A tea by any other name would taste as sweet
Fuze Tea appeared on shelves in the place where Nestea used to be, customers could easily have abandoned the beverage. Its success, however, provides six invaluable marketing lessons on the power of brand, taste and global reach.
"Mommy, I want you to buy the drink that tastes like Nestea," said my 4-year-old son. Funny, he never used to drink that brand's iced tea before. But the massive, focused Israeli ad campaign by the Coca-Cola Company's local franchisee, the Central Bottling Company, had done its work.
At a time when companies are watching their consumers' attention spans dwindle and their ad campaigns miss the mark, the Central Bottling Company managed to win over the public with a targeted campaign promoting a singular, sharp message.
The results are undeniable. After Coca-Cola handed over distribution of several of its Nestea products, prompting the name change of one of this country's most beloved iced teas, the newly christened Fuze Tea was introduced in a flurry of ads.
Two weeks in, the nascent brand's market share among iced tea beverages, in terms of financial total sales volume, reached 61 percent, according to figures compiled by market research company Storenext and published September 9 in TheMarker.
Nestea's market share plummeted from 76 percent to a negligible 15 percent market share, with Fuze Tea effectively knocking its predecessor off the shelves. The market share for other competing brands, including Tempo Beverages' Jump, Jafora-Tabori's Spring Tea and supermarket chain Super-Sol's generic iced tea held steady. But all brands can take heart in the fact that sales of iced tea jumped across the board.
The Fuze Tea marketing campaign was a blitz the likes of which had not been seen in Israel for many years. At a time when most companies have been scaling back on advertising, Central Bottling Company set aside a reported NIS 15 million to push its brand. This was a focused, thought-out campaign.
It began with a simple press announcement that was reminiscent of a product recall. Like all good ad campaigns, however, it left consumers thirsty for more, saying only that an established product was about to change its name. Nothing more was revealed.
With consumers curious, the message returned in an all-out public relations campaign. Sources close to the campaign say that even before it got off the ground, consumer awareness surveys showed that 60 percent of the target audience was already aware of a pending iced tea name switch.
The success of the campaign can be measured not just in how much tea was guzzled, but also how much buzz it generated. Perhaps driven as much by curiosity as confusion, customers who encountered the bottles with the same taste but different name began to chatter about what it all meant.
Curiosity may have killed the cat, but it also, apparently, sparked the thirst, as consumers hurried to try to the newly labeled drink and taste what all the fuss was about.
But the future of Fuze can't yet be read in the tea leaves. Despite the success of the launch, Osem Investments, Nestle's local distributor, has still not even begun to respond in force with the new version of Nestea iced tea. It’s also possible that despite Fuze's apparent success, some of those glugging it down are just trying out the drink, and won't stay loyal to it in the future. One thing, however, is clear. The successful launch of Fuze Tea and its nearly instantaneous replacement of an established brand highlight several important lessons for marketers everywhere.
As all good marketing students know, companies invest in their brand name, because a strong brand will generate customer loyalty and allow the company to charge higher prices. While competitors are selling their products at two bottles for NIS 10, Fuze Tea is charging between NIS 6 and NIS 7 per bottle. Despite the fact that Israelis are entrenched in a social justice debate about the inflated cost of products here, Central Bottling Company launched a new brand-name product selling at a higher price than its consumers. And the result? The cash-strapped masses bought it up in droves.
Taste versus image
Part of Fuze Tea's success can probably be chalked up to the fact that it tastes exactly the same as the old Nestea.
When Nestle and Coca-Cola split up, Coca-Cola got the drink's recipe while Nestle walked away with the brand name.
One of the key product development tests used by Nestle to determine a new drink's readiness for market is called the 60-40 test. A product is considered ready for public consumption when roughly 60 percent of those surveyed in taste tests call it delicious and say they prefer it to competing brands.
But this entire premise revolves around the idea that people are blindly loyal to brand names. The story of Fuze Tea suggests that companies may need only to preserve the taste that people love, and consumers will continue to buy the product, whatever the name.
The great irony here is that the company that has demonstrated this lesson in the iced tea market is the same company that markets Coca-Cola, a brand that in the past took a serious hit for trying to change its taste. This is also brand whose biggest competitor, Pepsi, tried without much success to draw away some of Coca-Cola's loyal customers through a blind taste test promotion to prove that consumers prefer its dark fizzy drink more.
Brand name versus product design
Perhaps the discussion is focused on the wrong dimension of the problem. Maybe we need to ask what really makes a brand – maybe it’s the font used in the logo or the container's evocative appearance.
Nestea's bottle was very distinctive. After the falling out between Nestle and Coca-Cola, the latter changed the name on their bottle's paper label but left everything else completely intact.
Keeping the same identifiable bottle, it appears, told consumers that the drink inside had remained the same, despite the name plastered across the front.
Product design folks will tell you that if you received a black carbonated drink served in Coca-Cola's distinctive glass bottle that you would be confident that you were drinking Coca-Cola, even if you were actually sipping RC Cola. Other research shows that it's not even product design that serves as a determining factor, it's simply color. When red food coloring is added to water, people think it tastes like raspberry.
Regardless product design, when a drink's flavor remians the same and the drink comes in the same shape bottle, the impact of a changed name is significantly reduced.
Distribution versus branding
Albeit much less sexy to talk about, another key element is a product's distribution channels. Fuze Tea's launch wasn't just exceptional in its scope or because the underlying product was left unaltered. It was also different because within two weeks of the product hitting the market, it had the same market penetration of Nestea. You could find the drink at almost every kiosk and grocer in the country.
Almost every single Israeli who went looking for a soft drink over the past few weeks had Fuze Tea as one of their choices. It's unlikely that any company other than Coca-Cola and its local distributor, the Central Bottling Company, could have reached this distribution level in a similar time frame. The Central Bottling Company's distribution muscle is one of its most significant advantages and probably played a significant role in Fuze Tea's success in the Israeli market, as much as the media campaign.
Location, location, location
Central Bottling Company has another distribution trump card: where its soft drinks are sold.
Sales of Heinz ketchup really took off in Israel when the brand-name condiment received wide exposure at local branches of McDonald's. Likewise, one of the advantages that Central Bottling has over its competitor Tempo is that its soft drink offerings are carried in most restaurants, food chains and bars. The more frequently a customer is exposed to a product, the more he is bound to like it.
Brand power versus corporate muscle
One of the reasons Fuze Tea was featured so prominently at most supermarket chains may have had something to with it belonging to the Coca-Cola Company, whose namesake product is instantly recognizable around the world. When you own such a powerful brand, retail chains have an interest in keeping you happy. You don't even need to make demands. You can just ask nicely and watch all the stores scramble to follow suit.