HLL, Pepsi rethink as tea gets cold

HINDUSTAN Lever’s marketing alliance with Pepsi Foods for hot and cold beverages in the country is under review. The marketing alliance, forged about three years ago for ready-to-drink tea and other tea-based beverages, has only got lukewarm response from the consumers. When contacted by ET, an HLL spokesperson said: “The mix is being reworked with the Pepsi team for the Indian market. We will roll out the new mix in the current year.” When the marketing alliance was first thought of, the plan was to leverage HLL’s strength in hot beverages combined with Pepsi’s extensive on-premise sales and distribution infrastructure. As part of the initial strategy, beverages such as ice tea, green tea, herbal tea and even diet tea were to be retailed through vending machines and fountains, in different packaging formats like glass and PET bottles as well as tetrapaks. Three years later, only Lipton ice tea is being retailed through tetrapaks and vending machines in cinema theatres, modern trade and eateries. The HLL spokesperson said Lipton ice tea has been growing at 15-20% in modern trade channels. While a source said the alliance is likely to remain on the slow burner, another source added that the two companies will rework the business model and the positioning this year. “There’s a business plan for it. The marketing pact still stands,’’ he added. However, ice tea, as a category, has not taken off in a big way in India and even players like Nestle and Coca-Cola’s Georgia brand have found limited success with the category. “The effort is to create the habit of drinking ice tea and it will take some time, given the fact that India is a predominantly a hot tea-drinking market. Even in developed markets such as the US and Western Europe, success came over a period of 8-10 years,” HLL and Pepsi said in a joint statement. It must be pointed out that Unilever and Pepsi operate through a joint venture for hot and cold beverages in several global markets, while in India both companies teamed up through a marketing alliance.