Marketing Lipton Iced Tea in
Compiled by
Tara Badri
Steve Gojak
Lilly Nicolen
Kathleen Gulitus
Stephanie Webb
Target Market
Our target market will include the younger
generation ranging from age 18 to 39.
 This group is the largest segment at 68% of the
total population (184 million).
 The younger generation is our best option for a
target market because they are less set in their
ways, are more open to trying new things, and are
more easily influenced by the media. These
characteristics makes them more susceptible to
changing their preferences from the common soft
drinks, juice, and coffee to a new aged beverage
such as iced tea.
Brazilians enjoy sweeter tasting beverages
therefore the products that could be introduced
include the Brisk product line or a modified
version of regular iced tea in which it would be
made sweeter.
– Unsweetened iced tea would be unsuccessful.
Due to an abundance of oranges in Brazil the
development of an orange flavored tea may prove
successful by adapting to local taste and showing
support for local industry.
– Since juices are a large part of the culture, adding
orange flavor would increase the chance of success
among the Brazilian people.
The label needs to be in Brazil’s official language: Portuguese
The national colors are green and yellow and are considered offensive
when used together on products so it is necessary to ensure that they
do not appear together on the label.
National law requires easily readable information about the product’s
quality, quantity, composition, price, guarantee, shelf life, origin, and
risks to consumers’ health and safety.
– The current colors and designs of the label can remain the same if
we carry the brisk lime, but if we use regular Lipton iced tea, the
colors must change. For both brands, we need to edit the
information on the product label to conform to national law.
All units should be metric or show a metric equivalent as this is the
measurement system that Brazil uses.
The refrigerator in the average home in Brazil is standard to US sizes,
therefore no change of the shape and size of the bottle is necessary.
Packaging Material
Presently only 75% of the population has trash collection
services. Recycling is found in minimal areas across the
country, primarily government buildings.
 Therefore, choosing recyclable materials is not a concern. The
best material to use to package the product is simply the
cheapest and most readily available, which narrows our options
to plastic or paper cartons.
– Plastic and paper cartons are lightweight and cheaper to
transport than glass.
– Paper cartons are more easily packed into a shipment
because of their square shape.
– Plastics are more readily available than paper cartons, and
most manufacturing firms choose plastic.
– Therefore we have decided to use plastic bottles
Place: Production
Produce product in the United States and export.
– Wait for FTAA (Free Trade Association of the
Americas), a trade agreement that would make the
Western Hemisphere a free trade zone.
– Brazil is hesitant to accept the agreement and allow
foreign competitors to freely enter the country.
The benefit of importing iced tea is the ability to use
current production facilities with the possibility of no
import tariffs.
Drawbacks include high freight expenses(25%
Merchant Marine Tax on Ocean Freight), a general
lack of knowledge about local practices, and that the
FTAA is slow moving and cannot be relied upon.
National Production Facility
Potential partnership with AmBev, a
producer of beer, soft drinks, and iced tea in
Latin America, where they benefit from the
brand equity of Lipton and we benefit from
the use of their distribution channels.
– Possibility of using information gained from
this partnership to open our production
facilities and distribution channels in the future.
By using AmBev, we would not need to find storage facilities
because the entire channel could be outsourced.
– This would be ideal because of the limited number of trucks
as well as the limitations of Brazil’s infrastructure.
– Approximately 20,000 trucks exist, all of which have been in
use for an average of 18 years.
– Infrastructure is poor with many of the roads being privately
 Iced tea should be stored at room temperature, therefore
refrigerated trucks are not necessary. However it is important to
ensure that the product is not allowed to sit in the sun while
being transported.
Distribution Centers
PepsiCo and Unilever recently created a joint
venture to expand Lipton into new markets which
include Brazil.
– Pepsi gains use of Lipton’s R & D expertise along with
their health conscience brand image.
– Unilever gains use of Pepsi’s distribution network and
bottling facilities.
This is beneficial because the production facilities
and distribution channels are already in place,
resulting in lower startup costs.
Retail Options
Carrefour is the second largest retail outlet in Brazil.
96 Hypermarkets
122 Supermarkets
100 Discount Stores
7 distribution centers (located in Sao Paulo and Vitoria)
The Sao Paulo distribution center reaches half of their
Deciding to use Carrefour as a retail outlet would be
beneficial because of their expansive distribution
network that reaches hypermarkets, supermarkets, and
discount stores. The discount stores are ideal because
of their appeal to lower income consumers which
accounts for 90% of Brazil’s population.
Retail Options
Advanced technology such as barcode scanners
and radio frequency transmitters have resulted in
accurate inventory counts and lower costs.
 Carrefour has begun to outsource to Cotia Penske
as a logistics provider to some of its stores.
 Thus, Carrefour has perfected their distribution
channels giving it the ability to reach most of our
market through superstores and hypermarkets, and
in addition to this, the ability to reach the poor
market segments through its discount stores.
Retail Options
Pao de Acucar is the largest local chain with over
400 outlets nationwide.
 They have twice as many outlets as Carrefour, but
both hold 14% of the market.
 Their distribution is handled by Brasilia de
Distribuicao (also owns the retail chain).
 Being a Brazilian company, they have the trust of
consumers. They also have the most retail outlets,
making them a sound option.
Retail Options
Wal-Mart currently has 2% of the market share but
is growing.
 They also have a distribution center outside of Sao
Paulo that has the capacity to reach 100 outlets.
 Wal-Mart’s discount chain, Toda Dia, appeals to
the low income level of the general population.
Their many locations make it more convenient for
those who cannot travel long distances.
 Although Wal-Mart is new to the Brazilian market,
it is growing rapidly and has strong potential to
compete with the other retail outlets in the country.
Cotia Penske, a logistics provider largely
developed in Brazil, has distribution centers,
warehouses, and transportation (18,000 trucks)
 They have developed the distribution channels for
100 Carrefour outlets.
 Familiar with Brazilian distribution channels, they
can provide the services that would be needed if
production were to take place in Brazil.
– They have connections with local, third
party distributors.
Currently in Brazil there are 65 million consumers
with a disposable income of $14,812 per
household annually.
 20% of the families live on a per capita income
that is less than the minimum wage. However
with a population of 178.5 million and a per
capita income of $4,336, Brazil’s large population
leaves them with a high market potential.
 The gap between the rich and the poor is one of
the largest in the world, showing the substantial
differences in the different economic classes.
This leads us to price our item competitively, but on the lower
end of the price spectrum. Due to our target market’s wide range
of incomes, a price on the lower end will include the lower
income individuals of our target market.
 In addition to our low competitive prices, we will markup our
product 60% for retailer and 30% for wholesaler depending on
which distribution option is chosen.
– For example, if the cost per bottle of iced tea is 40 cents:
40 (cost) + .6(40) (Retailer) + .30(40) (Wholesaler)
Then the total price for one bottle would be: 75 cents
Economic Conditions
The Brazilian economy has proven to be very unstable over the
past decade. Inflation rates are volatile.
– With the introduction of a new currency in 1990, the annual
rate of inflation was 2,947.73% which severely crippled the
– In the mid 1990’s as the inflation rate stabilized, many
Brazilians moved from the working poor to the lower middle
– Since 1990, the inflation rate has been stabilizing and is
currently at 8.45%.
 The shaky economy and unstable inflation rates make it risky to
enter the country’s market. With fluctuating inflation rates, it is
more difficult to predict price changes, which creates the danger
of our product becoming too expensive for consumers to
Security Concerns
Brazil’s borders with Argentina and Paraguay have
problems with money laundering, smuggling, arms and
drug trafficking, as well as fundraising for extremist
 This raises important security issues of product theft when
transporting goods across borders. Even though iced tea is
not a precious commodity, it would be a safer alternative to
produce the product within the country.
 We would be affected if the product were to be stolen, or
we would have to employ security, price to consumers
would have to be increased
Promotion-Media Types
Newspaper and Billboards
– With a literacy rate of 86%, print media is an effective form
of advertising in Brazil.
 Currently 25% of advertising dollars are put into
newspaper ads. It is the second largest form of
advertising expenditure.
– In 1992, the cost for one billboard for one month was $150.
– With high literacy rates and a relatively cheap cost of print
advertising, this would be an effective way to introduce iced
– Advertising on Brazil’s primary radio station, which is
already segmented by target market, would make it easier to
reach our market.
Promotion-Media Types
– 96% of households in major cities own a television.
– Brazil has the 4th largest television broadcasting system in the
– The cost of 30 seconds on prime time television in 1992 was
– Though these costs are dated and have most likely increased, it is
still necessary to create television ads because most households
have a television.
Cell Phone Advertisements
– 60 million cell phones are expected to be in use by 2005.
– SMS(short message service) and short video clips of
advertisements have become increasingly popular. This new
technology is expensive but the price is decreasing as the number
of cell phones increases. This could be an effective way to reach
our target market since cell phones are mostly used by younger
Promotion-Media Types
– Brazil has 408 cinemas that accept advertising.
– Cinema advertisements reach 21% of the adult population within
one month.
– Restrictions require that 2/3 of foreign advertising material must be
produced in Brazil.
– In 1992 the cost of a 4 week schedule at approximately 20 theaters
was $2800.
– This is a good option because it is relatively cheap and reaches our
young target market.
– Brazil has the most advanced internet industry in Latin America.
61% of Latin American websites are Brazilian.
 As of 2002, 14.3 million Brazilians have internet access.
– On-line ads would be effective with Brazil’s highly accessible
internet because most users are from the younger generation that is
included in our target market.
Sales Promotions
Event Sponsoring
– Soccer is the most popular sport in Brazil so purchasing
ad space in soccer stadiums would quickly and easily
reach a large number of people.
Celebrity Endorsements
– Soccer celebrities could be hired to endorse products in
commercials and advertisements.
– Use of models in ads to promote beauty and health
which are aspects of Brazilian culture.
Many of the people who attend sporting events
make up a large portion of our target market so
this would be a good way to reach them.
Promotion of the product should emphasize it as a
healthier alternative to soft drinks and a sportier
alternative to juice due to the growing concern
over health and body image in Brazil.
 Promote the beverage as a youthful drink since the
majority of the Brazilian population is younger.
 Due to the Brazilian desire to be fashionable,
promotion of the product as a trendy addition to
the new age beverage line could be very effective.
Language and Dialect
Portuguese is the primary language.
 Although most people in Brazil are multilingual,
with English, French, Italian and Spanish being
popular second languages, Portuguese should be
used in all ads because it is spoken by the entire
population and Brazilians find it offensive to be
spoken to in Spanish, which would be our next
best alternative.
With 68% of Brazil’s population being between
18-39 years old, they make up a large target
 The possibilities of joint ventures or partnerships
would be an effective way to combat the poor
infrastructure in Brazil.
 The availability of retailers makes it easier to have
our product available to consumers.
 A struggling economy, high inflation rates and a
large low income population may make it hard to
sell a non-necessity good.

Marketing Lipton Iced Tea in Brazil