Partnerships holding strong in beverage market
I recently returned home from my first of seven weddings this year. Although the travel might not be the most exciting part of the upcoming nuptials, hearing the individual couples explain what their new union means to them is always enjoyable. But partnerships aren’t only important in marriage. In actuality, consumer packaged goods companies are constantly forming their own partnerships in order to strengthen their brands and deliver to consumers.
Earlier this year, Unilever North America, Englewood Cliffs, N.J., and Waterbury, Vt.-based Green Mountain Coffee Roasters Inc. (GMCR) announced that they reached an agreement to offer Unilever’s Lipton hot and iced teas in K-Cup and Vue packs for GMCR’s Keurig single-cup brewing systems.
The Lipton K-Cup and Vue packs will be offered in a variety of channels in the United States and Canada beginning this summer, the companies say, and Lipton iced teas will become part of GMCR’s Brew Over Ice collection, a line specially crafted to brew iced beverages with any Keurig brewing system.
In a video blog titled “Three Takeaways from the Lipton/Green Mountain Partnership,” Jonas Feliciano, beverage industry analyst with Chicago-based Euromonitor International, addressed key insights to garner from this budding partnership.
The first takeaway is the opportunity this provides for Lipton as the single-serve and K-Cup segment has exploded in the U.S. market, generating $2 billion in retail sales in 2012, Feliciano explained. Adding that a majority of these sales came from coffee, this also will create an opportunity for coffee drinkers to drink tea, he said.
The next insight relates to the future of the U.S. tea market. Mentioning that beverage analysts have been forecasting that tea is on the verge of a breakout, Feliciano explained that with Seattle-based Starbucks Coffee Co.’s 2012 acquisition of Teavana, expectations are positive for the tea space. Although Lipton is categorized in a different space than Teavana or Starbucks’ Tazo Tea brand, Lipton remains a leader in the economy and specialty tea space and wants to be in all formats, he added.
The last takeaway from the partnership is that Lipton is getting into the hot drinks market as well as the soft drinks market, Feliciano said. Noting that 85 percent of tea is consumed in the form of iced tea — whether that’s ready-to-drink formats or hot brewed tea that is added to ice — the Keurig allows consumers to brew products over ice. Along the same lines, GMCR also announced an agreement in late 2012 with Dr Pepper Snapple Group’s Snapple brand for iced tea K-Cup packs, he said.
“A key here is the tea industry could really start playing in that realm of soft drinks, which is a more-preferred and more-consumed beverage in the United States,” Feliciano said in a video blog. “So by Lipton sort of hitching a ride with Green Mountain into this brewed tea/iced tea market, it really has opened its doors beyond just regular tea consumption to the soft drinks industry as a whole.”