The Fate of Nestea and FUZE in the Tea Category


Nestea

Most readers that also follow the beverage industry or the BevWire twitter feed know that Coca-Cola and Nestle Waters have altered their distribution agreement, with Nestea to be distributed by Nestle Waters after the end of 2012 (source article here).  The article goes on to state that Coca-Cola will focus on increasing the visibility for their own line of teas, such as FUZE, Honest Tea, Gold Peak, and Peace Tea.  How will this play out for the two beverage giants, Coca-Cola and Nestle?

Nestle Waters – a spinoff from the Nestle S.A. – originally bottled and distributed water exclusively, but has recently began to extend their offerings with a tea acquisition.  Bringing Nestea back into the fold for them now gives them a much stronger and balance tea portfolio.  Nestea will serve the value and price-conscious end of the tea spectrum, while Sweet Leaf Tea and Tradewinds cater to consumers at the organic and premium end of the spectrum.  Nestea itself is also popular and likely ranks as one of the larger tea brands in North America (other major players in a oligopolis category being Lipton, AriZona, Snapple).  Nestea may very perform better under new ownership, since its exclusive business operations are waters and teas. It may likely benefit with higher marketing budgets as they now become a key brand among some lesser known brands, and competes with fewer brands for funding.  Business customers like Wal-Mart, CVS, and other supermarkets are not likely to be too affected since they already stock Nestle Waters products, so Nestea will now be brought to them by the same trucks that the Nestle Waters products come off of.  Consumers may not even notice any difference, because the product is essentially the same as taste and packaging stay the same.

How about for Coca-Cola, how does this distribution partnership affect them?  With Nestea no longer coming off their delivery trucks, the company’s focus is to grow FUZE first and foremost.  Honest Tea, Gold Peak, and Peace Tea will also benefit from increased attention.  However, although FUZE stands to have the most opportunity to make a name for itself in the tea category, the brand is somewhat struggling currently.  FUZE is currently known for its juice offerings (except for Subway where it is already available as a fountain tea beverage) but struggling to fully differentiate itself among other competitors.  With the exception of FUZE’s Slenderize juice line (low-calorie benefit), FUZE’s other offerings are not easily connecting with consumers as a vitamin-enhanced juice.  Consumers currently see the FUZE line as just another emerging juice product that blends together unique fruits (peaches with mangos, bananas with coconuts, etc).

Fuze lineup - courtesy of foodbizdaily.com

Coca-Cola’s first order of business is to ensure that consumers understand the value proposition and benefits of the FUZE.  And because the company now understands that FUZE will represent both juices and teas, their positioning and c0mmunication will be markedly different from what it was before – simply raising the profile will not be enough.  The key message can no longer be about vitamin-enhanced juices, but either vitamin-enhanced juices and teas  or simply vitamin-enhanced products.  In that vein, it will be interesting to see what type of advertising message FUZE will come up with.

Another key area of concern may be the pricing strategy for FUZE.  Nestea exists as a value player in tea, while FUZE is a premium-priced juice offering.  If FUZE were to replace Nestea as Coca-Cola’s value tea offering, FUZE will have to adjust its pricing strategy to enter as a value competitor.  Is that in itself a good strategy?  As a company, do you want to trade down from a premium offering (higher margin product) to sell incremental bottles but make significantly lower margins?

Although Nestea will not be officially transitioned to Nestle Waters until 2013, there is a lot of preparation for both companies to do.  Coca-Cola will have to maintain its efforts on Nestea in North America, but be mindful that by 2013 Nestea will be a product that competes against their own tea offerings.  They also cannot legitimately stop their efforts on promoting Nestea since Coca-Cola still holds distribution rights for Nestea elsewhere in the world (Europe, Asia, etc).  At the same time, Coca-Cola must be working hard to raise FUZE’s profile as well as their other offerings to cover for the loss of Nestea.  On Nestle’s part, they must prepare for taking on a large tea brand and look for opportunities to increase Nestea’s market position.

There’s no word on whether how much of this will affect Canada, but since Canada’s market is closely affiliated to the American market, there is likely to be some impact.  Keep an eye out for these changes when Nestea changes hands.

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28 thoughts on “The Fate of Nestea and FUZE in the Tea Category

  1. Pingback: Honest Tea Modifies Packaging To Benefit Consumers « BevWire

  2. Deborrah

    Now I understand why I haven’t been able to purchase the12 can packs of Nestea Lemon diet iced tea which is all I drink. what stores will carry them??????

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  3. Lucy

    I am glad to know Nestea will be back on the shelves after the New Year. Our WalMart seems to have stopped carrying it. At least I have not been able to find it there for a few weeks. And I have missed it!

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  4. James M Polonsky

    I am disabled veteran who is home bound quit often and the only drink I like is the 12 pack (cans) of Nestea Ice Tea(lemon flavor)….I currently live in Ledyard,CT….I cant find this product anywhere….does anyone know when and if I will ever be able to purchase this product again???

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  5. Janice Patterson

    I cant find instant nestea plain or decafe in walmart they dont seem to know why I did find regular in winn dixie but no decafe and Ido not want lemon flavored

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  6. kristi

    i just found a bunch of nestea diet tea and raspberry tea at a discount market. i was looking everywhere. now its still under the coke label and not exp. so i bought 20 12pks to get through until they get it back on the shelves. so if u have what we call bent and dent or discount markets look there 🙂

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  7. Eschia

    I usually have Nestea delivered to me by relatives. For a long time they’ve been saying they can’t find any. So I went out and looked myself. None to be found in any nearby stores. It’s either Brisk or Fuze… Brisk tastes bitter and nasty. Fuze tastes like a watered down imitation. So its back to homemade Luzianne for me.

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  8. Pat Bruckart

    It is now the end of April and still no Nestea Diet on any of the shelves and my local stores around York, Lancaster, or Adams counties in PA. What’s the story? Your posting is dated Jan. 2012. My favorite drink used to be diet Coke, but it has gotten so expensive I switched to Nestea. Not only is it cheaper, but it is all around better tasting.

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  9. BevWire

    I’m sorry to hear that Nestea is not back on store shelves yet in American grocery stores as this transition takes place. As transitions happen, there promises to be a little bit of a rocky road given that manufacturers will want to focus on growing their own business, and retailers want to keep on stocking what is being sent in delivery trucks. If Coke has decided to replace Nestea product on their delivery trucks with Fuze and Gold Peak, that is why we’re seeing more of them in store shelves, and why no Nestea has reappeared yet.

    I’m really surprised by the amount of feedback that this post has generated. I just also want to note that as an independent blogger I’m not affiliated with Coca-Cola nor Nestle Waters, so my information comes from the same sources as yours. I only report what my perspective is on the business and marketing perspectives.

    BW

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  10. Nata

    The other day a vending machine said it sold nestea and it gave me fuze. I really dislike fuze iced tea. I prefer nestea 1000x more. I was so disappointed 😦 nestea come back.

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    1. James M Polonsky

      I agree with you completely 100%…They reeeeeeeeaaaaaaallllllllyyyyyy need to bring back my Nestea Ice Tea!!!!! And not the few Nestea Bottles that I have with the label being written in half Spanish…because it actually TASTES DIFFERENT….then my Nestea(Cool) Tea!!!! Your missed more then you know and I STILL CANT find your replacement!!!!

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  11. Dolores

    Nestea may not be able to find it’s place on the supermarket shelves if they wait much longer. My supermarkets have filled their spaces with BRISK from Lipton. I dislike Lipton and never drank tea until I found other brands. I am still hoping to find canned Nestea with lemon, with NO CAFFEIN, which is another reason I have not bought the other brands.

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  12. nats

    Sorry, but Fuze sucks. It just tastes BAD. I have been a sweet iced tea drinker ALL of my life, and with fuze iced tea everywhere my heart is breaking. I really wish there was a way to bring Nestea back! Or Lipton or Snapple, just not Fuze, please!

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    1. James M Polonsky

      I agree 100% completely…Fuze tastes horrible…I have also been a Sweet Tea drinker my entire life and as a Disabled Vet…I stay in quite often and used to LOVE drinking my Nestea tea…I have been sooooo upset since they took it off the shelves..Please bring the Nestea Cans back….the few bottles I find with half the writing in Spanish has two (2) different ingrediants in it and it REALLLLLLYYY tastes much different!!!

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  13. James M Polonsky

    Does anyone still have any Nestea (cool) Lemon flavored Tea left in CANS….NOT BOTTLES…LoL…cans taste much better….if so I will pay pretty well for them to be shipped to me…thank you for your time everyone

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    1. david jordan

      James, I am looking for Nestea (cool) as well. If you have found any OR can find any, please let me know as well. will pay handsomely. promised my girlfriend I would find it for her before we get married. thank you

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      1. James Polonsky

        Yeah they stopped delivering them in the US….you can find them in Canada and Europe…but you can find them now in some stores…but there not the same originall ones… If you look at the can or bottle there written half in Spanish… There made in mexico and it’s a different formula…. It tastes horrible…. But I do have a few cases that I picked up in Canada… LoL

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  14. Terri

    Hello!!!!!! Maybe Fuze just isn’t selling because it is just poor tasting and a lousy tasting product. Even if you gave it away free, I still would not drink it. diet Nestea has a much better flavor, and I don’t mind paying the extra dollar for something that I enjoy. Truthfully I’d buy it on-line and pay the delivery fee if necessary.

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    1. James M Polonsky

      Terri…I agree 100%…..I will also pay any shipping fees to be able to have my Nestea Ice Tea back….If they were just honest up front and told everyone that we wouldnt have been able to purchase our drinks for a while…at least we all could have STOCKED UP on our favorite drinks….My garage would have been PACKED from floor to ceiling if I knew the truth!!!!

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  15. Jon Valadez

    Wow, I thought it was only me going crazy or I thought Nestea Diet Green tea with Citrus was seasonal, but neither one. I really miss my favorite Diet Green Tea. I hope it will be brought back soon. And I mean SOON!

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  16. James M Polonsky

    I cant stand Fuze….for years the only thing I drank was Nestea Ice Tea (lemon flavor)…PLEEEEAAAASSSSEEEE bring this product back in the CANS….I miss it sooooo much and have yet to find a suitable replacment..Nothing comes even close!!!! Please return this back to the US MARKET?!?!?!

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