Coca-Cola acquired tea-and-juice blend FUZE in 2007 for an estimated $250 million at a time when Fuze had less than one-tenth of a percent share of the U.S. bottled tea market.
Last week FUZE Tea became the latest $1 billion brand in the Coke portfolio where it joins Gold Peak (which also crossed the $1 billion threshold) and Ayataka, a bottled green tea sold mainly in Japan. Honest Tea, a premium tea brand that sold more than 100 million bottles last year seems destined to cross the same finish line. Coke now has 20 beverage brands earning $1 billion or more.
Today Coke holds approximately 9% global market share for tea.
As the epicenter of the North American specialty tea market, World Tea Expo serves the $8 billion US tea industry, expected to grow an additional $7 billion by 2015. Specialty/premium tea is driving this growth and holds nearly 60% of the marketshare today; it remains the main focus of products, services and education at World Tea Expo.
In 2012 Coke began a big budget marketing push with five new flavors that re-launched the FUZE brand globally. The campaign stretched across 14 countries and expanded to 40 markets. The line now includes 30 flavors.
“FUZE TEA is perhaps the first Coke brand to be born truly global,” said Samir Bhutada, Coke’s global director of tea and ready-to-drink coffee. “The success of FUZE TEA is a testament to the power of the global Coca-Cola system. We’ve proven that when you get the product, packaging and positioning right, the system will rally around it.”
Adds Bhutada, “The concept of fusion – marrying a traditional beverage with a modern look and identity – is relevant in today’s globalized world and translates very well to the tea category. We’re positioning tea in a way consumers have never seen before by delivering a brand experience defined by innovation, not tradition.”
Coke launched Gold Peak in 2006 and has since grown it in double digits to become one of the fastest growing iced tea brands. It now accounts for 30% share of that segment,
“Gold Peak has one of the best conversion rates in the category, which means once a consumer tries it, they come back and buy it again,” said Geoff Henry, group director, tea portfolio, Coca-Cola North America.
As reported by Reuters “Global sales in the ready-to-drink tea category have more than doubled in the last decade, and sales are expected to reach $53.9 billion this year, according to Euromonitor International.”
RTD tea has become a $6 billion segment during the past five years demonstrating strong growth at a time when Coke’s carbonated soda portfolio declined year after year. Fruit beverage consumption fell by volume during 2014, according to Beverage Marketing Corp. which reported a 2.4% decline during the first half of 2014 vs. a 2.35% increase in volume growth for RTD tea.
In a release, Muhtar Kent, chairman and CEO of Coca-Cola, Atlanta writes that "we are taking definitive steps to capture the enormous growth opportunities available to us in the global nonalcoholic ready-to-drink beverage industry.”
Since 2007 Coke has added 10 brands to its $1 billion brands list with 16 others generating sales of $500 to about $1 billion.
Sources: Reuters, Beverage Marketing Corp., Coca-Cola