Canadian Tea Challenge - Communications Brief

Market Data

Tea is the world's favorite beverage, after water. It is more popular with consumers than beer and soft drinks.

In Canada, tea represents 1.1% of all beverage revenues. Among hot beverage choices coffee and tea do battle with each other but as of now coffee remains the leader. Coffee accounts for about

63% of hot beverage sales compared to tea at 23%. Other hot beverages account for the remaining market share.

The Canadian tea market is comprised of both hot tea and cold tea. Combined these two markets are worth $267 million (2005). Sales of hot tea account for $158 million in sales annually.

The hot tea market is segmented into several categories: regular black tea; flavored black specialty tea; green tea; and herbal tea.

In recent years, green tea sales have been fueling growth in the tea market. In fact, consumers in Canada now spend more on green, herbal, and flavored teas than they do on traditional black teas. Growth in the green tea segment is significant: +31% in 2004; and +37% in 2005. Regular black tea sales are declining marginally from year-to year averaging -3% per year over the past three years. Refer to Figure 1 for a summary of the retail value of each hot tea segment.

Hot Tea Segment Sales - Retail ($million) Segment	$ Sales 2004	$ Sales 2005	Growth
Regular Black	87.6	84.7	-3%
Flavored Black Specialty	23.9	25.3	+6%
Green	14.2	19.4	+37%
Herbal	29.3	28.8	-2%

Growth in the tea category is attributed to several factors:

Consumers are seeking products they perceive to be healthier

Demand for comfort foods and stress relievers remain high

There is a general desire to lead a "healthier" lifestyle

On a regional basis there is a variation between black tea sales and green and specialty tea sales. The migration to green tea is higher in the West than in the East. In the Western provinces the ratio of black tea sales to green and specialty tea sales is 60/40 in favor of green and specialty tea. In Ontario and Quebec, the ratio is 50/50 and in Atlantic Canada it is a mere 20/80 ratio.

Competitors

The Canadian retail tea market is dominated by two companies: Tetley and Unilever. Tetley is the leader with 40% share of the regular black tea market and a 20% share of the specialty tea market (green tea and herbal tea combined). Unilever's market share is 25% divided across three key brands: Lipton, Lipton Red Rose, and Lipton Salada. Refer to Figure 2 for a summary of market shares for the key brands.

Figure 2

Key Brand Market Share - Canadian Tea Market (2005) Brand	Market Share %
Tetley Regular Black	40
Tetley Specialty Teas	20
Lipton	8
Lipton Red Rose	10
Lipton Salada	7
All Other and Private Label	15
Total	100

Corporate Profiles

Tetley Tea is owned by Tata Tea Group, an India-based company and one of India's largest tea growers. Tata markets tea in 30 countries around the world. Tetley Tea was acquired by Tata in

2000 for $475 million. On an international basis sales of Tata teas amount to $702.8 million.

Unilever is a multinational food and personal care products company. Key products and brands include Hellmann's, Calvin Klein, Birds Eye, Slim Fast, Axe, and Dove, among many others. Unilever is a large resourceful company with annual sales of $46.9 billion internationally and profit of $4.5 billion. Lipton is the biggest tea brand around the world accounting for about 10% of all tea sold. Lipton is very popular in Europe, the Middle East and Asia. Lipton sells both hot and cold teas.

Product Benefits

Consumed regularly, tea can improve vascular function, combat fatigue, reduce cholesterol levels, and increase feelings of vitality. Tea contains high amounts of natural antioxidants called flavonoids, which are linked to reducing the risk of heart disease, stroke, and certain forms of cancer.

Part of the green tea phenomenon in recent years is the link to certain health benefits though the degree of accuracy of these links is suspect. Green tea has been linked to everything from warding off arthritis to blood clots and curing the common cold (or at least making one feel better).

Ironically, tea is tea. Research shows that black tea and green tea come from the same source, so they offer comparable health benefits. The perceived benefits of green tea compared to black tea is due to inaccurate media hype of misleading information communicated by tea producers. Consumers willingly pay more for green tea.

Tea is a healthy beverage. It does not contain any calories, salt, fat, or carbohydrates. Tea does keep a person hydrated and contains beneficial plant compounds. As a result, it has become a beverage of choice for "quality of life" seekers. Drinking tea of any kind is a natural way to increase dietary exposure to antioxidants and at pennies per serving it is not surprising that tea sales are skyrocketing.

Consumer Behaviour

The following are some facts about tea consumption in Canada:

77% of Canadians drink tea

50% drink a cup at least once a week

Canadians drink twice as much tea as Americans

Consumers select the type of tea they drink based on mood, time of day, and occasion

Specialty teas appeal to younger consumers as well as more affluent consumers (50% of young drinkers are drinking green tea or herbal tea)

Older age groups still prefer black tea

Consumers will pay two to three times as much for green tea or herbal tea based on the perceived benefits these teas offer

The main reason people drink tea is the "sheer pleasure of drinking it." (30% response in a research survey)

Canadians are drinking tea as part of a healthy lifestyle, whether to relax from the daily stresses or to improve their health. Tea is a naturally refreshing beverage that Canadians of all ages can enjoy.

Present Situation and Challenge

It was only 2001 when the Canadian tea market was flat but since then growth has escalated at a phenomenal rate, largely due to the sudden interest in green tea and herbal tea. Hot tea is "cool" again!

Given the trends in the market there is an opportunity for all brands to build market share while expanding the overall tea market. To do so, the various brands must tempt consumers of other beverages such as coffee and juices, to try tea, tea of any kind.

How various age groups perceive tea will be a factor in expanding the market and building share for a particular brand. It is possible that different strategies (targeted strategies) will be needed to attract different audiences.

we need 1-year marketing communications plan for your brand. Part of the challenge is to determine the marketing communications budget to meet the challenge. To do so we must consider the overall market sales and market shares of the key brands and allocate a portion of the sales to marketing communications. How much of their sales revenue should be devoted to the marketing communications budget?

The client wants to develop an "umbrella" campaign (family campaign) that presents a compelling reason for consumers to buy your brand of tea. The campaign will be designed to attract consumers to the brand, not a specific type of tea within the brand franchise. The benefits of the campaign will have an impact on the various sub-brands in the brand family.

Question:

Beingconciseaspossiblewhile providingproperdetailonthevariouscomponents ofthemarketing communicationsmix(marketing communication plan model) youarerecommending,providedetails aboutthefollowing:

TargetMarketProfile