Should Lipton leaf tea enter the Brazilian market?

Résumé du document

Western Europe, Lipton's biggest market, shows a poor growth outlook in the tea market. The brand and other tea brands of Unilever are also present in other markets where the sales outlook is better, but are almost absent in Latin America with a unique presence in Chile. Nevertheless, this market is expected to grow tremendously for the coming years, especially in Brazil. Unilever has already tried to enter this country about ten years ago with its Lipton brand and totally divested in 2003 because it did not adapt its strategy enough to the particular consumption habits and the Brazilian culture.

Today, the tea and other hot drinks markets are extremely fragmented in Brazil. Furthermore, the market is becoming more mature regarding tea consumption, the Brazilian population is considerable and the sales outlook of tea is set to be greater than ever in the coming years. Therefore, it seems there is a real potential to enter and grab the opportunities in the Brazilian tea market.

However, there are also a number of constraints that Unilever would need to define and decide, as a company, in order to conquer the market. Overcoming these obstacles is a must to succeed in Brazil.

Extraits

[...] Developing sales on-trade is also a priority as it would help Lipton to become a fashion tea brand and thus to upgrade the market. Furthermore, on-trade would help to increase moments of consumption of tea. This on-trade concept needs to be found but we can easily imagine something inspired by the Starbucks' concept. The main threat underlined from the beginning of this thesis, the fact Brazil does not have a tea drinking culture, as well as the country's disparity in terms of wealth and consumption habits, make Brazil hard to understand and to define, and thus to enter. [...]

[...] JM Smucker has purchased the Procter & Gamble's Folgers brand in 2008, which made it become the 9th biggest hot drinks brand. Source: Euromonitor International. Source: Euromonitor International. Source: Euromonitor from trade sources/national statistics. Bubble size shows Unilever share of sector. Range displayed: 13.0 - Source: Euromonitor International. Club realizes $44 million of sales, Emblem $ 13.3 million and Lipton $ 26.1 million. Source: Euromonitor International. In Peru, Unilever sold, in 2008, $ 22.2 million via Mc Colins, $ 0.8 million via Mc Colins anis and $ 0.7 million via Lipton. [...]

[...] Unilever's challenges in tea & Recommendation on its strategy in Brazil - 4 - 1. Internal analysis - 4 - Unilever, a major global company in the world - 4 - The third largest hot drinks company in the world - 4 - Facing the crisis & reorganizing itself to improve profitability - 4 - Unilever's hot drinks category - 4 - A hot drinks category predominantly focused on tea - 4 - Tea brands predominantly focused on black tea - 4 - Lipton leaf tea, an important & very strong brand worldwide - 4 - Competitive positioning in the hot drinks sector - 4 - A fragmented market - 4 - Dominated by Nestle - 4 - 2. [...]

[...] This makes sense as Brazilians have a preference for small formats than big stores. The entry of Carrefour's Dia in 2001 helped the channel to grow rapidly: +368% between 2002 and 2007 to reach US$487 billion. It will continue to grow a lot in the next five years between 2007 and 2012), even though the sales realized through this channel will remain small as it only represents less than of the total grocery sales Threat of private labels The positive overall performance of the hot drinks industry has stimulated retailers to make more shelf space available for hot drinks, including private label products. [...]

[...] Tea is produced locally in homes or small farms and then sold in those informal kiosks and ferias. As shown in graph 7 p Source: Euromonitor international. Source: Les Echos, 05/11/2009. The analysts' expectations were at about in volume and in value. Turnover in billions of euros in 2008, growth over the 2007-2008 period. Source: Euromonitor Internatioal. In the UK and Netherlands, its restructuring programme had resulted in a positive volume growth during the fourth quarter, while France, Germany and Spain had all lost ground to private labels. [...]