STiR coffee and tea magazine

36 STiR coffee and tea / Issue 6, 2019 (December / January 2020) I Nestea Relaunch Could Invigorate Instant Tea Sales By Dan Bolton nstant tea has suffered a long slide in sales which is why the US tea industry is paying close attention to former market leader Nest- ea, a brand dating to 1948 and known to 89% of US consumers. In November Colorado-based New Age Beverages Corporation, an organic and natural products company in partnership with Nestlé, re- launched Nestea powders online. A new formulation eliminated artificial colors and flavors, replaced high fructose corn syrup with stevia in its ready-to-drink (RTD) offerings and cer- tified the product line as non GMO. Sourcing tea leaves in the Nilgiri tea growing region in southern India signals a shift toward premiumization pio- neered by Honest Tea, and more recently in natural versions of Snapple, AriZona, and Lipton. In a release New Age said that it intends to "le- verage Nestea's awareness and consumer loyalty, and make the brand available through its own di- rect-store-distribution system, its network of dis- tributor partners throughout the US, and its foot- print with major retailers throughout the country." Last summer New Age acquired New York- based Brands Within Reach, a sales and marketing agency that owned distribution rights to Nestea as well as Danone's Evian water. New Age subse- quently negotiated a partnership with Nestlé. "We are thrilled to have the opportunity to manage the entire Nestea brand in the United States, and are committed to making it a sizable business for both Nestlé and New Age," said New Age president for North America Olivier Sonnois, adding, "Nestea ready-to-drink and powdered teas have a large base of passionate, loyal consumers across the country." Rebranding as a natural product opens a previ- ously closed retail channel where iced teas grew 12.4% through June, adding $5.6 million in sales during the past year, according to SPINS, a re- search firm focused on the natural channel. But will that be enough? Reviving powdered tea Globally conventional freeze-, vacuum-, and spray- dried instant teas are experiencing strong growth throughout Asia and in developing countries. Not so in the US where momentum has shifted to premium brands like small batch Cusa Tea, an or- ganic instant that sells 10 single-serve packets for $10. Its vegan friendly, gluten-free, paleo, keto certifica- tions speak to millennials. Premium packaging and "convenience without compromise" in fresh brewed taste models the success of Starbucks Via, an instant coffee that revived a then-flagging segment. Nestea, tasked with regaining market share lost to Lipton and Tetley, generated $30 million in sales within the powdered tea category which grossed $259 million from mass market outlets in the past 52-weeks, according to Nielsen market research. New Age will have to introduce some- thing more profitable than premium tea powder – a CBD hemp tea in bottles might do it. RTD dominates the retail tea segment accord- ing to Beverage Marketing Corp. which estimates RTD holds a 47.3% share of the US tea market. Tea bags account for 42.9% market share. Pow- dered and ice tea mixes account for 8.2%. The en- tire tea category (all formats) represents 5.6% of the US beverage market, according to BMC. Nestea modernized its label, switched to sculpted 23-oz PET bottles and greatly improved the quality of tea the year before Coca-Cola ended its 16-year US joint venture with Nestlé in January 2017 due to lag- ging sales. The depletion of inventory that followed led to complaints from loyal customers. Top-ranked competitor Lipton Pure Leaf ac- celerated past AriZona ($565 million) to capture $723 million in annual sales by 2019. Gold Peak rose to third with $400 million in sales as Lipton Brisk fell to $365 million, according to IRI, which compiles a list of top 20 brands that at one time regularly included Nestea in the top tier. Nestea has a long trail to travel but innovation clearly marks the path for a storied brand worth saving. Learn more: www.nestea.com

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