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Nestea Iced Tea in China

  • March 2016
  • -
  • MarketLine
  • -
  • 15 pages

Introduction

Nestea iced tea was extended into China in the early 2000s by Nestea in conjunction with Coca-Cola, intended to capitalize on the country's growing ready-to-drink (RTD) tea market. After 13 years, the line had to be withdrawn from the Chinese market, having lost brand value for four consecutive years.

Features and benefits

- Learn about Nestea's entry in to the Chinese RTD tea market and understand why it ultimately failed.
- Understand the market dynamics of Chinese consumer markets.
- Assess how other companies may avoid a similar failure.

Highlights

- The RTD tea line was too similar to other products on the market, and therefore it failed to differentiate itself due to the lack of distinct flavor appeal and an unclear brand identity.

- An inability to predict and respond to new emerging trends in soft drinks contributed to the brand losing the chance to win back market share.

- Innovative product offerings and marketing are what help brands to resist strong competition and achieve clear differentiation. Companies should capitalize on the changing Chinese market with more niche products to target new consumer segments.

Your key questions answered

- What is Nestea?
- Why were Coca-Cola and Nestle eager to enter the Chinese RTD tea market?
- Why did the brand ultimately fail?
- What can other companies do to avoid a similar failure?

Table Of Contents

Nestea Iced Tea in China
Overview
Catalyst
Summary
Partnership fails to secure sustainable market share
Initiative aimed at capitalizing on growth market ends in withdrawal
Nestea targeted its iced tea at young adults
Uninspiring flavors, lack of differentiation and functional drinks contribute to failure
Risk-averse flavor profile unable to leave strong impression
Undifferentiated positioning weakens competitiveness
Failure to respond to the rise of functional beverages
Conclusions
Lack of innovation is brand suicide in a Chinese market full of opportunities for niche products
Appendix
Sources
Further Reading
Ask the analyst
About MarketLine
Disclaimer

List of Figures
Figure 1: Nestea's "rise and fall" in China, 2002-13
Figure 2: RTD tea brand share in China, 2014
Figure 3: Nestea Iced Tea Promotional Material
Figure 4: Responses of "I often experiment with buying new tea (including RTD) products," among Chinese consumers, 2014
Figure 5: Master Kong and Uni-President marketing material
Figure 6: China: five-year CAGR (%) for RTD tea, 2005-15
Figure 7: China: the number of new functional drink SKUs launched, 2000-13
Figure 8: China: volume sales in soft drink (million units) by motivation

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