Lipton: Brand Profile / Unilever Tea

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Lipton is the world's best-known and biggest-selling branded tea, and one of the major icons in Unilever's global foods portfolio. Beneath its genteel exterior lies a surprisingly powerful product. It is the company's #2 food and beverage brand with sales of around E3bn a year. Founder Thomas Lipton was the son of a humble shopkeeper who transformed himself into a grocery millionaire before he was 30, establishing tea plantations and food factories worldwide. Over a century later, Lipton is far and away the world's best-selling tea, a household name in more than 110 territories worldwide. Unilever's regional tea brands include PG Tips and Brooke Bond in the UK, Red Label in India, and Bushells in Australia. The company also produces ready-to-drink Lipton Iced Tea, mainly through a global partnership with PepsiCo.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 9th Nov 2017: Unilever further expanded its already vast tea empire with the purchase from Starbucks of the Tazo packaged tea brand for $384m. Tazo slots in alongside Lipton, PG Tips, Brooke Bond and Unilever's other tea products. The deal represents a significant profit, at paper at least, on Tazo which Starbucks acquired in 1999 for just $8m. The sale follows Starbucks' decision to shutter all retail outlets of its other and much more lucrative tea brand Teavana, which it will retain and will continue to sell through its Starbucks retail estate. Sales of tea are growing at double digit percentages through Starbucks' network, and the company said Teavana generated sales of around $1.6bn over the past year.

Adbrands Weekly Update 15th Sep 2017: Unilever expanded its tea portfolio with the acquisition of UK-based premium organic range Pukka Herbs. No price was disclosed. Pukka is expected to report sales this year of around £30m, up 25% year-on-year. Unilever’s Refreshment President Kevin Havelock said: "Pukka has strong values and a clear purpose that aligns fully with our own sustainable growth model. There's a clear strategic, philosophical and cultural fit for us."

Adbrands Weekly Update 27th Feb 2014: Ads Of The Week "Be More Tea". Well-chosen music can make a good ad great, and a great ad perfect. Actually, our first ad doesn't even need the additional lift it gets from Nilsson's "Everybody's Talkin'". For this brilliant campaign for Lipton Tea, Adam&Eve DDB envisaged a world populated (almost) entirely by Animal from the Muppets. Now that's my kind of city! (In fact, it would be even better without Kermit and Miss Piggy). Clearly the charm of the Muppets will last forever, certainly if they continue to add value to other people's marketing in this way, while also promoting their own movie. Oy vey gevalt indeed! 


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Background

Free for all users | see full profile for current activities: From humble origins in working-class Glasgow, Thomas J Lipton became world famous as one of the most successful entrepreneurs of the Victorian age. Born in 1850, he spent his formative years working in his father's small grocer's shop. Obsessed with the sea and keen for adventure, he persuaded his parents to let him take passage at the age of 15 on a ship bound for America, where he scraped a living as a farm labourer, and later as a grocery clerk in New York. In 1869, he returned to Glasgow and began running his parents' shop. Two years later, on his 21st birthday, he opened the first store of his own. A keen believer in the power of marketing, he distributed handbills in the street outside the shop, and left the gas lights on at night so that prospective customers could see inside. Hugely ambitious, he was determined to open a chain of shops nationwide. Buying meat and cheese direct from farmers rather than through middlemen, and ruthlessly undercutting other retailers, he quickly built up an extremely profitable business, with a new store opening every week by the end of the decade. Later, he even established his own meat-packing plants in the US, importing bacon and sausages into Britain. 

A relentless showman, Lipton came up with a never-ending stream of gimmicks to publicize his business. For a new store opening in Glasgow, he purchased a herd of well-fed pigs to be herded through the streets of the city. Each of the scrubbed and polished hogs had the words "I'm Going to Lipton's" painted on their sides. Later, he hired teams of sandwich board-men. Skinny men were given boards which read "I'm Going to Lipton's" and were told to parade up one side of the street towards the new store; fat men marched down the other side of the street with signs which declared "Coming from Lipton's". In a similar fashion, he placed concave and convex mirrors in stores. In those positioned at the entrance to stores, under the legend "Going to Lipton's", customers could see distorted thin reflections of themselves. The mirrors hung at the exit read "Coming from Lipton's", designed to give fattened reflections. In 1881, Lipton imported the largest cheese in the world from America and then stuffed it with gold coins to make it even more publicity-worthy; he produced leaflets designed to resemble pound notes; and guaranteed to buy back any goods found not to be of the highest quality. Pumping profits back into the expanding business, he established Britain's first national grocery network within a decade. In around 1880 he also began selling tea, then a popular but extremely expensive tipple. In order to once again cut out the middle man he bought his own plantations in what was then Ceylon (now Sri Lanka). In addition to tea plantations he also bought rubber estates, factories and packing houses, shipping his goods to Britain and also to the US from 1890.

Although already extremely wealthy, Lipton was nevertheless not particularly well-known. For one thing he was too busy to become a figure in London society. This changed forever in 1897, the year of Queen Victoria's Diamond Jubilee. The Queen's daughter-in-law had launched a fund to provide a huge celebration dinner for the poor, but a few weeks before the event only a fraction of the £30,000 needed - a huge sum at the time - had been donated. Lipton saved the day by giving £25,000 of his own money anonymously. His identity was unearthed by the press, and Thomas Lipton suddenly became a major celebrity. In 1898, he was rewarded with a knighthood. Capitalizing on this fame, Lipton floated his British-based interests in one of the most lucrative public offerings of the Victorian age. Such was his popularity that the company was overwhelmed with applications for shares, raising as much as £50m. (Lipton's US business remained separate).

Still unmarried, Sir Thomas Lipton was now firmly established as one of the world's most eligible bachelors, courted widely in Britain and North America, where he spent increasing amounts of time. (He was reported to have enjoyed a liaison with Rose Fitzgerald, later the mother of US president John F Kennedy). Having long held a fascination for the sea, Lipton developed an obsessive interest in yachting. In 1899 he entered the America's Cup, the premier sailing contest. But his Shamrock I yacht was roundly defeated by the American defenders of the Cup. Undeterred, he entered the race four more times, failing each time but earning yet another reputation as a maverick sportsman. He skippered his last race in 1930, aged 80. The following year he died in London. With no heirs, he left the bulk of his fortune to the city of Glasgow to aid the poor.

Meanwhile the Lipton empire continued to prosper, especially in the US. Because of its role as a symbol of America's colonial past (epitomised by the so-called "Boston Tea Party" of 1773), tea had fallen thoroughly out of favour in the United States. Two events in the early 1900s changed the drink's fortunes dramatically. According to popular legend, in the blazing summer heat of 1904's St Louis World's Fair, British tea importer Richard Blechynden found it impossible to sell hot tea to the sweltering spectators. Instead he hit upon the idea of turning his brewed tea into a cold drink by pouring it over ice. This variation proved a huge hit, and the popularity of iced tea spread rapidly. Four years later, New York merchant Thomas Sullivan invented the first tea bag. He distributed samples of his loose tea to customers in small hand-sewn silk bags, and decided to market these devices commercially after he found a client successfully brewing the tea in the bag instead of decanting it into a pot. (Paper bags were not introduced until 1953, by Tetley). 

Although tea never managed to rival the popularity of coffee, Lipton was already firmly established as the country's biggest importer. In 1937, six years after Sir Thomas's death, the US operations of Thomas J Lipton were acquired by Unilever, marking the group's first move into the tea business. It already had some involvement with the Lipton brand, having inherited a minority shareholding in the separate Lipton grocery chain through Van den Bergh, which supplied its margarine. However Unilever played no other active role in that business, and for the next 30 or so years, limited its tea business to the US. Meanwhile, during the middle years of the century, the British grocery industry gradually consolidated, and the Lipton chain eventually became part of grocery conglomerate Allied Suppliers.

In 1965, Unilever took a further step into the tea industry with the acquisition of Ceytea, a German company based in what was then Ceylon experimenting with a process to make instant green tea along similar lines to Nestle's Nescafe. Later it tentatively drew up plans to enter the British tea market, but abandoned the project in the face of strong competition. Finally, in 1972, the group was drawn into talks with corporate raider James Goldsmith who sought Unilever's support for his hostile takeover of Allied Suppliers. In return for its shares, Unilever received control of the Lipton chain's plantations in Ceylon and its tea business in Europe, trading under the Lipton name and as Elephant, a long-established French brand. (Lipton groceries subsequently became part of Argyll, then Safeway, and ultimately Morrisons). Unilever finally established a strong presence in the British tea market in 1984 with the acquisition of Brooke Bond, a tea importer originally established in Manchester by Arthur Brooke. It launched PG Tips (originally Pre-Gest-Tee) in 1930, before merging with German company Liebig, makers of Oxo stock cubes, in the 1960s.

Meanwhile, Unilever's TJ Lipton division in the US had moved successfully into dry soups, having acquired the Continental Soup Company in 1940. This business was successfully introduced in other countries. (Unilever still produces soups and sauces under the Continental brand in Australia). The same dehydration process was used during the 1950s for a line of Lipton instant tea mixes in the US. The first ready-to-drink version was launched there in 1972, in response to the introduction of Nestea by Nestle. The latter struggled to gain a foothold in the US and was eventually suspended in the early 1980s. This gave Lipton Iced Tea plenty of room to grow, and the company forged alliances with several of Coca-Cola's bottling partners around the US. A sparkling version of Lipton Iced Tea was introduced in some continental European markets in 1984 as Liptonic. But in 1990, the company was alarmed by the announcement of a worldwide joint venture between Coca-Cola itself and Nestle (later known as Beverage Partners) to market a range of coffee and tea-based canned soft drinks around the world. Anticipating a competitor that would also close out its access to its US bottlers, Lipton quickly negotiated an aggressive new partnership with Coke's arch-rival Pepsi, then intent on expanding its own portfolio to counter the dominance of Big Red. However as a result of contractual obligations triggered by Lipton's change of bottler, the company was forced to pull its product off-sale in several US markets for a year. 

In the meantime, smaller rival Snapple leapt in with national distribution of its own RTD iced tea, quickly followed by the launch of Coke/Nestle's Nestea. Canned RTD Lipton was reintroduced as Lipton Brisk in 1991, and gradually rolled out nationally as regional non-compete obligations with bottlers terminated. By 1993 it had been joined by another seven bottled hot-fill Lipton Original  varieties, now renamed Lipton Iced Tea, as well as a range of fountain forms. The battle which ensued between Lipton-Pepsi and Coke-Nestle marked the start of the massive diversification within the US soft drink market. The next few years witnessed a fierce three-way battle between Lipton, Nestea and Snapple. However, leaning heavily on its long-established reputation, Lipton Brisk overtook its two competitors to regain control of the sector by 1996. A similar struggle was taking place in Europe, where Liptonic was absorbed into a larger Lipton Ice Tea range in 1993.

In 1998 Unilever also reinforced the position of the Lipton range of side dishes in the US, transferring its Van Den Bergh Foods division under the Lipton umbrella. In 2001, the company revamped its branding, finally dispensing with the image of Sir Thomas Lipton which had featured on all its tea packaging since the start of the century.


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