кейси для індивідуальної роботи 2014 н.р. / UNILEVER GROUP IN HOT DRINKS

TEA GROWTH OPPORTUNITIES

Unilever's category strength, weak spots and opportunities

Globally, Unilever is within the top 10 ranking in all tea categories and continues to lead black standard tea, black speciality tea and fruit/herbal tea. Black standard tea is Unilever's key strength with a 22.3% value share in 2011, while TGBL trails far behind. Black standard tea remains the cash cow for Unilever although consumption is saturated and volume growth is stagnant in many developed Western markets.

Although Unilever ranks third in green tea, its position is not as strong. The gap between Unilever (3.4% share) and the category leader Ito En (6.1% share) remains relatively wide. It is no surprise that Japanese company Harada Seicha ranks second in green tea given that Japan is world's largest green tea market, while Unilever has yet to achieve a significant category share in this market.

Unilever has potential for expansion in instant tea and "other" tea, particularly in major markets such as China. Unilever was the pioneer in China's instant tea category, however it was outperformed by local companies that created instant tea variants for local palates. Unilever's NPD, marketing and distribution in China may require a significant revamp if the company is to regain ground lost to local players.

Notes: - refers to no or negligible share

Figures in ( ) refer to category ranking

TEA GROWTH OPPORTUNITIES

Finding the future tea growth hot spots

China and Russia are expected to account for nearly 60% of global growth between 2011 and 2016, indicating the rapid commercialisation of tea. Emerging middle classes and changing lifestyles should be recognised and fully explored by Unilever. Missing the growth opportunities in these two markets may risk seeing a weakened global status in the medium term. In Russia, Unilever ranks fifth in tea with a 10% share, trailing far behind leader Orimi with a share over 24% in 2011.

Indonesia has been rather overlooked by multinationals, with only Unilever active there. Black speciality tea is set to see good growth and there may be opportunities for mid-priced products. Unilever ranks second in tea in Indonesia with a 14% share compared to leader Sinar Sosro PT's almost 27%. However, Unilever managed to achieve incremental share gains over the past few years and should consolidate its position further before other multinationals enter.

Major Tea Growth Markets, US$ mn 2011/2016

TEA GROWTH OPPORTUNITIES

Case study: Entering Germany's mature tea market

Unilever is making its second attempt to enter

Germany's tea market with a wider range of

tea offerings than it did for the first attempt.

Facing strong competition from local

companies and private label, it is crucial for

Unilever to secure the appropriate retail space.

TEA GROWTH OPPORTUNITIES

Unilever should look to grab market share in Germany

The outlook for volume sales in Germany is still optimistic as tea has a healthy image and is a lifestyle drink for many consumers, pointing to sustainable growth and steady revenues. Surprisingly, major global tea companies Unilever, ABF, TGBL and Ito En have neither registered a share nor hold prominent positions in Germany's tea market, meaning they may have missed the category's dynamic growth period. Growth potential aside, the market's substantial size is already a good reason for re-entry. It is never too late for bold and financially strong companies to flex their marketing muscles and enter a mature market as long as they have the right product and the right distribution.

Existing companies and potential entrants should perhaps look towards taking share from rival companies rather than trying to increase consumption levels in Germany. The country already offers a large consumer base for tea and so manufacturers simply need to introduce the right products and differentiate themselves from their rivals.

Germany: Tea Sales and Growth Prospects, US$ mn 2011-2016

TEA GROWTH OPPORTUNITIES

Germany: Pyramid tea bags a fresh tactic

When Unilever first tried to enter Germany a few years ago, it failed to capture consumers' imagination and was forced to withdraw. Unilever's unsuccessful attempt was possibly due to its underestimating the importance of fruit/herbal tea. First time around, Unilever mainly focused on black tea, trying to influence the preferences of heavy fruit/herbal tea drinkers. This approach failed to succeed as sophisticated German consumers are particularly discerning in their tea selection. Despite certain exposure to Lipton RTD tea, German consumers remained rather sceptical about the world's leading hot tea brand. Understandably, any new product launches and entry into a new geography carry a certain level of risk even for the most established and powerful multinationals.

In late 2010, Unilever tried again, introducing both Lipton black tea and fruit/herbal tea in 15 different variants. Lipton is now sold in just a few distribution channels, namely Rewe, Toom and Amazon. Unilever has positioned Lipton in the premium segment to compete against local companies. The fact that it uses pyramid tea bags, which claim to offer a better aroma, may appeal to some discerning tea drinkers. Currently, the pyramid tea bag format is not commonly used. It is still too early to gauge how much share Lipton captured in 2011, although it is clear that such narrow distribution coverage will limit its ability to gain share. Nevertheless, if Unilever is determined to make a difference this time around, Unilever should have the financial capability to sacrifice its margins and set up good distribution arrangements with mainstream nationwide retailers in order to secure retail space.

In terms of product trends, blended fruit/herbal tea is likely to offer a value opportunity as private label products currently tend to offer just one single flavour. Category-wise, green tea and black speciality tea are expected to continue to grow, indicating an opportunity for ABF, Unilever, TGBL and Ito En. ABF's new facility in Poland may help to reduce production costs and also help supply the German market.

TEA GROWTH OPPORTUNITIES

Possible geographies/categories Unilever can also consider

Instant tea: China and Asia

Unilever is the pioneer of instant tea and has the full product knowledge to develop the concept in other Asian countries. Instant tea saw an increase in global off-trade value of almost 30% in 2011.

Black speciality tea: Russia

Unilever ranked seventh in Russia's black speciality tea category in 2011. Its share declined between 2006 and 2009, but has since increased slightly. There are opportunities to exploit further category growth, with sales of black speciality tea in Russia predicted to increase by US$383 million between 2011 and 2016.

Green tea: Japan

Unilever does not have a significant presence in Japan's green tea market, which constrains its global category position. Although Japan's green tea market is saturated, it should still consider a entry to boost its green tea presence.

TEA GROWTH OPPORTUNITIES

Change in competition dynamics in Latin American tea market

 Unilever leads Latin America's highly fragmented tea market, with over 13% market share. This comfortable lead means it is a major tea player in most of the local markets. However, Unilever should be aware that major beverage companies are expanding into Latin America, despite consumers in the region not being traditional tea drinkers and the current market size remaining small.

COFFEE GROWTH OPPORTUNITIES

Unilever has limited presence in coffee

Unilever has limited presence in coffee and only registers market share in Asia Pacific (mainly India) and Australasia. In India, the company accounts for 29% of coffee off-trade value sales in 2011, with flagship brand Bru. Given its strong leading position, Unilever concentrates its effort in continuous brand building and has carried out limited NPD. Both Unilever and key rival Nestlé target the young population through heavy advertising.

In the hot drinks market, Unilever appears to be a tea specialist, and its strong presence in coffee in India is kept low key and there is little mention of its coffee presence in India in any of its corporate publications, indicating coffee is not a core development area for the parent company.

It is hard to predict if Unilever will embark on massive investment in coffee as it is expanding its Personal Care and Beauty business. Nevertheless, the strong position in India may help Unilever to leverage its coffee ambition to other Asia countries, where it has strength as a key fmcg player.

Unilever: Coffee Presence and Growth Prospects by Region, Off-trade Value 2011-2016

Market size 2011 (US$ mn RSP)

Note: Bubble size shows company share of region in 2011, share displayed: 0.8-1.1%