22 February 2007

It's got great distribution

My wife likes to drink tea in the morning at breakfast and when she stays at hotels outside the UK they very often bring hot water to the table and a selection of Lipton's tea bags. She doesn't enjoy it much. Her description of Lipton's tea bags is that they are designed for people who don't enjoy drinking tea.

As a brand though, it's well-known, and it must have great distribution. They claim that their teas are drunk in 180 countries. Hotels obviously buy it because they want their guests to enjoy the authentic flavour of a quality tea in the morning. All that well-meaning effort and they buy Lipton.

What Lipton has done very succesfully is to provide Hotels with a short-cut. They can buy the (admittedly extensive) range as an easy choice. That makes it hard for a new entrant - unless they used a cherry-picking strategy to develop volume and then use the volume to justify the distribution required to deliver greater penetration. That's quite an uphill struggle and not many competitors are going to want to adopt that as a strategy.

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