Just Think ahead

It is estimated that Chinese people consume tea of 0.36kg per person a year, which is a huge market, considering the 1.3 billion Chinese population and 3% annual growth rate.

Lipton, a brand under Unilever UK, is No.1 market share in China. In 2008, Lipton’s production in China is about 23 billion RMB, which is almost equivalent to Chinese total local tea production of 30 billion RMB. It’s a wonder that one brand could be placed on the par of Chinese whole tea industry!

When we track Lipton’s operation in China, something of his business secrets and key success factors could be smelled out.

Unique brand positioning

Basically, Lipton positions himself in fashionable young office workers. By 5 years, Lipton has successfully established an international brand image of fashion, urbanization, and easy life by marketing in high-end consumer places and medias of film, TV, fashion magazine, web novel, etc. which attracted great number of young white collars.

Lipton’s great breakthrough exists in applying modern distribution channels in adequate like hypermarket, 24-hour convenient chain store, with Unilever strong finance supports, which is quite different from Chinese traditional tea distribution of professional wholesale marketplace and retail brand shop. Thus, Lipton wins the market far head through rapid access to consumers.

Lipton’s package is another selling point. When Lipton taps Chinese market in 1992, its unique package of disposable little bag, seldom seen in local market, is healthy, convenient, simple and fast to use, which closely meets fast-pace office life. By comparison, Chinese local tea in bare and bulk package is most often consumed on slow-pace family leisure time.

Continuous product development and innovation   

Lipton makes market research every year with annual budget of about 0.7% of his world sales of 1.5 billion GBP (2.8 billion USD or so). These commercial research cover tea trend, consumers’ usage and habit, preferences of color, taste, package, etc. and key drive factors for consumer’s tea consumption.

Lipton engages in R&D all the time in China and has rich product line. As the black tea being accepted widely in China, Lipton launches his green tea and Jasmine tea to meet Chinese consumers’ special tastes. In 2004, Lipton introduced instant tea series like milk tea and lemon tea. In 2005, herbal tea series are also been put on market with great Chinese characteristics.   

Localization of the procurement and production

The raw material of Lipton tea is sourced from all over the world, and processed and manufactured in local factory. Lipton Chinese factory is located in Hefei city, the middle of China. This factory buys semi-finished tea in China, and then makes processing. The  production could reach 20,000 tons by 2010, both for Chinese local market and for overseas like US, Canada, Singapore, Japan, Australia, etc.

By localization, the cost of production is reduced greatly.

A brand with unique positioning and operation of localization are threshold to open Chinese market.