Usually, when you hear “Can it!” it’s not a good thing. But it looks like some ready-to-drink iced tea companies are taking the order to a literal extreme, and they consider it a positive development, as well.
That’s a big turnaround from the past decade, in which the glamour plays in the RTD tea category were defined by full-leaf brands that commanded packaging in high-end glass or at least elegant PET bottle designs. With consumers spending much of the decade trading up, it seemed like a great way to create separation from the mass market Liptons and Nesteas of the world, as well as AriZona, the category leader, and Snapple, the only bottled brand to have major mass market share.
But now, with the economy still down and consumers watching their expenditures, there’s a decidedly downmarket shift taking place in tea packaging — and it is coming from brands that typically have an upmarket aura. Yoga-mom friendly marketers like Steaz, Sweet Leaf, Guayaki Yerba Mate, and even Snapple itself are rolling out cans in the months to come, trying to put pressure on AriZona in a category that the Purchase, NY-based company has dominated for years.
“It’s a great way, for the next six months at least, to really get the brand out there and introduce it to people,” said Steaz’ CEO Eric Schnell. Steaz launched a line of fair trade and organic-certified canned iced “Teaz” a year ago, but this summer Schnell and his partner, Steve Kessler, have begun an all-out pricing assault on grocery stores, dropping as many pallet displays of his inexpensive (think 5-for-$5 at retail) but highfalutin’ product into as many outlets as the channel will bear. With its crunchy credibility, Steaz has long been a Whole Foods stalwart, but this represents a change to reach consumers in old markets and new. And with large pallet drops and deals on multiserve packs as well, Schnell believes he is tapping into the organic consumer who has taken a blow to the wallet.
“We took the price decrease as a marketing decision,” Schnell said. “Whole Foods is loving it because they have one of their premium brands out there at a regular supermarket price.”
And it comes at a time when RTD tea’s five-year growth spurt – according to Mintel, RTD tea grew 19 percent from 2003 to 2007, as marketers took advantage of tea’s twin virtues of a healthy aura and moral rectitude – finally ended, the result of a consumer downturn that has pulled all beverage categories down with it.
It was a nice, long run, however: Honest Tea, Sweet Leaf, Tazo and Fuze all pulled in capital from Coke or Pepsi, while many other brands drew significant investment from private sources. With consumers rabidly chasing both the antioxidant health benefits of tea consumption and the good feeling that they were ingesting a natural, green product (not to mention one with plenty of caffeine) there was plenty of high-end love to spread around.
But with consumer buying power decreasing, the price point for many of the brands chasing companies like Honest Tea and Sweet Leaf has made them somewhat exclusionary, marketers say. Companies are faced with a tough choice – cut prices to keep their product out there while they continue to lose money, or go for less expensive packaging and risk losing cachet.
“We do see the organic consumer being more value conscious,” said Kara Nielsen, a trend analyst with the Center for Culinary Development. “Consumers have had to reorient their commitment to organic products to the economy. Everybody has been hit, and organic products strated shifting. People kept up with produce and milk, but not so much in the center store.
For Steaz, that issue is a nonstarter – it came out in cans first, so plans to possibly migrate the tea into glass bottles will remain on the shelf – but for other brands, keeping packaging high-end means a squeeze, even if it will be a temporary one.
“In this environment, there’s a lot of price pressure, and [cans] are so much less expensive than glass or PET it’s easy to jump at,” says Inko’s founder Andy Schamisso. “But the economy is bound to improve, and three or four years down the line, the premium-price item is bound to come back. Inko’s is a premium item, and our packaging has to reflect that.”
The movement into cans comes at a time when, oddly enough, many of the mainstream brands are trying to take advantage of the momentum accumulated by the upmarket brands. Both Coke and PepsiCo recently completed brand makeovers with their tea partners that emphasize their healthier qualities and feature cleaner, more modern packaging – as well as upscale lines like Lipton PureLeaf and Gold Peak. AriZona introduced a line of organic green teas, in bottles, at a higher price point than its best-selling 24 oz.-for-$.99 cans. And Snapple, while planning a cold-filled can line that will undercut AriZona on price (at $.79), recently made over its hot-filled premium glass bottles and has introduced products like white tea, all sweetened with natural cane sugar.
Still, Schnell seems to believe that at his new price point, Lipton drinkers are Steaz consumers who just need to give him a try.
“Stores are happy to have such a low-cost organic,” Schnell said. “We’re getting a lot of new customers who would never have gotten a chance to try us.”
As for losing his base, Schnell isn’t worried: he believes his product meets or exceeds so many of the cultural hurdles for the crunchy customer – in addition to its organic and fair trade credentials, it is low in sugar and features an indigenous farm worker on the label – that putting it at a value price isn’t going to turn off the consumer he’s been selling his green tea sodas and energy drinks to for years.
Expanding the base is also behind the move of a product like Guayaki Yerba Mate into the aluminum can game, according to Pierre Ferrari, who runs the marketing operation for the fast-growing company. By introducing a lemon-ginger flavor in cans, he hopes to hook a whole new group of consumers on yerba mate’s stimulating effects.
“The major move is to make the ready-to-drink mate available at a lower price,” Ferrari said. “The can is cheaper ($1.99, as opposed to $2.49 and up), it ships more easily, and it’s lightweight. It offers tremendous opportunity for new use occasions, like outdoors.”
Meanwhile, Snapple’s move into aluminum is clearly aimed at AriZona, the category leader. Snapple’s products have long been associated with bottles, but at a recent investor conference, Dr Pepper Snapple marketing chief James Trebilcock made it clear that “penetrating the value tea market… is a must do for us.”
Of course, with a canned product in place, Snapple isn’t the only company trying to pick off the AriZona buyer.At the tallboy end of the spectrum, Xing Tea has found distribution in 38 states with its mix of volume – 23.5 oz. – and all-natural ingredients, including pure cane sugar and while leaf tea, as well as a higher price point than AriZona to reflect its more premium mix. Meanwhile, Polar Beverages has introduced BlackJack in the Northeast, which actually undercuts AriZona with a permanent 88-cent cost on the label.
If you ask AriZona, the idea that there might be other value players on the market, even ones with organic bona fides, isn’t a scary one at all.
“Everybody’s copying us,” said AriZona spokeswoman Leigh Parinello. “Everybody’s doing 99 centZRedT
ZredT, the Louisiana-based producer of ZT antioxidant-rich, organic rooibos red teas, is now available nationwide through distribution deals with United Natural Foods, Inc. and Nature’s Best. ZT is a line of organic teas made from the rooibos plant, which grows only in the Cederberg Mountains of South Africa. With a naturally smooth, complex flavor, every bottle of ZT is a good source of both magnesium and natural fiber, is low in calories, and contains zero caffeine and zero sugar.
Steaz Iced Teaz is Steaz’ non-carbonated RTD Tea line, available in 16 oz. cans and 64 oz. multiserve PET bottles. The line is an “Organic Value” play at Steaz, and will feature “10 for $10s” on the cans and “2 for $5” on the multiserve in mainstream Grocerers such as Shaws, A&P, Stop & Shop, and Wakefern. Grocers are encouraged to put pallets on their floors and offer their consumers their first “organic/fair trade” premium tea experience at the same price levels as AriZona and Lipton.
Tradewinds Beverage Company recently added a complementary product to its already robust line of teas with the addition of 20 oz. PET Single Serves to their portfolio. Backed by an aggressive in-store support plan, this new product will be available in seven SKUs, including green and diet green varieties.
Sweet Leaf has launched a proprietary 16 oz. glass bottle shape with embossing that will be out on shelves starting in late Q3 and Q4. Each bottle will feature two stories, one about Sweet Leaf Tea and the second story unique to the flavor. In addition, Sweet Leaf has launched a line of new 8 oz. cans in Original Sweet Tea, Peach Sweet Tea and Mango Green Tea, which were created mainly for schools. They are 100 percent organic, with no high-fructose corn syrup, no preservatives and meet all “Alliance for a Healthier Generation” Guidelines.
FUZE will launch Goji Berry White Tea in September, while phasing out White Tea with Orange Blossom. The Goji Berry White Tea will strengthen the FUZE portfolio by leveraging the current and anticipated market success of Goji Berry, a superfruit with consumer appeal because of their interest in functional qualities, such as high levels of antioxidants, and new taste experiences.
Inkos is introducing 64 oz. multiserve jugs of its Blueberry, White Peach and Unsweetened Mint flavors, including selling a special 2-pack of its 64 oz. Peach flavor in Costco. The company also recently introduced new Lemon and Unsweetened Original flavors (in March ‘09) to add to its 16 oz. glass line, with a new label design on both flavors. The new label design is expected to follow on the entire 16 oz. line. The company also entered into distribution with Spike Beverage to handle the state of Arizona.
China Mist Brands has expanded its product line with the release of a super premium RTD tea called China Mist Pure Bottled Organic Tea. CMB manufactures and distributes specialty iced tea for the foodservice industry from Scottsdale, Arizona.
HoneyDrop recently participated in a marketing promotion with Whole Foods entitled “Bee Appreciation Week.” The purpose was to educate consumers on colony collapse disorder (CCD) and the importance of using organic honey, free of pesticides and insecticides, a common theory on the leading cause of CCD. The promotion ran in select Whole Foods stores where HoneyDrop had a display with other similar “bee” brands such as Burts Bees.
Republic of Tea
During the 2009 National Breast Cancer Awareness Month, restaurant guests can enjoy The Republic of Tea’s new limited edition Sip for the Cure PassionFruit Green Tea, a premium unsweetened glass bottled iced tea, and support the fight against breast cancer. Proceeds from the sale of each bottle of Sip for the Cure PassionFruit Green Tea, available exclusively in select fine restaurants and hotels nationwide during October, benefits Susan G. Komen for the Cure. This new Glass Bottled Iced Tea is the first of the Sip for the Cure Collection. It’s also the first time Komen for the Cure will have a “pink-ribbon product” in the food service category. Sip for the Cure PassionFruit Green Tea is subject to availability from October 1-31, 2009.
Peet’s Coffee & Tea, Inc. has announced the introduction of Peet’s Bottled Iced Teas, a line of exceptional ready to drink teas made from Peet’s whole tea leaves. The six new iced tea varieties are crafted from green, oolong, white and black teas. Five of the six are complimented with all natural flavors such as peach, mint, citrus and honey to accentuate the unique flavor characteristics inherent in each tea. Peet’s Bottled Iced Teas are all natural, very lightly sweetened and include an unsweetened version.
AriZona Beverages, the leader in premium ready-to-drink tea beverages in the US has partnered with Nestle Waters North America Inc., the U.S. leader in bottled water, to create AriZona Tea Waters. This new line of low-calorie, tea infused waters is certified organic by the U.S. Department of Agriculture (USDA) and combines the antioxidant benefits of green tea with the hydration of natural spring water. At only 20 calories per eight-ounce serving AriZona Tea Waters are healthful and refreshing. In addition to AriZona’s classic Green Tea, the new line includes Yumberry Green Tea, Mandarin Orange Green Tea, and Pomegranate Green Tea.
ITO EN, the maker of Tea’s Tea, won three First Place Awards at the World Tea Expo, for its Oi Ocha Dark, Oolong Shot and Traditional Jasmine Green teas. The company has also recently launched Teas’ Tea Naturally Sweet, three new flavors with only 70 calories per bottle in Mango Oolong, Blueberry Green and Citrus Black flavors.
TeaZazz Sparkling Tea has announced the addition of its newest flavors to its family of low calorie, low carb sparkling teas: White Tea Orange/Mango and White Tea Kiwi/Strawberry. TeaZazz is now available on Amazon.com and has expanded its retail chain accounts to participating Albertsons, Ralph’s and Sam’s Clubs. The TeaZazz line up now includes six delicious flavors.
Numi Organic Tea has announced the launch of six RTD bottled tea blends, including five varieties of Puerh Tea blends and one Rooibos Herbal blend, available in retail and foodservice channels. Puerh (pu-err), an ancient healing tea long revered in China for its medicinal properties and rich taste, is a fermented tea that packs a heavy antioxidant punch. The end result is a bold, earthy-flavored tea with hints of malt. Numi Organic RTD Puerh teas will be available in five SKUs: Mango Passion Puerh Black Tea, Earl Grey Puerh Black Tea, Magnolia Jasmine Puerh Green Tea, Peach Nectar Puerh Green Tea, Moroccan Mint Puerh Green Tea. In addition, Honey Lemon Rooibos Teasan is available as an herbal, caffeine-free option.
In the June/July 2009 issue of Everyday with Rachael Ray Magazine, New Leaf’s Strawberry White Tea was selected as the “best flavored white tea.”
New Leaf’s Strawberry White Tea is all-natural and contains a blend of strawberry and White Tea, naturally sweetened with 100 percent organic cane sugar. New Leaf’s White Teas originate from the tea fields of China as one of the world’s least processed teas and with medicinal properties respected worldwide. Ingredients include: Filtered Water, Florida Crystals Organic Evaporated Cane Sugar, White Tea Blend, Citric Acid and Natural Flavor.
The sales of Anteadote gourmet teas are buoyed by Adagio Teas’ recent conversion of the line to USDA Organic. All five varieties – green, white, black, jasmine and oolong – now sport the USDA Organic logo. To increase coverage, Adagio Teas had recently hired Natural/Specialty Sales as its national broker. The objective of the switch in representation and frequent promotions this fall is to sustain Anteadote’s rapid growth this year and throughout 2010.
Revolution, a 10-year-old premium beverage company, is joining the fight against breast cancer with the release of the newest flavor of its 3D line, 3D Pink Grapefruit. A portion of all the sales from 3D Pink Grapefruit will go to support breast cancer charities.3D is an all-natural beverage that combines the antioxidant power of super fruits, essential multi-vitamins and healthy white tea. Revolution released the four original flavors, 3D Pomegranate, 3D Blueberry, 3D Mango and 3D Green Apple in 2008. The new product will be sold alongside the original 3D flavors at fine retailers in Arizona, California and Texas as well as online at www.drink3d.com.
NESTEA has launched NESTEA Red Tea, a rooibos tea with 50 calories per 8 oz. serving. This product combines the natural goodness and antioxidants of red tea combined with the sweet, refreshing taste of pomegranate and passion fruit. With over 50 years of iced tea heritage, NESTEA has added Red Tea Pomegranate Passion Fruit – recently selected by retailers as one of the “Top 12 Cool New Products” – to its line of RTD teas. Consumers can learn about NESTEA Red Tea Pomegranate Passion Fruit and other NESTEA flavors through the NESTEA “Liquid Awesomeness” marketing campaign launched in April.
Delta Blues markets three RTD full bodied teas made with organic black or green tea and combined with natural citrus juices, cane sugar, and flavors. Stir in Delta Blues as a summer mixer: ‘Deep South’ with bourbon, ‘Bayou Soleil’ with tequila and ‘Peachy Keen’ with vodka. Delta Blues is available in 16 oz. glass bottles.
Guayakí has added a new Lemon Ginger Yerba Mate, the first-ever yerba mate available in a can. The can offers a lightweight, recyclable and convenient format that expands the places and occasions at which Guayakí can be enjoyed. Well-suited for the health-conscious and eco-conscious, the new Lemon Ginger Yerba Mate, like all Guayakí products, is organic, fair-trade certified and cultivated using sustainable and environmentally conscious processes.
Honest Tea has expanded its new Honest Mate line to include a pair of new flavors, Agave Mate and Tropical Mate. High in antioxidants and low in sugar and calories, Honest Mate is brewed with organic un-smoked mate grown on a family farm in Argentina using environmentally-sound farming methods. Agave Mate is a blend of refreshing organic yerba mate and organic agave syrup, Tropical Mate is an exotic combination of mango, orange and organic yerba mate. The company has also added Mango Green Tea to its iced tea lineup.
Founded by a DSD distributor from Denver, Co. two years ago as a way to challenge the changing complexity of the three-tier distribution system, Xing Tea is committed to the DSD system. XingTea now has 13 flavors in its 23.5 oz. cans and has added six new flavors in its 16 oz. PET line.
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