Exploring the Australian Market: Lipton R.T.D. Iced Tea

1. Exploring the Australian Market: Lipton R.T.D. Iced Tea Caroline Bintz Kevin Donohoe Mike Holt Amber Miller Sara Vineyard

2. Quick Lipton Facts • Current Global Market Share (2000): 9.5% • Flavors: 9 flavors • Kroger, Walgreen's, Meijer, etc.

3. Australia at a Glance • Land mass equal to U.S., but population equivalent to the greater Los Angeles area. • Majority of population located on the coast • Age as of 2004: • 0-14 years = 20.1% • 15-64 years = 67.2% • 65+ years = 12.8% • 20% of population born outside of Australia

4. Consumer Behavior • The R.T.D. tea market in Australia is of a much smaller scale as compared to that of the United States. • Australia market – 0.4 million liters in 2002 • U.S. market – 1,878.3 million liters in 2002 • The Australian R.T.D. tea market saw a 37.50 percent decrease in volume sales over the years of 1997-2002; whereas the U.S. experienced a 32.46 percent increase during this same period. • The RTD tea market experienced a 55.57% decrease in value sales in Australia from 1997-2002. • Forecasted sales for RTD tea in 2005-2007 are only 0.3 million liters per year. • Recent trend towards high quality, value-added food products. • Consumer spending on non-alcoholic beverages in Australia were $5.17 billion in Australian dollars in 2001.

5. PRODUCT

6. Competition Product / Place / Price / Promotion • Cadberry Schweppes Australia • Manufacturer of sugar confectionery and soft drink. • Brand Share of market for fruit drinks: 4.7% • Types: Oasis, Passiona, and Sunkist • Berrivale Orchards Ltd. • An association of cooperatives producing fruit, fruit juice and other foods. • Brand share of market for fruit drinks: 8.3% • Types: Berry Fresh, El Fresco, and Sunrise

7. Product / Place / Price / Promotion Labeling & Packaging • Australia /New Zealand Standards code states that there are percentages of key ingredients and main ingredients that may cause allergies. • U.S. exporters should ask their Australian importer to ensure that their products comply with Australian Federal and State Government labeling regulations. • Australian laws mandate that pre-packaged goods are to be labeled with a true description of the goods in clear contrast to the background graphics, nor may they falsely represent any crucial information pertaining to the product. • Cans sold by Coca-Cola; packaged in 10’s and 30’s. • Cans sold by Pepsi; packaged by 24 case.

8. Product / Place / Price / Promotion Recycling/Packaging • Legislation has provided incentive for Australian drink companies to create voluntary waste reduction plans to meet government waste reduction goals. • In accordance with legislation, Unilever Australia has signed the National Packaging Covenant and the Greenhouse Challenge Programs. • Unilever Australia has an involved corporate environmental policy which strives to minimize waste, reduce environmental impact from production, conserve energy, and maximize recycling and re-use practices.

9. PLACE

10. Supermarkets 1.8 supermarkets per 1000 inhabitants Woolworths and Coles/Bi-Lo dominate market with 75% of supermarket sales Trend towards wider product range, larger outlets, longer hours, lower prices Supermarkets account for 2/3 of food sales Convenience stores 7-eleven and Night Owl are major chains 82.6% of sales are done by independently owned outlets Retailers Product / Place / Price / Promotion

11. Domestic production options Unilever plant in New South Wales that produces hot tea. PepsiCo Australia in New South Wales produces similar products and has strong presence in category. Coca-Cola Amatil produces similar products located in Victoria. Importing options China produces/distributes Lipton through Guangdong Lipton Foods Company Thailand produces/distributes Lipton through Serm Suck PCL Indonesia produces/distributes Lipton through Unilever and Aqua Golden Mississippi Consumer Distribution Product / Place / Price / Promotion

12. Corporate Distribution Aid in Australia Product / Place / Price / Promotion • Freight on Board Pty Ltd • Freight on Board are able to provide sea, air, customs and logistical solutions to American companies doing business in Australia. • Henning Harders Pty Ltd - Henning Harders are international forwarding agents and licensed customs brokers. They handle consignments by air and sea freight - in particular between Australia and the United States

13. US Commercial Services Product / Place / Price / Promotion • Help US companies find local partners and attorney. • IPS: International Partner Service: CS will locate, screen, and assess Australian agents, distributors, licensees, and joint venture partners for IS companies. • Golden Key Services: designed to make US company representatives visit to Australia more productive. Provides Market Orientation briefings, market agents, agent/distributors search and screening. http://www.buyusa.gov/australia

14. Corporations Law Product / Place / Price / Promotion • The entity is registered under automatically as an Australian company, enabling it to conduct business throughout without further registration in individual states or territories • Does not require directors to be Australian, but must have a registered office address and a statutory agent responsible to fulfill the requirements of the Corporations Law • Every company must be registered for a Australian Business Number under the Goods and Services Tax. • You are free to choose between Australian or US law governing your contract. However, if foreign contract agreed upon, without a stipulation of law, Australian courts will apply the law of jurisdiction where the agent of distributor works, that is Australian federal and appropriate state and local law.

15. Infrastructure Product / Place / Price / Promotion • Highly sophisticated transportation and telecommunication systems: • Road System: 490,000 miles of paved roads; 65% of freight is shipped along these roads. • Rail Road System: 24,000 miles of railroads; preferred mode of transportation from Eastern ports (privatized in 1999) • Air Transport: Serviced by most international carriers, providing access routes from regional centers to major cities. • Sea Transport: 83% of exports and 70% of imports; mainly dealing in bulk commodities. • Telecommunications system: land-based telephone lines provide access to 97% of all households. • Telstra, Optus, Primus, AAPT, Orange, and Vodafone are the dominant carriers. • Has one of the one of the highest mobile phone user rates in the world (over 10 million subscribers) • Telstra, Vodafone, and Orange are the major providers. • Rapid development because of introduction of fully digitalized network.

16. PRICE

17. Price Product / Place / Price / Promotion • Current market prices for beverages (in Australian dollars) • Coke 1.25L = $1.43 • Gatorade 600mL = $1.97 • Just Juice 1L = $1.67 • RTD Pop Tops Juice 250mL = $.465 • Australia has experienced positive economic growth in recent years: • A free-market economy that is highly involved in the world market • Much of the recent growth has been attributed to strong domestic demand: consumption 4% in recent years. • Capital spending and consumer spending appear to remain positive in the upcoming future due to the government’s recent budget and tax cuts. • Exchange Rate = 1.5419 Australian dollars : 1 US dollar

18. Price control Product / Place / Price / Promotion • As Australia is a free-market economy, there is little formal price control. • The national regulator, the Australian Competition and Consumer Commission (ACCC), has the power under the Prices Surveillance Act of 1983 and the Trade Practices Act of 1974, to investigate, vet or monitor the prices charged by businesses.  • The ACCC was also active in the implementation of the Goods and Services Tax (GST), serving as a “watchdog” to ensure that resulting price increases by the private sector are not excessive.  State governments have the power to control prices, but in recent decades have rarely done so. • Goods and Services Tax (GST) shifted Australia’s tax mix away from income taxes, in July 2000.  • set at ten percent on most goods and services

19. PROMOTION

20. Television: 97% of population own a TV, only 25% with cable TV marketers can ideally reach 93% of population Cost for 30 second, Primetime slot, (6:00PM-12:30PM) is $4,620 Adults 18+ watch the most primetime TV Only 20% time used for paid advertisements can be from outside Australia Radio: 97% of households and automobiles have radios Radio marketers have the potential to reach 98% population Cost for 30 second, Primetime slot, (5:30AM- 9:00AM) is $600 Media Availability Product / Place / Price / Promotion

21. Newspapers: 2 national daily papers accept advertising Combined circulation of 225,000 The Australian 1 page cost US$ 8,690 The Australian Financial Review 1 page cost US$ 4,775 Magazines: 600 national consumer magazines accept advertising Australia Women’s Weekly Avg. Issue Audience 3,571,000 1 page cost of US$ 14,900 New Idea Avg. Issue Audience 2,694,000 1 page cost of US$ 11,720 Media Availability (cont.) Product / Place / Price / Promotion

22. Cinema Outdoor transit Direct marketing -Australians prefer promotional material to be sent through direct mail. Duty is levied on catalogs, circulars, and all advertising matter introduced into Australia Ad trolley In store radio Internet -Low trust in internet safety Telemarketing -“Code of Practice” restrictions instated June 2003 Alternative Media Product / Place / Price / Promotion NOTE: Lipton in the United States currently uses Network TV, Spot TV, syndicated TV, Cable TV network

23. Sponsorship Opportunity Product / Place / Price / Promotion • Common Wealth Games • 2006 • Melbourne • Fanatical following of sport • Television audience expected to be in excess of one billion people • 71 member countries • Language of games is English

24. Possible Roadblocks Product / Place / Price /Promotion Language in Australia: • Colloquialisms + idioms make Australian English unique • Spot on means right on, prang is a fender bender, crook is someone who is unwell, bloke is a guy, mate is a friend (male) • G’day, goodonya, she’ll be right, mate, bloody • Shorten words for everyday conversation • Uni, kindy, telly, footy, barby • To avoid offensive slang, use standard English Dialect: • Accent is far more nasal and less clipped than British English accent • Imported commercials require voice-overs • Mid-Atlantic accent Inappropriate Gestures: • winking at women, yawning without covering mouth

25. UK cultural influence Tea preference Metric System Liquid Conversion Chart: Difference in seasons due to location relative to Equator Possible Roadblocks (cont.) Product / Place / Price /Promotion

26. Thank You!