Lipton Tea

1. What was the change in the tea bag format for Unilever (Europe) in the year 2003-2004, it’s effectiveness and the indispensable role of Packaging in the Process?

The aim of this investigation is to see what the old tea bag format was, the reasons for the changes made, the know-how of the technical changes in the tea bag format, the effectives of this change in the market and how the packaging and its’ department play a indispensable role in the process. I decided to tackle this problem because people often tend to neglect the importance of packaging in a product and concentrate more on the other Ps (product, price, place, promotion) however packaging is also equally important because it is an important part of the product itself as well as the promotional aspect. This will be better understood after analyzing the role of packaging in this particular, very common, consumer good.

2. This research will require an extensive knowledge of the underlying principals packaging and it’s uses in promotion and product. Moreover analytical tools such as SWOT Analysis and Ansoff Matrix will certainly be used for my Analysis

For my research I will refer to several packaging books and reports. I will also write to the Packaging development manager in Europe requesting for more information on this topic. After which I make find the strengths, weaknesses, threats and opportunities of this end format. I can also compare the sales before and after the format change, all this will finally enable me to also put in place the Ansoff theory in my analysis.

3. The research might lack accuracy in a few instances for two chief reasons. Firstly, since it will entirely be carried out from Europe, I may not be able to verify the reliability of some of my sources. Secondly, Unilever is a private enterprise; hence I may not be able to access confidential financial results very accurately.

Acknowledgments:

Contents:

Executive Summary

An introduction will be given which will introduce Unilever as a Private enterprise. Followed by the divisions of the company into foods and household goods. Then the brand under which this particular tea bag falls, Lipton will be introduced. A brief section about the influences of Packaging in Lipton tea will be included in the introduction. This introduction giving the background will provide a good understanding of the packaging department in the company and help in the project.

The introduction will be followed by the findings of the research, that is, how the tea bag format was before and how was it changed. This will also include pictures of the old and the new tea bags. The results will show the increase or decrease in sales with an illustrated bar graph.

This report will come to its final part with a discussion and analysis of the findings. The reasons for the change in sales, the new customer perception, the approach to gaining a to competitive edge will all be included. It was also have the Ansoff matrix to show what strategy Unilever chose to gain a competitive edge in packaging of their product. The SWOT Analysis will also be used to strengthen the discussion. A conclusion will be drawn from the above analysis and any needed recommendation will finish the report.

Introduction:

Unilever Best Foods is the largest foods company in the world, with a turnover of close to 50 million US dollars annually. It has to main divisions foods and household personal care. Foods division has got famous mega international brands like Knorr, Walls, Lipton etc. In this assessment, we will deal with Lipton, the brand which falls under the beverage category of foods division.

Lipton includes all hot and cold tea based drinks. Lipton targets young adults, aging 16 to 28 years. Lipton’s new strategic aim is not only to refresh and rejuvenate the young adults but also promote it as a health and vitality drink. The mission statement is The plan of action which it takes to achieve the aim is as follows:

* Huge investments are made in the Research and Development department to explore tea science and various elements in it which rejuvenates individuals, for example, it was been found that tea leaf contains anti-oxidants which is beneficial to health.

* Communication is done through various persuasive and informative advertisements which targets the particular segment mentioned above. These advertisements highlight the health benifit of drinking Lipton Tea. Various promotions and activations are also organized by the Marketing development to include and influence the young adults.

* It focuses on strategic implementation of world class supply chain and ensures the consumers get the best cup of tea

Lipton Tea and the Influence of Packaging in it

In this report, we will focus on hot beverages where tea bag is a vehicle through which consumers get a taste of the product itself. In Europe tea is mainly prepared through tea bags. Unilever has got a centralized packaging development department, which controls and defines tea bag packaging. Packaging has got fundamentally three roles to play, i) contain the product ii) communicates what it contains and iii) delivers the product to the consumers. The packaging is developed in such a way that it should help attract the customer when it is displayed at retain outlets. It must keep the product as fresh as it was manufactured. Packaging is organized as below:

Centrally it reports to research and development at the same time it has parallel and dotted line reporting to technical/supply chain. However most of the projects are driven through multifunctional teams comprising of representatives from marketing, technical, commercial and packaging development. Unilever has gone even further to include member of the key supplier in the multifunctional team. Therefore in Unilever the lead or the key suppliers are no longer termed as suppliers but the partners.

The main two competitors for Lipton in hot Tea are; Tetley and Dilma. They are both well-known international brands that offer a tough competition in the market to each other as well as Lipton. Therefore Unilever is constantly investing in Research and Development to achieve the competitive edge. Finally the packaging department came up a new format, which would give their product a new look and new perception. The research and the findings follow in the next part of the report.

Research and Findings:

Tea bag is known as primary packaging for tea and it has got three main element: the filter paper, the string and the tag. Tea bags containing tea (approx 2grams per bag) are then packed in paper board carton which is then over wrapped by polypropylene to retain freshness. Historically dust tea is used for tea bags. The reason is, dust tea has higher infusion in water compared to long leaf tea. Since tea bag is an obstacle between the product and the water one would require to use a type of tea which has higher and aggressive infusion, that is, dust tea. However several consumer research clearly indicates that dust tea is an inferior quality tea and it is viewed as a mundane, low end quality of tea. This consumer perception hit Lipton tea bag adversely and Lipton market share started falling. Unilever felt immediate need to change the mix (product, packaging and communication) of the company.

The new generation consumer expectation are as below:

* Leaf tea not “dusty” tea

* Fast infusion

* Improved product experience

* Affordable cost

To have the above elements all together was a technical challenge for Unilever, especially the packaging department.

Change in the packaging to suit customer needs, customer reaction and change in market value

Primary packaging format: tea bag

More leafy tea was introduced for loading in tea bag. No longer the same packaging material could be used for tea bag because leaf tea needed more transparent and porous packaging material. Further the same tea bag format/structure needed fundamental change. As the current tea bag structure didn’t allow enough ‘room to move’ packaging development worked out an innovative pyramidal structure which actually revolutionized the tea bag market in Europe. The new format in the pyramidal structure can be with or without the string or tag. Without the string or tag, the tea bag can be used as a boilable teas bags or pot bags. With string and tag, it can be “dip-dip” kind of tea bag. In short packaging change for the tea bag took place in two fronts 1) Material and 2) Format. This allowed the customers to recognize the product, because of its packaging as an unique and original one.

The pictures illustrates the change in the tea bag:

Secondary packaging: the carton

The secondary packaging also underwent a change, the flat conventional carton was replaced by more elegant and flip-top carton with a special re-closable carton. This allowed the Unilever to improve the visibility of the pack in retail outlets. This special flip-top re-closable feature improved the in-home freshness perception for the consumer. This greatly improved the image of the product, uplifted it’s value and premium ness. This allowed the company to charge premium in the market and thereby improved the margin.