boiling and no tea bags. Iced tea is not new. We can trace iced tea invention to the 1904 World's Fair in St Louis. Richard Blechynden, a promoter of Indian and Ceylon tea, found it impossible to peddle his hot tea in the stifling Missouri heat. In desperation he dumped some ice cubes into his tea and discovered that the spectators were willing to gulp anything cold. Iced tea in a can isn't new either. That's been around since the early 1970s, but it had never been more than a blip on the beverage market's radar screen. Adding flavour Flavour is what's new. In the USA, Snapple started the trend by building a regional cult following based on bottled iced teas that featured zany flavours like cranberry, peach and raspberry. Snapple's flavoured, hot-filled tea (the manufacturer bottles the tea while it is still warm from brewing) offered consumers a better-tasting tea. Befo.

1. INSTRUCTIONS: Read the case study below which is The case study focused
on the emergence and growth of the market for canned iced-tea while laying
much attention on the Western markets and answer the questions that follow.
Look Out Lipton, Here Comes Oolong!
Heating up an old product
Chinese Emperor Shen Nung was boiling water under a Camellia Sinensis tree in 2,737 BC.
When
some leaves fell into the pot, he found the resulting infusion pleasant. So, the legend has it, tea
was born. From this accident flowed the Opium Wars, the annexation of Hong Kong and rituals
that
have made tea far more than just a drink in the great tea-drinking nations of China, Japan and
Britain.
Thomas J. Lipton Company has been in the tea business ever since Cutty Sark and other tea
clippers
raced Cape Horn and The Cape of Good Hope to be the first to the European and American
coffee
houses with their crop from the Orient. By the 1990s the excitement had left the declining tea
market. To enliven the old-fashioned product market leader, Unilever resorted to selling Lipton,
along with its other leading brands, Brook Bond, PG Tips, Red Label and Taaza, using frantic
sales
promotions and comical characters. Then, the boring business heated up by cooling down.
Chalk up the change to those fickle consumers. Forget soft drinks. They were the rage of the
1980s,
as the cola companies added 'diet everything' to their lines and experimented with all sorts of
flavours. Forget sports drinks. They became the glamour drinks of the late 1980s and early 1990s
as the soft-drink market levelled and the cola companies searched for growth opportunities.
Forget
those flavoured sparkling waters, like Oasis and Perrier. They had a wild ride in the early 1990s
and
became a health sensation. Forget coffee. After being battered by soft drinks, the venerable
standby has risen as people have begun to turn away from alcoholic drinks and entrepreneurs
have
rediscovered the coffee house. However, today's hot drink is iced tea. Yes, iced tea. In fact, it's

2. iced
tea in a bottle or can, already prepared and ready to drink. No fuss, no boiling and no tea bags.
Iced tea is not new. We can trace iced tea invention to the 1904 World's Fair in St Louis. Richard
Blechynden, a promoter of Indian and Ceylon tea, found it impossible to peddle his hot tea in the
stifling Missouri heat. In desperation he dumped some ice cubes into his tea and discovered that
the spectators were willing to gulp anything cold. Iced tea in a can isn't new either. That's been
around since the early 1970s, but it had never been more than a blip on the beverage market's
radar screen.
Adding flavour
Flavour is what's new. In the USA, Snapple started the trend by building a regional cult
following
based on bottled iced teas that featured zany flavours like cranberry, peach and raspberry.
Snapple's flavoured, hot-filled tea (the manufacturer bottles the tea while it is still warm from
brewing) offered consumers a better-tasting tea. Before Snapple, Lipton and others offered iced
teas in plain and leraon flavour. Young, trend-setting consumers bought Snapple directly from
ice
cabinets in convenience stores and delicatessens and drank it straight from the bottle.
The flavoured teas hit a bull's-eye with consumers. They were willing to move away from
traditional
colas in search of new flavours. Consumers seemed to have a short attention span for new
products
and were willing to try new drinks. They were interested in so-called 'New Age' beverages -
drinks
that appealed to their desire for healthier, lighter refreshment. Consumers responded to the all-
natural, no-calorie, relaxing and refreshing claims that the new-age beverages made. Increasingly
on the go, consumers also liked the convenience and availability of ready-to-drink teas.
Forming teams
Despite the small size of the iced tea market, the big players noticed the growth rate and jumped
in. Coca-Cola made the first move by teaming up with Nestle to form Coca-Cola Nestle
Refreshments, combining Coca-Cola's powerful distribution network with Nestles tea expertise
and
its Nestea brand. Pepsi-Cola followed by joining forces with Thomas J. Lipton Company. Barq's
energized its Luzianne tea brand, A & W announced it would make and distribute Tetley tea,
Cadbury uncovered little-known All Seasons to serve -AS its tea partner and Perrier joined
forces
with Celestial Seasonings.

3. Lipton was already no. 1 in the tea market, but like Coca-Cola, Pepsi's top management argued
that
the company's alliance with Lipton would leverage Pepsi's distribution strength with Lipton's
leadership in tea to produce a can't-miss proposition. Lipton's president observed that the new
partnership would make Lipton 'as widely available as Pepsi'.
The entrance of Pepsi, Coca-Cola and their competitors should invigorate the ready-to-drink tea
market. One observer noted that the iced-tea market was still a small market despite growing 50
per cent between 1990 and 1991. And it was getting very overcrowded. Indeed, all this attention
produced almost 200 new ready-to-drink teas during 1991 and 1992. The tea category leaped
another 50 per cent in 1992 and the same again in 1993. The competitors generated this growth
by dusting off tea's boring image and recasting it as a natural, better-for-you beverage. Further,
scientific evidence emerged that tea inhibited certain types of cancer in laboratory mice and
seemed to be linked to lower cholesterol rates. Lipton, Nestea and Snapple lured customers with
new flavours and pointed out that lack of carbonation makes iced tea easier to drink rapidly and
in
quantity.
Although Coca-Cola/Nestles Nestea sales soared, Snapple's and Lipton's grew even faster. As a
result, Nestea narrowed its promotion to target 18- to 29-year-olds with a promotional blitz
consisting of sponsorships and sampling. It dispatched five 18-wheeler demonstration trucks,
which it called its 'Cool Out Caravans' to sporting events, theme parks and beaches in 60
markets,
Pepsi continued its cola-style marketing for Lipton teas. Its radio ads argued that Snapple is
'mixed
up from a powder', but Lipton is 'real brewed'. Pepsi also promoted Lipton in supermarkets by
offering customers 'value packs' that contained one bottle each of three new drinks: Lipton
Original, Ocean Spray Lemonade and All Sport sports drink. Pepsi also pursued sponsorship of a
Rolling Stones concert tour, to which it would link a massive sampling programme.
Because of its efforts, Lipton's teas seemed ready to unseat Coca-Cola/ Nestle, despite its early
market entry, was falling behind in the iced-tea wars. Lipton was taking market share from both
Snapple and Nestea one selling hot tea. Having spent 10 million developing hot cans to be sold
in
convenience stores and petrol stations, it was ready to test market the product in Manchester,
England. Brooks Bond's PG Tips will be sold in ring pull tins kept at 56'C in a heated cabinet on
shop
counters. On sale alongside PG Tips, with or without sugar, will be Red Mountain coffee,
sweetened

4. or unsweetened, and Choky, the leading French hot chocolate brand. Watch out Oolong, Rrook
Bond's waiting!
END OF CASE STUDY
QUESTIONS
1. Based on the information provided in the case study, what bases can
companies use to segment the iced-tea market?
2. What potential market segments can you identify for iced tea based on the
information in the case study?
3. Which type of market coverage strategy should Pepsi/I.ipton adopt? Why?
How should they position Lipton iced teas and Brook Bond canned teas?
4. Using the Ansoff Matrix as a framework, what growth strategies are being
pursued in growing the market for iced tea? Support you answer by citing
specific examples from the case study.
INSTRUCTIONS: Read the case study below which is The case study focused
on the emergence and growth of the market for canned iced-tea while laying
much attention on the Western markets and answer the questions that follow.
Look Out Lipton, Here Comes Oolong!
Heating up an old product
Chinese Emperor Shen Nung was boiling water under a Camellia Sinensis tree in 2,737 BC.
When
some leaves fell into the pot, he found the resulting infusion pleasant. So, the legend has it, tea
was born. From this accident flowed the Opium Wars, the annexation of Hong Kong and rituals
that
have made tea far more than just a drink in the great tea-drinking nations of China, Japan and
Britain.
Thomas J. Lipton Company has been in the tea business ever since Cutty Sark and other tea
clippers
raced Cape Horn and The Cape of Good Hope to be the first to the European and American
coffee
houses with their crop from the Orient. By the 1990s the excitement had left the declining tea
market. To enliven the old-fashioned product market leader, Unilever resorted to selling Lipton,
along with its other leading brands, Brook Bond, PG Tips, Red Label and Taaza, using frantic
sales

5. promotions and comical characters. Then, the boring business heated up by cooling down.
Chalk up the change to those fickle consumers. Forget soft drinks. They were the rage of the
1980s,
as the cola companies added 'diet everything' to their lines and experimented with all sorts of
flavours. Forget sports drinks. They became the glamour drinks of the late 1980s and early 1990s
as the soft-drink market levelled and the cola companies searched for growth opportunities.
Forget
those flavoured sparkling waters, like Oasis and Perrier. They had a wild ride in the early 1990s
and
became a health sensation. Forget coffee. After being battered by soft drinks, the venerable
standby has risen as people have begun to turn away from alcoholic drinks and entrepreneurs
have
rediscovered the coffee house. However, today's hot drink is iced tea. Yes, iced tea. In fact, it's
iced
tea in a bottle or can, already prepared and ready to drink. No fuss, no boiling and no tea bags.
Iced tea is not new. We can trace iced tea invention to the 1904 World's Fair in St Louis. Richard
Blechynden, a promoter of Indian and Ceylon tea, found it impossible to peddle his hot tea in the
stifling Missouri heat. In desperation he dumped some ice cubes into his tea and discovered that
the spectators were willing to gulp anything cold. Iced tea in a can isn't new either. That's been
around since the early 1970s, but it had never been more than a blip on the beverage market's
radar screen.
Adding flavour
Flavour is what's new. In the USA, Snapple started the trend by building a regional cult
following
based on bottled iced teas that featured zany flavours like cranberry, peach and raspberry.
Snapple's flavoured, hot-filled tea (the manufacturer bottles the tea while it is still warm from
brewing) offered consumers a better-tasting tea. Before Snapple, Lipton and others offered iced
teas in plain and leraon flavour. Young, trend-setting consumers bought Snapple directly from
ice
cabinets in convenience stores and delicatessens and drank it straight from the bottle.
The flavoured teas hit a bull's-eye with consumers. They were willing to move away from
traditional
colas in search of new flavours. Consumers seemed to have a short attention span for new
products
and were willing to try new drinks. They were interested in so-called 'New Age' beverages -
drinks

6. that appealed to their desire for healthier, lighter refreshment. Consumers responded to the all-
natural, no-calorie, relaxing and refreshing claims that the new-age beverages made. Increasingly
on the go, consumers also liked the convenience and availability of ready-to-drink teas.
Forming teams
Despite the small size of the iced tea market, the big players noticed the growth rate and jumped
in. Coca-Cola made the first move by teaming up with Nestle to form Coca-Cola Nestle
Refreshments, combining Coca-Cola's powerful distribution network with Nestles tea expertise
and
its Nestea brand. Pepsi-Cola followed by joining forces with Thomas J. Lipton Company. Barq's
energized its Luzianne tea brand, A & W announced it would make and distribute Tetley tea,
Cadbury uncovered little-known All Seasons to serve -AS its tea partner and Perrier joined
forces
with Celestial Seasonings.
Lipton was already no. 1 in the tea market, but like Coca-Cola, Pepsi's top management argued
that
the company's alliance with Lipton would leverage Pepsi's distribution strength with Lipton's
leadership in tea to produce a can't-miss proposition. Lipton's president observed that the new
partnership would make Lipton 'as widely available as Pepsi'.
The entrance of Pepsi, Coca-Cola and their competitors should invigorate the ready-to-drink tea
market. One observer noted that the iced-tea market was still a small market despite growing 50
per cent between 1990 and 1991. And it was getting very overcrowded. Indeed, all this attention
produced almost 200 new ready-to-drink teas during 1991 and 1992. The tea category leaped
another 50 per cent in 1992 and the same again in 1993. The competitors generated this growth
by dusting off tea's boring image and recasting it as a natural, better-for-you beverage. Further,
scientific evidence emerged that tea inhibited certain types of cancer in laboratory mice and
seemed to be linked to lower cholesterol rates. Lipton, Nestea and Snapple lured customers with
new flavours and pointed out that lack of carbonation makes iced tea easier to drink rapidly and
in
quantity.
Although Coca-Cola/Nestles Nestea sales soared, Snapple's and Lipton's grew even faster. As a
result, Nestea narrowed its promotion to target 18- to 29-year-olds with a promotional blitz
consisting of sponsorships and sampling. It dispatched five 18-wheeler demonstration trucks,
which it called its 'Cool Out Caravans' to sporting events, theme parks and beaches in 60
markets,
Pepsi continued its cola-style marketing for Lipton teas. Its radio ads argued that Snapple is
'mixed

7. up from a powder', but Lipton is 'real brewed'. Pepsi also promoted Lipton in supermarkets by
offering customers 'value packs' that contained one bottle each of three new drinks: Lipton
Original, Ocean Spray Lemonade and All Sport sports drink. Pepsi also pursued sponsorship of a
Rolling Stones concert tour, to which it would link a massive sampling programme.
Because of its efforts, Lipton's teas seemed ready to unseat Coca-Cola/ Nestle, despite its early
market entry, was falling behind in the iced-tea wars. Lipton was taking market share from both
Snapple and Nestea one selling hot tea. Having spent 10 million developing hot cans to be sold
in
convenience stores and petrol stations, it was ready to test market the product in Manchester,
England. Brooks Bond's PG Tips will be sold in ring pull tins kept at 56'C in a heated cabinet on
shop
counters. On sale alongside PG Tips, with or without sugar, will be Red Mountain coffee,
sweetened
or unsweetened, and Choky, the leading French hot chocolate brand. Watch out Oolong, Rrook
Bond's waiting!
END OF CASE STUDY
QUESTIONS
1. Based on the information provided in the case study, what bases can
companies use to segment the iced-tea market?
2. What potential market segments can you identify for iced tea based on the
information in the case study?
3. Which type of market coverage strategy should Pepsi/I.ipton adopt? Why?
How should they position Lipton iced teas and Brook Bond canned teas?
4. Using the Ansoff Matrix as a framework, what growth strategies are being
pursued in growing the market for iced tea? Support you answer by citing
specific examples from the case study.
INSTRUCTIONS: Read the case study below which is The case study focused
on the emergence and growth of the market for canned iced-tea while laying
much attention on the Western markets and answer the questions that follow.
Look Out Lipton, Here Comes Oolong!
Heating up an old product
Chinese Emperor Shen Nung was boiling water under a Camellia Sinensis tree in 2,737 BC.
When
some leaves fell into the pot, he found the resulting infusion pleasant. So, the legend has it, tea

8. was born. From this accident flowed the Opium Wars, the annexation of Hong Kong and rituals
that
have made tea far more than just a drink in the great tea-drinking nations of China, Japan and
Britain.
Thomas J. Lipton Company has been in the tea business ever since Cutty Sark and other tea
clippers
raced Cape Horn and The Cape of Good Hope to be the first to the European and American
coffee
houses with their crop from the Orient. By the 1990s the excitement had left the declining tea
market. To enliven the old-fashioned product market leader, Unilever resorted to selling Lipton,
along with its other leading brands, Brook Bond, PG Tips, Red Label and Taaza, using frantic
sales
promotions and comical characters. Then, the boring business heated up by cooling down.
Chalk up the change to those fickle consumers. Forget soft drinks. They were the rage of the
1980s,
as the cola companies added 'diet everything' to their lines and experimented with all sorts of
flavours. Forget sports drinks. They became the glamour drinks of the late 1980s and early 1990s
as the soft-drink market levelled and the cola companies searched for growth opportunities.
Forget
those flavoured sparkling waters, like Oasis and Perrier. They had a wild ride in the early 1990s
and
became a health sensation. Forget coffee. After being battered by soft drinks, the venerable
standby has risen as people have begun to turn away from alcoholic drinks and entrepreneurs
have
rediscovered the coffee house. However, today's hot drink is iced tea. Yes, iced tea. In fact, it's
iced
tea in a bottle or can, already prepared and ready to drink. No fuss, no boiling and no tea bags.
Iced tea is not new. We can trace iced tea invention to the 1904 World's Fair in St Louis. Richard
Blechynden, a promoter of Indian and Ceylon tea, found it impossible to peddle his hot tea in the
stifling Missouri heat. In desperation he dumped some ice cubes into his tea and discovered that
the spectators were willing to gulp anything cold. Iced tea in a can isn't new either. That's been
around since the early 1970s, but it had never been more than a blip on the beverage market's
radar screen.
Adding flavour
Flavour is what's new. In the USA, Snapple started the trend by building a regional cult
following

9. based on bottled iced teas that featured zany flavours like cranberry, peach and raspberry.
Snapple's flavoured, hot-filled tea (the manufacturer bottles the tea while it is still warm from
brewing) offered consumers a better-tasting tea. Before Snapple, Lipton and others offered iced
teas in plain and leraon flavour. Young, trend-setting consumers bought Snapple directly from
ice
cabinets in convenience stores and delicatessens and drank it straight from the bottle.
The flavoured teas hit a bull's-eye with consumers. They were willing to move away from
traditional
colas in search of new flavours. Consumers seemed to have a short attention span for new
products
and were willing to try new drinks. They were interested in so-called 'New Age' beverages -
drinks
that appealed to their desire for healthier, lighter refreshment. Consumers responded to the all-
natural, no-calorie, relaxing and refreshing claims that the new-age beverages made. Increasingly
on the go, consumers also liked the convenience and availability of ready-to-drink teas.
Forming teams
Despite the small size of the iced tea market, the big players noticed the growth rate and jumped
in. Coca-Cola made the first move by teaming up with Nestle to form Coca-Cola Nestle
Refreshments, combining Coca-Cola's powerful distribution network with Nestles tea expertise
and
its Nestea brand. Pepsi-Cola followed by joining forces with Thomas J. Lipton Company. Barq's
energized its Luzianne tea brand, A & W announced it would make and distribute Tetley tea,
Cadbury uncovered little-known All Seasons to serve -AS its tea partner and Perrier joined
forces
with Celestial Seasonings.
Lipton was already no. 1 in the tea market, but like Coca-Cola, Pepsi's top management argued
that
the company's alliance with Lipton would leverage Pepsi's distribution strength with Lipton's
leadership in tea to produce a can't-miss proposition. Lipton's president observed that the new
partnership would make Lipton 'as widely available as Pepsi'.
The entrance of Pepsi, Coca-Cola and their competitors should invigorate the ready-to-drink tea
market. One observer noted that the iced-tea market was still a small market despite growing 50
per cent between 1990 and 1991. And it was getting very overcrowded. Indeed, all this attention
produced almost 200 new ready-to-drink teas during 1991 and 1992. The tea category leaped
another 50 per cent in 1992 and the same again in 1993. The competitors generated this growth
by dusting off tea's boring image and recasting it as a natural, better-for-you beverage. Further,

10. scientific evidence emerged that tea inhibited certain types of cancer in laboratory mice and
seemed to be linked to lower cholesterol rates. Lipton, Nestea and Snapple lured customers with
new flavours and pointed out that lack of carbonation makes iced tea easier to drink rapidly and
in
quantity.
Although Coca-Cola/Nestles Nestea sales soared, Snapple's and Lipton's grew even faster. As a
result, Nestea narrowed its promotion to target 18- to 29-year-olds with a promotional blitz
consisting of sponsorships and sampling. It dispatched five 18-wheeler demonstration trucks,
which it called its 'Cool Out Caravans' to sporting events, theme parks and beaches in 60
markets,
Pepsi continued its cola-style marketing for Lipton teas. Its radio ads argued that Snapple is
'mixed
up from a powder', but Lipton is 'real brewed'. Pepsi also promoted Lipton in supermarkets by
offering customers 'value packs' that contained one bottle each of three new drinks: Lipton
Original, Ocean Spray Lemonade and All Sport sports drink. Pepsi also pursued sponsorship of a
Rolling Stones concert tour, to which it would link a massive sampling programme.
Because of its efforts, Lipton's teas seemed ready to unseat Coca-Cola/ Nestle, despite its early
market entry, was falling behind in the iced-tea wars. Lipton was taking market share from both
Snapple and Nestea one selling hot tea. Having spent 10 million developing hot cans to be sold
in
convenience stores and petrol stations, it was ready to test market the product in Manchester,
England. Brooks Bond's PG Tips will be sold in ring pull tins kept at 56'C in a heated cabinet on
shop
counters. On sale alongside PG Tips, with or without sugar, will be Red Mountain coffee,
sweetened
or unsweetened, and Choky, the leading French hot chocolate brand. Watch out Oolong, Rrook
Bond's waiting!
END OF CASE STUDY
QUESTIONS
1. Based on the information provided in the case study, what bases can
companies use to segment the iced-tea market?
2. What potential market segments can you identify for iced tea based on the
information in the case study?
3. Which type of market coverage strategy should Pepsi/I.ipton adopt? Why?
How should they position Lipton iced teas and Brook Bond canned teas?

11. 4. Using the Ansoff Matrix as a framework, what growth strategies are being
pursued in growing the market for iced tea? Support you answer by citing
specific examples from the case study.