The Nestea brand has lost the cold tea market to the new kid on the block, Fuze Tea. Three months after its relaunching under the Osem group, Nestea holds a market share of only 20.2%, while its rival Fuze Tea, launched in September by Coca-Cola Israel, holds 57.7%.
Nestea has been floundering since its relaunch. It held 23% of the market in November before dropping to its current level. Nestea onced controlled 80% of the market, holding 75% as late as last July.
Since 2001, the Nestea brand was produced and marketed by Coca-Cola Israel as part of a partnership between Nestle, which controls Osem, and Coca-Cola International. Since the breakup of the partnership, Coca-Cola controls the product and Nestle keeps the brand name.
Fuze took over the market when Nestea's products were unavailable during its changeover. Osem says Coca-Cola Israel broke the agreement with Nestle under which it was supposed to continue marketing Nestea products. Coca-Cola denies this.
Nestea launched an advertising campaign in October to market the new brand, made by San Pellegrino using mineral water, in contrast to tap water used by Fuze. The cold tea market is estimated at NIS 150 million a year, comprising 3% of the beverage market.
Coca-Cola Israel's power in logistics, distribution and advertising overwhelmed Osem, a newcomer to the field. Fuze also benefited from the fact that it tastes like Nestea's older product.
Osem isn't concerned, however, having a record of long-term persistence. It's convinced that after the launching stages, it will gradually grow again in this arena.
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