exploring the australian market: lipton r.t.d. iced tea

Exploring the Australian Market:

Lipton R.T.D. Iced Tea

Caroline BintzKevin Donohoe

Mike HoltAmber Miller

Sara Vineyard

Quick Lipton Facts

• Current Global Market Share (2000): 9.5%

• Flavors: 9 flavors

• Kroger, Walgreen's, Meijer, etc.

Australia at a Glance• Land mass equal to

U.S., but population equivalent to the greater Los Angeles area.

• Majority of population located on the coast

• Age as of 2004:– 0-14 years = 20.1%– 15-64 years = 67.2%– 65+ years = 12.8%

• 20% of population born outside of Australia

Consumer Behavior• The R.T.D. tea market in Australia is of a much smaller scale as

compared to that of the United States.- Australia market – 0.4 million liters in 2002- U.S. market – 1,878.3 million liters in 2002

• The Australian R.T.D. tea market saw a 37.50 percent decrease in volume sales over the years of 1997-2002; whereas the U.S. experienced a 32.46 percent increase during this same period.

• The RTD tea market experienced a 55.57% decrease in value sales in Australia from 1997-2002.

• Forecasted sales for RTD tea in 2005-2007 are only 0.3 million liters per year.

• Recent trend towards high quality, value-added food products.• Consumer spending on non-alcoholic beverages in Australia were

$5.17 billion in Australian dollars in 2001.

PRODUCT

Competition

• Cadberry Schweppes Australia- Manufacturer of sugar confectionery and soft drink.- Brand Share of market for fruit drinks: 4.7%- Types: Oasis, Passiona, and Sunkist

• Berrivale Orchards Ltd.- An association of cooperatives producing fruit, fruit juice

and other foods.- Brand share of market for fruit drinks: 8.3%- Types: Berry Fresh, El Fresco, and Sunrise

Product / Place / Price / Promotion

Labeling & Packaging

• Australia /New Zealand Standards code states that there are percentages of key ingredients and main ingredients that may cause allergies.

• U.S. exporters should ask their Australian importer to ensure that their products comply with Australian Federal and State Government labeling regulations. – Australian laws mandate that pre-packaged goods are to be labeled

with a true description of the goods in clear contrast to the background graphics, nor may they falsely represent any crucial information pertaining to the product.

• Cans sold by Coca-Cola; packaged in 10’s and 30’s.• Cans sold by Pepsi; packaged by 24 case.


Recycling/Packaging

• Legislation has provided incentive for Australian drink companies to create voluntary waste reduction plans to meet government waste reduction goals.

– In accordance with legislation, Unilever Australia has signed the National Packaging Covenant and the Greenhouse Challenge Programs.

• Unilever Australia has an involved corporate environmental policy which strives to minimize waste, reduce environmental impact from production, conserve energy, and maximize recycling and re-use practices.


Retailers• Supermarkets

– 1.8 supermarkets per 1000 inhabitants

– Woolworths and Coles/Bi-Lo dominate market with 75% of supermarket sales

– Trend towards wider product range, larger outlets, longer hours, lower prices

– Supermarkets account for 2/3 of food sales

• Convenience stores– 7-eleven and Night Owl

are major chains– 82.6% of sales are done

by independently owned outlets


Distribution• Domestic

production options– Unilever plant in New

South Wales that produces hot tea.

– PepsiCo Australia in New South Wales produces similar products and has strong presence in category.

– Coca-Cola Amatil produces similar products located in Victoria.

• Importing options– China

produces/distributes Lipton through Guangdong Lipton Foods Company

– Thailand produces/distributes Lipton through Serm Suck PCL

– Indonesia produces/distributes Lipton through Unilever and Aqua Golden Mississippi Consumer


Corporate Distribution Aid in Australia

• Freight on Board Pty Ltd- Freight on Board are able to provide sea,

air, customs and logistical solutions to American companies doing business in Australia.

• Henning Harders Pty Ltd - Henning Harders are international

forwarding agents and licensed customs brokers. They handle consignments by air and sea freight - in particular between Australia and the United States


US Commercial Services• Help US companies find local partners and attorney.• IPS: International Partner Service: CS will locate,

screen, and assess Australian agents, distributors, licensees, and joint venture partners for IS companies.

• Golden Key Services: designed to make US company representatives visit to Australia more productive. Provides Market Orientation briefings, market agents, agent/distributors search and screening.

http://www.buyusa.gov/australia




Corporations Law• The entity is registered under automatically as an Australian

company, enabling it to conduct business throughout without further registration in individual states or territories

• Does not require directors to be Australian, but must have a registered office address and a statutory agent responsible to fulfill the requirements of the Corporations Law

• Every company must be registered for a Australian Business Number under the Goods and Services Tax.

• You are free to choose between Australian or US law governing your contract. However, if foreign contract agreed upon, without a stipulation of law, Australian courts will apply the law of jurisdiction where the agent of distributor works, that is Australian federal and appropriate state and local law.


Infrastructure• Highly sophisticated transportation and telecommunication

systems:– Road System: 490,000 miles of paved roads; 65% of freight is shipped

along these roads. – Rail Road System: 24,000 miles of railroads; preferred mode of

transportation from Eastern ports (privatized in 1999)– Air Transport: Serviced by most international carriers, providing access

routes from regional centers to major cities.– Sea Transport: 83% of exports and 70% of imports; mainly dealing in

bulk commodities.– Telecommunications system: land-based telephone lines provide

access to 97% of all households. • Telstra, Optus, Primus, AAPT, Orange, and Vodafone are the dominant

carriers.• Has one of the one of the highest mobile phone user rates in the world (over

10 million subscribers)– Telstra, Vodafone, and Orange are the major providers. – Rapid development because of introduction of fully digitalized network.


Price• Current market prices for beverages (in Australian dollars)

– Coke 1.25L = $1.43– Gatorade 600mL = $1.97– Just Juice 1L = $1.67– RTD Pop Tops Juice 250mL = $.465

• Australia has experienced positive economic growth in recent years:– A free-market economy that is highly involved in the world

market– Much of the recent growth has been attributed to strong

domestic demand: consumption 4% in recent years.– Capital spending and consumer spending appear to remain

positive in the upcoming future due to the government’s recent budget and tax cuts.

– Exchange Rate = 1.5419 Australian dollars : 1 US dollar


Price control• As Australia is a free-market economy, there is little formal

price control. – The national regulator, the Australian Competition and Consumer

Commission (ACCC), has the power under the Prices Surveillance Act of 1983 and the Trade Practices Act of 1974, to investigate, vet or monitor the prices charged by businesses.

• The ACCC was also active in the implementation of the Goods and Services Tax (GST), serving as a “watchdog” to ensure that resulting price increases by the private sector are not excessive. State governments have the power to control prices, but in recent decades have rarely done so.

• Goods and Services Tax (GST) shifted Australia’s tax mix away from income taxes, in July 2000. – set at ten percent on most goods and services


PROMOTION

Media Availability• Television:

– 97% of population own a TV, only 25% with cable

– TV marketers can ideally reach 93% of population

– Cost for 30 second, Primetime slot, (6:00PM-12:30PM) is $4,620

– Adults 18+ watch the most primetime TV

– Only 20% time used for paid advertisements can be from outside Australia

• Radio:– 97% of households and

automobiles have radios– Radio marketers have the

potential to reach 98% population

– Cost for 30 second, Primetime slot, (5:30AM- 9:00AM) is $600


Media Availability (cont.)

• Newspapers:– 2 national daily papers accept

advertising• Combined circulation of

225,000• The Australian 1 page cost

US$ 8,690• The Australian Financial

Review 1 page cost US$ 4,775

• Magazines:– 600 national consumer

magazines accept advertising• Australia Women’s Weekly

Avg. Issue Audience 3,571,000

– 1 page cost of US$ 14,900

• New Idea Avg. Issue Audience 2,694,000

– 1 page cost of US$ 11,720


Alternative Media• Cinema• Outdoor transit• Direct marketing

- Australians prefer promotional material to be sent through direct mail.

- Duty is levied on catalogs, circulars, and all advertising matter introduced into Australia

• Ad trolley• In store radio

• Internet- Low trust in internet safety

• Telemarketing- “Code of Practice” restrictions

instated June 2003


NOTE: Lipton in the United States currently uses Network TV, Spot TV, syndicated TV, Cable TV network

Sponsorship Opportunity

• Common Wealth Games– 2006– Melbourne

• Fanatical following of sport

– Television audience expected to be in excess of one billion people

– 71 member countries– Language of games is

English


Possible RoadblocksLanguage in Australia:• Colloquialisms + idioms make Australian English unique

– Spot on means right on, prang is a fender bender, crook is someone who is unwell, bloke is a guy, mate is a friend (male)

– G’day, goodonya, she’ll be right, mate, bloody

• Shorten words for everyday conversation– Uni, kindy, telly, footy, barby

• To avoid offensive slang, use standard English

Dialect:• Accent is far more nasal and less clipped than British English accent• Imported commercials require voice-overs

• Mid-Atlantic accent

Inappropriate Gestures:• winking at women, yawning without covering mouth


Possible Roadblocks (cont.)

• UK cultural influence– Tea preference

• Metric SystemLiquid Conversion Chart:

• Difference in seasons due to location relative to Equator

2 fl oz 60 ml ¼ cup

4 fl oz 120 ml ½ cup

8 fl oz 240 ml 1 cup

16 fl oz 480 ml 1 pint


Thank You!

exploring the australian market: lipton r.t.d. iced tea

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