Exploring the Australian Market: Lipton R.T.D. Iced Tea

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Exploring the Australian Market Lipton R.T.D.
Iced Tea

• Caroline Bintz
• Kevin Donohoe
• Mike Holt
• Amber Miller
• Sara Vineyard

2
Quick Lipton Facts

• Current Global Market Share (2000) 9.5
• Flavors 9 flavors
• Kroger, Walgreen's, Meijer, etc.

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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

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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.

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PRODUCT
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Competition
Product / Place / Price / Promotion

• 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

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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 10s and
  30s.
• Cans sold by Pepsi packaged by 24 case.

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Product / Place / Price / Promotion

• 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.

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PLACE
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Retailers
Product / Place / Price / Promotion

• 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

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Distribution
Product / Place / Price / Promotion

• 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

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Corporate Distribution Aid in Australia
Product / Place / Price / Promotion

• 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

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US Commercial Services
Product / Place / Price / Promotion

• 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

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Corporations Law
Product / Place / Price / Promotion

• 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.

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Infrastructure
Product / Place / Price / Promotion

• 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.

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PRICE
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Price
Product / Place / Price / Promotion

• 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
  governments recent budget and tax cuts.
• Exchange Rate 1.5419 Australian dollars 1 US
  dollar

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Price control
Product / Place / Price / Promotion

• 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 Australias
  tax mix away from income taxes, in July 2000. 
• set at ten percent on most goods and services

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PROMOTION
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Media Availability
Product / Place / Price / Promotion

• Radio
• 97 of households and automobiles have radios
• Radio marketers have the potential to reach 98
  population
• Cost for 30 second, Primetime slot, (530AM-
  900AM) is 600

• 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,
  (600PM-1230PM) is 4,620
• Adults 18 watch the most primetime TV
• Only 20 time used for paid advertisements can be
  from outside Australia

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Media Availability (cont.)
Product / Place / Price / Promotion

• 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 Womens 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

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Alternative Media
Product / Place / Price / Promotion

• 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
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Sponsorship Opportunity
Product / Place / Price / Promotion

• 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

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Possible Roadblocks
Product / Place / Price / Promotion

• Language 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)
• Gday, goodonya, shell 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

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Possible Roadblocks (cont.)
Product / Place / Price / Promotion

• Difference in seasons due to location relative to
  Equator

• UK cultural influence
• Tea preference
• Metric System
• Liquid Conversion Chart

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
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Thank You!