The tradition of drinking tea began thousands of years ago. While other ingredients of ancient times have waned or fallen to the brink of extinction, today, the United States alone sees more than $1 billion in sales from the ready-to-drink tea category.

The Pepsi-Lipton Partnership (PLP), a joint venture between Pepsi-Cola North America and Unilever, aims to take that ancient ingredient and create new and relevant RTD teas for consumers. “Tea is not a one-size-fits-all category by any stretch of the imagination,” says Stacy Reichert, PLP’s vice president and general manager.

“Tea is a substrate,” she continues. “Think of tea as almost a white sheet of paper. What are the different ways we can take it to really bring new users to the ready-to-drink tea category?”

Unilever, which owns the Lipton trademark, and Pepsi-Cola formed their partnership in 1991 to get Lipton teas to market in RTD form. PLP is charged with the manufacturing, sales, marketing and all operations for Lipton Brisk, Lipton Iced Tea and Lipton PureLeaf Teas. The partnership benefits both companies in different ways, Reichert says.

“Unilever has identified Lipton as one of its priority global brands,” she says. “So certainly the U.S. market becomes a significant market for them as it relates to RTD. I would also say from their standpoint that Lipton RTD helps to contemporize the Lipton brand, so it’s helping to bring in younger users than a typical leaf tea consumer and really helping the brand to be more relevant. Certainly it contributes to their overall market share as well for the Lipton trademark.

“From a Pepsi standpoint, it is one more weapon in our arsenal of non-carbs, and a pretty big one at that. I would really say that this has helped us achieve leadership not only in the tea category, but in terms of our growing non-carb portfolio.”

Demonstrating RTD tea’s strength, PepsiCo Beverages North America posted double-digit growth for Lipton RTD teas in 2007. Along with benefiting from a consumer shift to non-carbonated beverages, Lipton RTD tea sales also are profiting from the consumer movement toward better-for-you products.

“When RTD iced tea first came onto the scene nearly 15 years ago, the industry said, ‘You know, we can make this category fun like a CSD,’” Reichert says. “But the correction that’s taken place in the last three or four years, which has really turned the category around, has been finding that perfect blend of health and wellness and great taste to really drive the category.”

Inside the health and wellness trend in the tea category, green tea has taken a leadership role with consumers thanks to being credited by scientists as being good for health. “[Green tea] is rich in antioxidants, but not necessarily something that people have found palatable until more recently,” Reichert says.

RTD tea also is advancing from another consumer trend of convenience.

“No doubt about it, a lot of people still brew their own iced teas, but I think that we are converting them as times goes on, and people look for more convenient options,” she says. “They are distinguishing between which occasions they want for RTD vs. which occasions they are going to continue to make their own brew.”

'Tea purists'

Understanding that tea isn’t a one-tea-fits-all beverage, PLP offers three platforms for its tea consumers: Lipton PureLeaf Tea for premium tea consumers, Lipton Iced Tea for mainstream consumers and Lipton Brisk for young male adults and male teens.

“We’re learning as we go in this space,” Reichert says. “What has been great for Lipton is that we have had success across three different sub-brands for tea. I think we probably underestimated how huge Lipton Iced Tea was going to be, so we’re out trying to really go where the puck is going as it relates to PureLeaf.”

Last year, PLP reformulated, relabeled and rebranded its Lipton Original line to Lipton PureLeaf. With all-natural ingredients, Lipton PureLeaf contains no artificial flavors or colors. The regular versions are sweetened with sugar, and the two diet varieties are sweetened with sucralose.

“Lipton Original was always about being a fresh-brewed tea,” Reichert says. “…The opportunity was to really evolve that fresh brewed positioning into one that consumers would see as also healthy. While we were doing that, we took the opportunity to deliver on as many health and premium cues as we could. We made a conscious decision to say that this product is not only going to stand for being great-tasting, fresh-brewed tea, but it’s also going to be high in antioxidants and we’re going to make sure it’s all natural, hence, the name PureLeaf.”

The move to all-natural ingredients also was essential in distinguishing Lipton PureLeaf to a newly forming group of premium tea consumers that the PLP has coined “tea purists.” Along with looking for all-natural ingredients and no preservatives, tea purists want a tea with natural sweeteners, fewer calories and a lower sweetness profile, which PureLeaf delivers, Reichert says. As such, one of the areas PLP is testing this year is lightly sweetened tea varieties, which the partnership sees as an opportunity for going forward, she says.

While lots of opportunity is available for Lipton PureLeaf in the growing premium tea segment, several smaller brands have started “to chomp around the edges there,” Reichert says.

“Lipton PureLeaf has typically held greater than 50 percent share of that premium segment,” she explains. “Now a lot of new players are coming in because they realize there is a premium segment and the opportunity to get consumers to trade up.”

One of Lipton PureLeaf’s advantages is its approachability in the premium segment, Reichert continues. “Consumers know Lipton,” she says. “They know Lipton to be tea. First and foremost, what we want that brand to deliver is strong tea credentials. That’s not to say there are not other formidable premium competitors out there, but they play in a less approachable kind of way.”

During Lipton PureLeaf’s development and packaging, PLP discussed the importance of keeping the line packaged in glass bottles. “That’s something we agonize over all the time, because people think about PET being more convenient and lightweight and easier to carry around,” Reichert says. “But to the tea purist, we think that glass is consistent with the all-natural message that we want to send … I think what we’ve learned from consumers is that it just sends a strong freshness cue.”

PureLeaf originally released in Green, White and Black tea varieties, and includes such options as Green Tea with Honey, Green Tea with Orange and Passion Fruit, White Tea with Tangerine, Black Tea Sweetened, Black Tea Unsweetened, Black Tea Extra Sweet, Black Tea with Lemon, Black Tea with Raspberry and Black Tea with Peach. This spring, PLP expanded its line with Lipton PureLeaf Red Tea with Blueberry Pomegranate, the first red tea offering from PureLeaf. The lines leading SKUs in sales are currently Green Tea with Honey, Black Tea with Lemon and Black Tea Unsweetened.

“If you think about Unsweetened, that completely speaks to the tea purist looking for something with just tea,” Reichert says.

PLP does think the tea purist knows the difference between red, green, white and black tea varieties. “The tea purist knows that tea is healthy,” Reichert says. “That’s a given. So we don’t need to tell that consumer about health because that’s a cost of entry for them. What they are looking for is a much richer experience in terms of the tea blend and in terms of the naturalness of the whole product offering. They are interested in the origin of tea, and they are interested in varietals.” While Lipton PureLeaf addresses the tea purist’s needs, PLP wants to make sure that it balances the tea offerings and growth of the line against what the partnership is offering for Lipton Iced Tea’s consumers.

“We’re really on a journey with Lipton PureLeaf,” Reichert says. “We’re still building distribution. We’re still optimizing the SKU mix. One thing we’ve learned is that because it is the tea purist consumer, they expect to see certainly some black tea SKUs, but more importantly they want to see the reds, the whites and the greens. They are going to be even more adventurous than the mainstream consumer.”

Flavor forward

While Lipton PureLeaf was developed for the “tea forward” consumer, Lipton Iced Tea resonates as the flavor forward option for mainstream consumers, Reichert says. PLP found the sweet spot for the Iced Tea line in green tea, she explains.

“What makes Lipton Iced Tea great is that it still delivers the same levels of antioxidants from tea as PureLeaf — it’s just as healthy in terms of the antioxidants — but we’re giving a bolder flavor and taste profile than PureLeaf.”

Targeted toward the mainstream consumer, Lipton Iced Tea is packaged in PET, and sells more teas in multi-packs than individual bottles. “The real workhorse is the 12-pack of half-liter bottles,” Reichert says.

It’s no wonder then that PepsiCo announced in May the release of a new lighter half-liter non-carbonated beverage bottle for Lipton Iced Tea and other PepsiCo brands such as Aquafina. The company reduced the plastic in the bottle by 20 percent, the size of the label by 10 percent and the shrinkwrap film used to wrap multi-packs by 5 percent. For Lipton Iced Tea, the lightweighting changes reduced the half-liter bottle height and made the bottle slightly wider. The bottle went from using 23.5 grams of PET to 18.6 grams of PET. The new lighter-weight package is available in 12-packs and 24-packs.

“The challenge was to deliver significantly lighter packaging that would provide the same shelf life as the heavier bottle, withstand the manufacturing and distribution process yet not compromise aesthetics,” Robert Lewis, vice president of worldwide beverage packaging and equipment development at PepsiCo, said in a statement. “After a full year of hard work from multiple corners of the company, we hit the trifecta — a bottle that satisfied the needs of our system, our consumers and the environment.”

PLP also is taking packaging into consideration with the release of its Lipton Iced Tea 1-gallon jug. The multi-serve package contains less PET than many competitors it will be up against, and is differentiated from the brand that has tended to define the category to date, Reichert says. The jug also features transparent PET packaging to show off the tea inside and an attached green flex grip handle.

The partnership recently began shipping 1-gallon jug Lipton Iced Tea into the Southeast, and will hopefully be moving toward national expansion, Reichert says. The package will be available in Lemon and a regular and diet version of Green Tea with Citrus.

Additionally, Lipton Iced Tea expanded its white tea offerings this spring with Diet Lipton White Tea with Peach Papaya. Lipton Iced Tea’s other white tea flavors include White Tea with Raspberry and Diet White Tea with Raspberry.

The line leaders for Lipton Iced Tea are still the green tea flavors. Diet Green Tea with Citrus and Green Tea with Citrus are PLP’s leading SKUs followed by Diet Green Tea with Mixed Berry.

Following green tea’s popularity with consumers, PLP focuses Lipton Iced Tea’s broader marketing message around green tea and its health and wellness benefits through mainstream advertising avenues. But to market Lipton Iced White Tea flavors, PLP is targeting a more youthful audience and launched a digital effort with Google YouTube. The “Free Your Y” contest asks participants to submit creative videos in categories such as, “Move and Grove,” featuring dance and movement; “Tricks and Feats,” showcasing unique talents; and “Free for All,” which is an anything goes class.

“The little spark that’s around white tea is youthful because it’s a very light-tasting tea,” says Christiane Paul, PLP’s director of marketing. “Recognizing that our target spends a lot of time on the Internet, what we have is a video contest where we are inviting consumers to ‘Free Your Y,’ which is code for ‘free your youthful spirit.’”

Across the portfolio from Lipton PureLeaf to Lipton Iced Tea to Lipton Brisk, the partnership uses different packaging, merchandising and pricing strategies. Brisk is a brand that takes the trademark into an even more youthful space, Reichert says. As such, Brisk’s marketing efforts have been more grassroots, such as hosting block parties, and have been very focused on male teens and young adults. Additionally, parents purchase Brisk for their families in the soft drink aisle at the grocery store.

“Brisk is an interesting business in that it plays very well to the male teen and young adult male in a small format environment throughout single-serve packaging, but then the gatekeeper is just as happy to pick it up in the CSD aisle,” she explains.

Brisk is available in traditional soft drink packaging, such as 12-ounce cans and 20-ounce, 1.5-liter and 2-liter bottles. Brisk Lemon Iced Tea is the leading SKU in sales for the brand, which also includes Green Brisk (an Apple flavored Iced Green Tea), Diet Lemon Iced Tea and Raspberry Iced Tea. Where the flavor varieties become most important for Brisk is in its small-package formats, Reichert says.

“The young male coming into a store to look for a slam-down refreshment in the form of a 1-liter or 20-ounce bottle is looking for variety,” she says.

Interestingly enough, in the foodservice channel Brisk Raspberry Iced Tea is the leader.

“That flavor has more traction,” Reichert says. “It’s more differentiated than other teas. I think a lot of outlets can do a black tea with lemon themselves so Raspberry provided them with a different option.”

Brisk’s new product offering comes the way of the foodservice channel with the release of a no-calorie Brisk Peach Green Tea for fountain. “Raspberry has done so well, but Raspberry is a black tea and everybody would love for us to bring the success of green tea into the foodservice environment,” Reichert says. “…The decision to do no-calorie was because there were so few no-calorie options.”

PLP’s new product development starts with consumers’ need states, Reichert says. The partnership examines consumers’ drinking habits by specific consumption occasions. From there, the partnership takes into consideration the target consumer and what is going to be the best brand under which to build the new innovation. “Every day we are challenging ourselves to see how far we can stretch tea,” Reichert says.

The partnership makes it a priority to be a leader in the area of tea science, she continues. “There is still so much that is being discovered about tea and the benefits of tea.”

PLP is also always working to contemporize and create a more relevant message to its target consumers. “We are going to continue to build the Lipton brand equity so the Lipton brand is a brand for the future and not a brand for yesterday,” Reichert says. “We’re still in the process of putting our 2009 plans to bed, but everybody is looking for growth. It’s one of the shining stars of the RTD category, and we want to have more than our fair share of winning with the consumer.”