It has recently been reported in the national press that Unilever could be mulling a sale of their iconic tea brand, PG Tips. Kantar have reported that the total market is worth £667m, however demand for black tea has fallen by 2.7% YOY.
The PG Tips brand, has declined by £5.6m over the last 12 months, after having it's number one spot snapped away by Twinings, who were in turn surpassed by Yorkshire Tea for the top spot. Both have invested heavily in strengthening their brand credentials with above the line spend in recent years.
All is not lost within the category however, with growing sub categories coming through herbal tea, which is now worth £52m, and cold infusions, worth £11.2m.
This highlights some important points to consider for established brands who want to avoid the current sales decline predicament of PG Tips;
1. Focus on personality
As Yorkshire Tea have done, you need to invest in driving a bit of brand personality as they have with their recent T.V. campaign featuring Sean Bea, which is full of Yorkshire style banter.
Reinforcing your premium credentials (think Twinings), helps to drive value sales growth. If you don't invest in this area, you run the risk of your product being commoditised, which potentially eradicates the perceived value in the brand from a consumer, and therefore retailer point of view.
3. Innovate to grow
Growth areas within tea, are herbal and cold infusions, so it is important for suppliers such as Unilever to recognise this and expose themselves to growth in these areas. This could be achieved through the PG Tips brand, or with a challenger brand, such as Pukka. Promoting the health benefits of such products will also tie in nicely with the currently popular personal well being trend.
4. Coffee is hot
The Coffee trend continues to march onwards, with more and more demand coming through; coffee on the go, home machines, premium instant brands e.g. Nescafe Azera, and iced coffee. Don't get me wrong, I love a good cup of tea, but let's face it, coffee is just a little bit more exciting! Look at recent investments by other FMCG organisations, such as Coca Cola's acquisition of Costa Coffee. This highlights the long term perceived growth in this area.
Unilever have a job on their hands in turning things around. Will they spread their bets backing both PG Tips and Pukka? Or will they head to the cashier's desk and cash in their PG Chips (apologies!)? We shall see!