Cold War Brews Over Iced Tea as Nestea Plans Comeback

Osem, the local distributor for Nestle brands, to launch new upstart brand of tea called Fuze.

A new version of Nestea will be launched by Osem, the local distributor for Nestle brands, immediately after the holiday season in an attempt to reclaim some of the venerable product's dominant market share from Coca-Cola's Fuze Tea.

Fuze, the upstart brand, distributed by the Coca-Cola franchisee Central Bottling Company, effectively knocked its predecessor off the shelves with Nestea's market share plummeting from 76% to just 15% within weeks.

Until recently. Nestea was distributed jointly by Coca-Cola and Nestle, with Coca-Cola providing the formula and Nestle the name. When the venture ended this summer, Nestle kept the name but Coca-Cola introduced the repackaged Fuze amid a marketing blitz that won it 61% of the iced tea market.

Under the agreement, Osem is only permitted to distribute Nestea beginning in October. That leaves Central Bottling with a big time advantage, but marketing experts are divided over whether Osem can claw back its lost market share.

"Despite the big advantage held by the Central Bottling I'm betting on Osem-Nestle and their Nestea brand," said Tali Sakler, marketing manager at the Clalit health maintenance organization.

"For consumers Nestea represents not just a flavor but an entire brand impact of experiences, image, and sentiments. Osem will need to convince customers that its drink is the real Nestea to maintain its brand impact," she said.

Dror Katzir, vice president of marketing at Superpharm, disagreed.

"Many would say the battle between Coca-Cola and Osem-Nestle was won even before it began," he said. "The key was the Central Bottling's window of opportunity from when it stopped marketing Nestea itself a month and a half ago."

Einat Portugali, deputy CEO for marketing at Fax Group, said the brand name usually wins out over the actual product, which should give Osem an advantage with Nestea.

"Success or failure in its mission will be measured by the company's success in creating a taste as close as possible to the old Nestea taste," she said. "A new, different taste may win it some sales as people try it but won't necessarily win it continuous sales."