Tuesday, April 5 2005 14:14 Hrs (IST) - World Time -

Bangalore: Pepsi and Hindustan Lever Limited (HLL) joined hands in India to launch ice tea, a segment that's expected to grow into five to ten per cent of the Rs 6,000 crore carbonated soft drinks market.

The two companies today (Apr 5, 2005) announced a 50:50 joint venture (JV) and launched Lipton ice tea through the alliance that pools their respective strengths to market, sell and distribute Lipton ready-to-drink teas and tea-based beverages in India.

Chairman of Pepsi India Holdings Pvt Ltd, Rajeev Bakshi and Managing Director, Foods, HLL, S Ravindranath, told a press conference that arrangement combines Lipton brand equity with Pepsi bottling, sales and distribution strengths.

"Right now, market for ice tea is non-existent or very, very small; We are creating a new category," Bakshi said. Lipton ice tea, would be available in returnable 250 ml glass bottle (Rs 9) and 500 ml PET, officials said.

The joint venture, Bakshi said, would focus on urban areas in the first two years. Lipton ice tea, targeted at the youth segment and positioned as "better for you and good for you" category, would be available initially in 17 cities.

Ravindranath said that the alliance would offer an opportunity for HLL get into new "consumer mind space" as well geographic areas, which were not reachable. "We will expand scope for foods business," he added.

Bakshi believed that the ice tea market in India would account for 5-10 per cent of the carbonated soft drinks segment, where annual consumer spend in around Rs 6,000 crore.

Pepsi officials said returnable glass format would provide the JV the scale.

Pepsi and Unilever, which is HLL's parent company, has a global joint venture in the "healthy drinks" category, according to Ravindranath. The two companies launched ice tea in the US market a few years ago, Russia last year and in China some months ago.

In China, the ice tea market has grown into a "billion Dollar business" in the last 4-5 years, Ravindranath said.

Company officials said the combined muscle of Pepsi and HLL would help make the JV a success but admitted that in a country (India) where tea means "hot tea and milk tea", spreading awareness about "goodness of tea" in a different format is a "marketing task".