Diversified Products Corporation is a private equity firm based in Worcester, Mass., that owns and operates more than 20 consumer brands. We specialize in the acquisition and revitalization of brands that have become neglected by their parent company.
DPC is proposing the acquisition of the consumer brand Nestea from its parent Company, Coca-Cola. We feel that it has been neglected by Coca-Cola and as a result, sales have been going down for three consecutive years.
We have completed a thorough analysis of :
 Ready-to-Drink (RTD) tea industry
 Competitive landscape
 Nestea brand perception
 Nestea sales and financial position
We also believe that we can revitalize the Nestea brand through :
 A better focused target market
 Rebranding
 Reformulation and new flavors
 Increase in marketing expenditures
 New line extensions
 Building stronger partnerships with distributors
1

Industry Performance
 More consumers have started to buy tea as a healthier alternative to soda. The tea market reached $3.9 billion in 2009 in
FDMx (food, drug, mass retailers excluding Wal-Mart) and conveniences stores.
1 Even if other beverage categories dip in sales, tea sales could see continual gains, making it an attractive industry to enter.
 Compared to bagged/loose tea and instant tea mixes, ready-todrink (RTD) tea has become more popular because it is more convenient to drink. In FDMx, RTD tea accounted for 59% ($1.5 billion ) of tea sales in 2009 and is expected to grow to 68% ($2.5 billion) by 2014.
2
 RTD tea sales are expected to grow by 41% over the next five years. Bagged/loose tea and instant tea mixes remain the same 3 further highlighting attractiveness of RTD tea industry.
140
120
Monthly RTD Tea Sales
Summer
Average Difference 50%
100
80
60
Winter
3,000
2,500
2,000
1,500
1,000
500
0
FDMx Sales and Forecast of Tea by Segment
2008
RTD tea $million
2009 2010 F 2011 F
Bagged/loose tea $million
2012 F 2013 F 2014 F
Instant tea mixes $million
Seasonality
 The RTD tea industry is very sensitive to the external environment. There is a significant seasonal fluctuation in sales. Sales reach their peak during the summer months of July and August, then gradually decrease until December. The drop in sales from summer to winter is almost 50%, meaning there are great gains to be made during the summer.
2
40
20
0
Timeline, from Jun-05 to Jun-10

Why Do Consumers Drink RTD Tea?
 People drink RTD tea because they enjoy the taste (77% of tea drinkers) and it is refreshing (68%). Forty-one percent, report drinking it for health benefits and 40% drink it because it goes with what they are eating.
4 Therefore, RTD tea should be positioned as a refreshing beverage; one that is a good accompaniment to food.
Who Drinks RTD Tea?
 Gender: A larger percentage of women (48%) than men (41%) drink RTD tea.
5
 Age: When examining data by brand [below], Lipton was the top choice within RTD tea, across all age segments.
6
AriZona and Snapple are both strongest in teens and young adults aged 12-24. Although Nestea holds the 3 rd place in the teen market (52%), it has a large room to grow in the 18~24 and 25~34 year-old age segments.
Percentage of Personal Consumption of RTD Tea by Choice of Brands
(Age) 12-17
%
Average 48
Lipton
Nestea
59
52
AriZona
Snapple
54
40
18-24
%
47
60
46
55
39
25-34
%
46
60
42
40
35
35-44
%
45
58
41
37
30
45-54
%
45
59
38
34
27
55-64
%
45
58
36
27
28
65+
%
41
59
24
18
15
When Do Consumers Drink RTD Tea?
 Based on a survey we conducted, RTD tea drinkers indicated that they are most likely to drink RTD tea when it is hot, especially in the summertime at barbecues. We believe this provides us with an opportunity to capitalize on this market potential.
Where Do They Buy RTD Tea?
 Supermarkets are the largest sales channel in the overall tea market. For Nestea, 59% of products were sold at supermarkets, while convenience store channel picked up 34%.
7 Therefore, those channels should be focuses when creating promotion strategies.
3

4
Less Sugar, Less Artificial
 Fifty-five percent of all tea drinkers think that RTD tea has too much sugar and 54% are buying less RTD tea due to high-fructose corn syrup. Females (61%) are more sensitive to the amount of sugar compared to males (55%).
8
Nestea contains a great deal of high-fructose corn syrup, which means that it is not currently meeting the consumer desire for less sugary drinks.
Attitudes Toward Tea Sweeteners by Gender
(Attitude)
I believe that ready-to-drink teas have too much sugar
I am buying less ready-to-drink tea because they contain high-fructose corn syrup
I do not like the taste of artificial sweeteners in tea
Average Male Female
%
55
%
50
%
61
36
54
32
54
40
55
Family-Size Packaging
 Forty-six percent of tea drinkers report purchasing tea in family-size packaging to save money.
9
 People with an average annual income of less than $25,000 and between $25,000 -
$49,900 are more price-sensitive. Thus, while setting up product prices and developing product lines, we should focus on how to increase consumers’ perception of Nestea’s value.
60%
50%
40%
30%
20%
10%
0%
I have Started Purchasing Tea in Family-size Packaging to Save Money
All Under 25K 25K-49.9K
50K-74.9K
75K-99.9K
100K+
(Income)

 Producing tea is relatively easy, as the basic ingredients are water, tea, and sugar. However, earning a sizeable share of the market is a much more difficult prospect. Major players Lipton,
AriZona, and Snapple, who had a combined $980m in sales in the United States for the year ending 6/12/2010, hold a total
61.71% of market sales. This is largely due to the massive distribution afforded them by their parent companies’ strong organizational structures.
 About 400 smaller brands, each holding less than a 1% share of total tea sales, comprise another 18.74% of the market.
10 The barrier to entry is low because of the low cost of materials, but in order to become a top shareholder in the market, mass production equipment is necessary, along with the distribution ability to spread that product across regions of the nation.
11
Average Price/Equivalent Unit
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
U.S. RTD Tea Sales Market Shares (Sales Dollars)
Other
 Pricing is an important separating factor between brands, as is demonstrated in the table to the left. Snapple sets the ceiling as a highquality tea, with a price of $0.75 per equivalent unit (1 equivalent unit ≈ 6.4oz). Lower-quality brands like Red Diamond, Turkey Hill, and stores’ private labels are priced around $0.30 per equivalent unit, with Nestea, Lipton, and
AriZona in the middle.
Snapple Nestea Lipton Arizona Red
Diamond
Turkey
Hill
Private
Label
5





Nestea’s sales have declined by 13% from month’s end June 2007 to June 2010 (Fig. 1 & 3).
Meanwhile, the RTD tea industry has grown at an average rate of 4.4% for the same time period (Fig. 3).
One of Coca-Cola’s other RTD tea brands, Gold Peak, nearly reached Nestea’s sales level during June 2010. Fig. 1 shows the sales of Nestea and Gold Peak during only the month of June over a period of four years. It is important to mention that the difference between the numbers for Nestea and Gold Peak in Fig. 1 & 2 is because the first is presented in monthly values while the latter is accumulated for the 52 weeks ending as of Jan. 2010.
The contribution of Nestea to Coca-Cola’s total RTD tea sales has decreased from 73% to 65.6% from Jan 2009 to Jan 2010 respectively indicating that it may no longer be a valuable asset to their portfolio.
Fig. 1 Brand Sales of Nestea June ‘07 – June ‘09 12 Fig. 2
10
Share of Coca-Cola's total RTD Tea Sales 14
120
9
10
10
10
100
0
14
22
June 07' June 08' June 09' June 10'
80
Fig. 3
130
Nestea and Top 10 Players Aggregate Sales 13
10
60
40
$89
80
Honest Tea
Fuze
Gold Peak
Nestea
120
5
20
110
6
100 0
0
June 07' June 08' June 09' June 10'
52 w/e Jan 25, 2009 52 w/e Jan 24, 2010





Coca-Cola’s overall RTD tea sales are currently decreasing , mainly due to Nestea’s poor performance.
In 2008 ,Coke purchased a 40% stake in Honest Tea, an organic, RTD tea company. This company has increased its revenues by more than 10%.
If Coca-Cola removes Nestea from its product portfolio,
Coca-Cola would reduce its market share. However, it would revert the growth rates to positive numbers.
Coca-Cola may benefit more by having better positioned brands within niche segments than investing in repositioning Nestea.
120
100
80
60
40
20
0
2009 – 2010 Sales Per Company 15
-10.1%
-1.8%
23.5%
Nestea Coca-Cola Co.
Coca-Cola Co. +
Honest - Nestea
250
200
150
100
50
0
450
400
350
300
Unilever Bestfoods*
(Lipton + Tazo)
Ferolito, Vultaggio
& Sons (AriZona)
Snapple Natural
Beverage Co.
52 weeks ending Jan 25, 2009
Nestea Coca-Cola Co.
Coca-Cola Co. w/o
Nestea
52 weeks ending Jan 24, 2010
Honest Tea
7

Successful brands in the RTD industry concentrate on one of three focuses: price, quality, or variety. Low prices allow for a higher quantity of sales; higher quality leads to a higher price but comparatively low quantity of sales; and variety often comes with a higher price but meets the needs of more consumers and therefore has a high quantity of sales.
 With its ‚made from the best stuff on Earth‛ campaign and glass bottles, Snapple taps into the high quality segment of the market. Lipton and AriZona reach consumers who want variety by producing a wide variety of flavors. Turkey
Hill approaches the tea market from a low-price direction, aiming to sell a high volume of tea to earn its share of tea sales. However, Nestea lacks a solid competitive strategy.
 Nestea is priced in the mid-to-high range for RTD Teas. However, it does not fill the same price niche that some of its competitors fill. For example, Snapple is seen as a premium brand and therefore it can be more expensive and still appeal to customers. On the other hand, Turkey Hill and Red Diamond are seen as lower quality and, therefore, lower-cost teas.
 Nestea only offers three flavors, while Lipton, AriZona, and Snapple each have over 15 flavors.
1. Lipton and AriZona control huge market shares
(26.5% and 21.85%) by grabbing the middle of the market with flavor variety
2. Turkey Hill, Red Diamond, and the private label brands all hold smaller shares in the RTD tea sales market, but are priced similarly to economy teas
3. Snapple captures the top of the market with high perceived quality and a high price
Relationship Between Price and Equivalent Units in 2010
1,200
1,000
1
AriZona
(21.9%)
Lipton
(26.5%)
800
600
400
200
2
Private Label
(7.0%)
Red Diamond
(3.2%)
Turkey Hill
(4.8%)
Nestea
(4.5%)
3
Snapple
(13.4%)
0
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
Price Per Equivalent Unit (USD)
8

Nestea has attempted to establish itself as a leader in the RTD tea industry by implementing customer-centric marketing tactics several times in the past few years. However, their strategies have been misaligned and have not increased sales.
2004: Cool to the Core Campaign
Nestea attempted to appeal to teenagers starting in the summer of 2004
 Nestea Cool ads featuring the Nestea Cool Snowman
 Interactive content and games online
 The Cool to the Core Tour featuring Nestea Cool Snow Bunny
Models and a CoolMobile which visited over 50 music festivals, hip-hop venues, beach parties, and skate parks from July-
December 2004
9
2006: Rebranding for a New ‚Natural‛ Feel
Nestea changed its taste and look to appeal to customers who want a natural, healthy drink
 Nestea Cool and Nestea Ice were removed and more diet options and green teas were introduced.
 All products were branded under only the name Nestea
Although they were attempting to follow market trends, this rebranding didn’t align with the needs of Nestea’s previously targeted consumers – teens. As a result, Nestea’s sales continue to drop.
Previous Design Current Design

Internal factors
Management
Offerings
Marketing
Personnel
Finance
External Factors
Consumers
Competitive
Economic
Environmental
Strengths
An experienced team at Coca-Cola
Nestea is currently offered at a reasonable price
10
Weakness
Lack of a clear corporate culture; fragmented worldwide ownership between Coca-Cola and
Nestle through their joint venture Beverage
Partners Worldwide (BPW)
Lack of variety – only four flavors while competitors like Arizona and Lipton each have more than fifteen flavors
Inconsistent messaging and lack of target market Strong brand recognition and use of Coca-Cola’s distribution system
Some strong personnel in current management committee
5 th largest market share
High turnover rate at Coca-Cola
Opportunities
Increased health awareness and a demand for less sugar in RTD tea; demand for variety in flavor; increase in demand for family size packs 17
Nestea will be an independent group under DPC and we can give this brand a single-minded focus; with Coca-Cola it was just one of many brands in the portfolio
RTD tea industry is a fast-growing industry and is projected to grow 41% between 2009 and 2014 18
The opportunity to partner with organizations working on water conservation
Steady decline in sales volume for last three consecutive years 16
Threats
With our reformulated less-sugar iced tea, we may lose some consumers who prefer more sugar in tea
Low-entry barrier makes new competitor entry easy; threat of replacement by other refreshment drinks such as juice and energy drinks
Slowly recovering economy and chances of a second dip into recession
Increasing threat of fresh water scarcity in the near future

Targeting A Larger Market Segment
 Using U.S. population statistics to estimate potential market demand for RTD tea, we see there is a larger demand in the
18~24 and 25~34-year-old markets than the teen market alone*.
To increase Nestea’s sales, we need to extend Nestea’s target market from mainly the teen market to a larger market segment.
19,20
20,000,000
15,000,000
Potential Market Demand for RTD Tea
(* Based on 2006-2008 U.S. Census Data, we multiplied the population of each age segment by the percentage of people drinking RTD tea in every age segment from Mintel.)
 Our market expansion goal is to keep current consumers while we attempt to generate sales from a larger market segment.
Thus, we have chosen the market segment with the most closely aligned preferences to teens, 18~34 year olds instead of expanding to the older age groups.
10,000,000
5,000,000
0
15-17 18-24 25-34 35-44 45-54 55-64 65+
What Do People Aged 18-34 Want?
Age Groups
 According to the results of our survey, 43% of people in the 18-34 age demographic rarely drink RTD tea. One way to increase Nestea’s sales is to increase usage frequency, as 28% and 16% drink at least once a month and once a week, respectively.
 In a focus group discussion, many 18-34 year old target consumers mentioned they prefer to drink RTD during the summer time or at a barbeque. Thus, we see an opportunity to create more reasons to drink RTD tea and associate
Nestea with barbeque and summer holidays to increase usage frequency.
 When talking about favorite brands, 27% of those surveyed in this age group said Snapple is their favorite one, followed by Arizona (20%) and Lipton (16%). The results show that consumers seek premium RTD tea brands and products, such as Snapple. However, more consumers actually buy Lipton or AriZona. The trade-off balance between premium image and affordable prices could be Nestea’s opportunity to increase market share.
11

New Placement
Placed separately from soda
4
5 1
New Logo qualitea. realitea. nestea
2
3
New Line up
New product appreance with simple and clear messages
New Touch Points
Reposition Nestea as a high quality tea associated with fun
More Packaging Options
Can, bottle, gallon, and par tea cooler
New Formula
Less sugar, more tea flavoring seven flavors instead of four
12

With our new logo we will portray a more modern, high quality image and emphasize our new, natural flavors
Too busy – no clear message
Conventional look; brand name is overwhelmed by other elements on the can
(e.g. images, wording)
The New Branding
 Simple and clear message – easy to pick out on shelves among competitors
 Modern appearance resonates with consumers – soft design lines relay the quality of the product 21
 Clean new look – persistent design through the entire product line builds brand awareness and recognition, alignment
With the new design, our goal is to establish a consistent brand image throughout the entire marketing mix. Our products will look clean, taste good, and compel consumers to prefer the new Nestea over other brand.
‚I love the new look. Mainly because it stands out and the old one is like any other can. Also, it's more modern.‛
- Michelle, High School Sophomore
13

To better meet the demands of our target market it is important that we make fundamental changes to the Nestea formula. It is also important that
Nestea augment and expand it’s flavor line up. These changes will not only better serve our consumers and potential new consumers but also help shift the consumer’s perception of the brand from low quality, limited variety to high quality with interesting variety
Reformulation
 Reduce sweetness by reducing the amount of high fructose corn syrup in concentrate by approximately 25% 22
 Offset the reduction in sugar content by adding more real tea flavoring to the concentrate to create a more natural taste
 Survey results indicated consumers prefer a more natural flavor and less sweetness
 Reformulating the basic recipe will help to move the brand image from low quality to high quality
New Flavors
 Regular (including diet), Lemon (including diet), Half-Half (iced tea/lemonade mixture), Green, Raspberry, Peach, Sweet Tea,
Unsweetened
 Discontinue Pomegranate flavor
 New flavors reflect user preferences as reported in our survey of our target market as well as industry trends (i.e. Half & Half)
14

Nestea has the opportunity to leverage the make up of its product line to target potential new customers when and where they drink RTD tea. This will help Nestea increase revenue and grab market share. We determined the new product line by looking closely at industry trends, survey results from iced tea drinkers, and interviews with industry professionals.
New 1 gallon container
 Fastest growing container size for RTD tea 23
 More than two-thirds of RTD tea consumers say they drink RTD tea in their homes, 24 gallons are for future (vs. immediate) consumption
 Nestea’s primary competitors (Lipton and AriZona) have gallon containers
New 5-liter, insulated partea cooler
 Will be similar to ‘Wine in a box,’ like Franzia, however, container will be insulated to keep tea cool
 Consumers will appreciate the easy pour spout and larger size for events
 Product will be positioned as a necessity for any summer barbecue
 Product will be promoted during the summer months and advertised in connection with major holidays (e.g. Fourth of July, Labor Day) and events
(e.g. graduation, family reunions)
Updated Bottle Design
 Design of 20 oz. bottles will match that of the 1 gallon container
 Distinct design will emphasis brand shift towards quality
Full Product Line
 12 oz. can (individual and 12-packs)
 20 oz. plastic bottle (individual and 12-packs)
 1 gallon plastic bottle
 5 liter par tea cooler
15

We are giving our products a new higher-quality look through our revamped packaging and marketing. We are also increasing the flavor by reducing the sugar and increasing the tea flavoring.
Therefore we want to capture this revitalization with slightly higher prices.
Our prices are based on consideration of several factors:
 1 equivalent unit ≈ 6.4oz.
25, 26
 Lipton and AriZona are our main competitors so their prices are considered when setting new prices for
Nestea.
 Slightly conservative pricing with the new gallon and par tea cooler, leaving room for growth.
 Price growth rates of 2% based on historical data.
New Price Structure
Year 1
MSRP: $0.90
Year 1
MSRP: $1.60
Year 2
MSRP: $4.55
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
$0.20
$0.21
$0.17
$0.21
$0.11
Can
$0.35
$0.38
$0.31
$0.37
$0.20
Bottle
$0.98
$1.05
$0.86
$1.02
$0.55
Gallon
Year 2
MSRP: $6.25
$1.26
$1.47
$1.21
$1.60
$0.70 partea cooler
Profit Margin(64.2%)
Retail Margin(23.53%)
Distributor Margin(25.4%)
Bottler Margin(40%)
COGS par tea cooler requires extra materials, so we account for these expenditures by allocating additional
5% for bottler margin.
16

Marketing Messages
 Image is one of the key components of the plan to establishing Nestea as a quality brand of RTD tea. Currently, it is viewed as a second option to more popular brands, but by creating a new look and feel for Nestea it can become a more compelling product.
 The actual issue of product appearance has been addressed by redesigning the look of the cans and bottles, but a rebranding campaign is the best way to totally reconfigure consumer perception and attitude toward Nestea, building social approval for the product at gatherings and in public.
27
 A series of online ads will focus on transformational appeal, showing Nestea as a quality, high-value brand of tea through simplistic visuals and clever wordplay on the suffix –ty, replacing it with ‚tea.‛ Through these ads, Nestea will establish some of its better qualities, like new wide variety of flavors or newly adapted formulation.
28
 Wording in the ads will be written in entirely lower-case type to highlight the laid-back energy with which the brand will be associated, as it is a summer beverage that will be positioned as perfect for barbecues and relaxation. The lower-cased lettering suggests freedom from constraints and rules, allowing the consumer to be free and have fun.
Advertisement Taglines vari tea Highlights Nestea’s new release of additional flavors reali tea Showcases the new reformulation, reducing sugar and adding tea flavor par tea Positions Nestea as a beverage for socializing during the summer
(especially the 5 liter, par tea cooler) originali tea Spotlights the new design of Nestea cans and bottles
17

18
5
4
The marketing budget for 2009 has been set at $5.07 million, which is 14.5% of revenue – a number that was drawn directly from Coca-Cola’s 10-K as of FYE 2009.
29
Budget Allocation 2009:
Promotion
50%
Promotion: The current promotional expenses for Nestea are estimated to be USD $2.5 million. This number was deducted after allocating the budget to sales force and advertising expenses as explained below. It is important to mention that this budget allocation, which prioritizes promotion, is consistent with the trends observed in this industry, where sales volume appears to be strongly related to promotion (refer to promotion section).
3
2
1
0
Advertising
10%
Sales Force
40%
Projected Nestea Marketing
'Marketing Budget Allocation -
Base Year
Advertising: Given the lack of apparent Nestea ads our focus group has observed during recent years, we are assuming minimal advertising expenses. However, given the possibility advertisement in other areas of the U.S., we estimated a total expense of USD
$500,000 for advertising during 2009.
1
Sales Force: Assuming the company’s hired sales representatives are highly-qualified sales portfolio managers, we estimated a sales volume of $1.6 million per salesperson. By dividing our
$35 million sales for this period by $1.6 million we obtain an estimate of 22 salespeople. At a yearly salary of USD $95,000 30 would cost $2.03 million, which represents 40% of our total marketing budget.

Through an analysis of Nielsen data, we found promotions have a significant impact on sales of Nestea.
 We discovered the behavior of monthly Nestea unit sales compared to the percent of units promoted as presented in the graph to the right. We calculated a linear regression to analyze the impact of promotion in our sales with the following variables:
 Dependent variable: Nestea’s total monthly sales
 Independent variables: percent of products promoted by
Nestea and percent of products promoted by the remaining top nine players in the market.
15
10
5
0
Nestea Sales vs. Promotion
0 10 20 30 40 50
% Units associated w/ any promotion
Regression results



This regression results in an R-squared of .86 meaning that 86% of the average change in sales volume is related to the amount spent on promotion holding our competitor’s expenditures constant.
This gave us a monthly estimated increase of 477.5 thousand equivalent units per percent point increase in the amount of equivalent units sold with any type of promotion.
Potential problems with this calculation:
 Seasonality: Because Nestea sales are highly seasonal, the amount of promotion may only increase in summer and other high-sales times. However, given that we also obtained a correlation of less than .5 with the promotion of the rest of Nestea’s competitors, this could possibly imply that the promotion of our products may not necessarily take place during the same periods as our competitors.
 Residuals: We noted an increasing spread of the residuals as percent of promotion gets higher. This data would require more sophisticated statistical methods to understand.
19

Nestea Price vs. Promotion
Additional findings:
0.8
When plotting the price of Nestea against the percent of its products promoted, we can also observe a clear negative correlation in which the price of units sold decreases as the promotion percentage increases. This effect slightly reduces the impact of promotion on the total sales of the company; however this impact is nearly negligible as described in our strategy below.
0.6
0.4
0.2
0
0 10 20 30 40 50
% any feat. or disp.
Our strategy:
 According to the results of this regression and the apparent high impact of promotions on our company’s revenues, we have decided to double the promotional expenditures from $2.5 million to slightly above $5 million. The goal of this strategy is to increase our current 22.4% of total units promoted to match the percentage of products promoted by the leader of the industry, Snapple, who currently promotes 46.7% of their products.
 According to the regression results, the effect of promotions could potentially increase sales to $18.1 million as per the following equation:
 Retail price per equivalent unit promoted at 47%: $0.38
 Nestea unit income after retail, distributor and bottler margins: $0.13
 Additional monthly unit increase per percentage point of units promoted: 477.5 thousand
 Yearly unit increase per percentage point of units promoted: 5,730 thousand
 Total percentage points increase in units advertised from 22.4% to 46.7%: 24.29
 (24.29) x (5,730) = 18.1 million in additional sales based on promotion
 In spite of this aggressive increase, we have decided this growth rate is unrealistic, thus we have adjusted the actual sales increase to a more conservative and realistic growth rate (refer to financial assumptions for a broader explanation of this section).
20

Budget Allowance
 Given the $1,500,000 allocated (see slide 18) to advertising during the first year under new management, $100,000 will be spent to hire a new graphic designer to handle the advertisements planned for the rebranding campaign. Additionally, $500,000 has already been allocated to other advertising initiatives within Nestea and will continue to be used in those channels.
Getting the Message Out
 Because of the available pricing options, the easily quantified results, and the wide distribution, online advertising is the best choice for Nestea’s branding campaign.
We will schedule a three-month roll-out campaign split between three websites
(table below) to raise awareness of the new branding campaign.
 $90,000 will be used to create ads on Facebook targeted at the 18-34 age demographic within the United States, a group that is – according to Facebook – approximately 90,500,00 users. Marketing would set a daily allowance of $500 for a
$1 cost per click, building an approximate $90,000 total cost over the course of the three-month roll-out to bring 90,000 unique visitors to the Nestea website.
31
 A video ad (left) will be run on Hulu, flashing the attached images with relaxing music playing in the background. This will align with the rebranding themes of quality and relaxed attitudes. Approximately 10 million viewers would see the video over the course of one month for a cost of $270,000.
32
 Banners of the print ads will appear on the New York Times homepage for one month, a period during which approximately 9 million viewers visit the site. That banner will link to the Nestea homepage and will aid in raising awareness both on the New York Times website and once visitors are linked to our website for $540,000 over one month.
33
Site
Facebook 34
NYTimes.com
35
Hulu 36
Total
Dollars Spent
$90,000
$540,000
$270,000 37 10,000,000
$900,000
Audience
90,000
9,000,000
19,090,000

Given the large increase in online traffic in recent years, more customers access the webpages of the products they purchase. They search for information of all types including pricing, location and product characteristics to compare between similar products 38 . As a result of
Nestea’s new brand image and aggressive advertising and promotion strategies, we expect to generate greater traffic to our website.
Since our webpage is our online face to our customers, we believe it is of the utmost importance to care for projecting Nestea’s new image while awakening our visitor’s interest in trying the new Nestea. We plan to achieve this goal by improving the following details on
Nestea’s current homepage:
Buttons and functions will be reduced to the minimum possible without compromising important information about the products.
Product images will be aligned to the new
‚simplicitea‛ campaign including the new can design and logo.
New webpage will highlight new reduced-sugar and increased-tea-flavor products.
Background color will be simple and elegant while inspiring freshness and nature
Background images will emphasize the motives of the new campaign
- more tea flavor and improved image.
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Other consumer drink companies, such as Polar Beverages, have found success through careful management of their distribution channels.
In order to improve Nestea’s positioning in the market, two things must be achieved that can be addressed through distribution: an increase in retailer desire for Nestea products and an increase in visibility within stores. By combining current efforts with new management strategies, these goals can be accomplished.
 Right now, Nestea is using Coca-Cola’s bottling and distribution channels, which are comprised of 79% independent vendors. In order to maintain current distribution levels, it would be wise to maintain relationships with the majority of those independent vendors.
 However, those vendors are selling Coca-Cola products, including Nestea competitors Gold Peak and Honest Tea.
When making deliveries and pitching products, why would distributors want to sell more Nestea?
 In order to raise distributor desire to pitch the product, under new management Nestea will use distributor margins of 40%, which–given our increases in prices–will increase the actual dollar values given to distributors per sale. These relatively small increases will be magnified in significance over the course of millions of transactions.
Old Price: $0.85
Old Margin: $0.165
New Price: $0.90
New Margin: $0.175
Old Price: $1.50
Old Margin: $0.291
New Price: $1.60
New Margin: $0.311
New Product
Price: $4.45
Margin: $0.864
New Product
Price: $6.25
Margin: $1.214
The way distributors interact with retailers is vital to Nestea’s operations. Choosing distributors who will create relationships with local retailers will help on several fronts:
 Distributors will know what kind of promotions work best with each individual retailer and will relay that information to Nestea for consideration in promotional allowances.
 Having local distributors who are devoted to our product will ensure better shelf placement and will assist in assembly of displays.
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Nestea
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

Nestea products often appear overshadowed by its competitors, such as
Arizona and Honest Tea.
Nestea also occupies very limited shelf space in comparison to its main competitors who dominate the RTD tea section in grocery stores.
AriZona Nestea Honest Tea


Independent beverage companies 40 have found that sales representatives from large companies such as Coca-Cola and Pepsi tend to try to sell the largest amount possible in a short amount of time since such positions are mostly transitional or entry positions.
This generates a problem for distributors and retailers, since sometimes sales representatives try to sell as many products as possible without being supported by enough demand.
We intend to create a closer and more reliable relationship with
Nestea’s sales representatives by reducing their turnover. This will enable the bottlers and distributors to have people they know within our company and will also avoid short-term product sales maximization since our sales representatives will seek long-term goals and achievements (see slide 28).

Diversified Products Corp. currently owns over 20 consumer brands, operates in 14 consumer-product categories, and employs over 3,000 people. However, we believe in the importance of a unique mission, vision, and set of values for each brand that we manage.
In drafting the new mission, vision, and values of Nestea, we were intentional about including input from current DPC employees who have already agreed to join our team, DPC’s Board of Directors, as well as representatives from the previous parent companies, Coca-Cola 41 and Beverage Partners Worldwide.
Our Mission:
To provide our customers with the best possible selection of high quality and refreshing iced teas in a variety of flavors and sizes.
Our Vision:
People: To be a fulfilling place to work where employees are inspired and supported to be the best they can be.
Partners: To nurture relationships based on trust and mutual benefit with our network of suppliers, distributers, retailers and customers
Planet: To continually work to better the environment, specifically through the direct support of water conservation
Portfolio: To provide a portfolio of high value, high quality iced teas that anticipate and satisfy our customer’s desires and needs
Performance: To maximize long-term return to our shareholders while being mindful of our overall responsibilities to our stakeholders
Our Values:
Loyaltea: To our employees, partners and customers
Qualitea: Do one thing and do it well
Productivitea: Always work efficiently and effectively
Accountabilitea : If it is to be, it’s up to me
Diversitea: Throughout all our endeavors from hiring to flavor selection
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Positive Elements of the Current Brand Situation To Build Upon : Nestea has a strong brand name and a well-established distribution system that has developed as a result of Coca-Cola’s extensive network of bottling partners. Nestea has also been produced in the United States under the guidance and leadership of a team of Coca-Cola employees.
A Valuable Team: It is our intention to hire employees who wish to join us directly from Coca-Cola 42 as we approach the revitalization of Nestea. We believe that Nestea’s decline in the market is due to the fact that it has been neglected by Coca-
Cola as a whole, not because of the inabilities of the workers who produce and manage the brand. These people include but are not limited to: 1
Vikram,
Growth Mgmt.
Tania,
IT General Mgmt
Alex,
Strategy and
Business Development
Melissa,
Brand Marketing
Scott,
General Mgmt.
Because they are familiar with the Nestea brand, these Coca-Cola employees will be of considerable value to us should they chose to join DPC. They will also offer consistency through the acquisition process which is important as we strongly believe in establishing consistent relationships with everyone we work with – bottlers, distributors, retailers, and customers. We will also augment our team by hiring other people who have experience in the RTD tea industry or bottled beverages industry as a whole. We will seek people who share our values, believe in our mission, and are ready to contribute to our vision.
All employees will go through an extensive orientation before beginning work on the product. It is important to us that our culture and values are aligned from the very beginning.
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27
Market Share
Non-Carbonated RTD Beverages 44
As a whole, the RTD bottled beverage industry is a ‚red, white, and blue‛ industry in that it is dominated by two major players – Coca-Cola (Red), and Pepsi (Blue) – as well as a variety of smaller independent beverage producers (white). In purchasing Nestea, Diversified
Products Corp. is moving it from being a ‚red‛ product, produced and distributed by Coca-
Cola to a ‚white‛ product.
1 While this poses challenges because Nestea will no longer have the resources of such a large company, it also provides opportunities for Nestea to set itself apart from other products in the RTD tea category. Below are some norms of corporate culture in the current industry that we hope to learn from as we create our own culture.
 While information on employee turnover rate is not publicly available from companies such as Coca-Cola or PepsiCo, interviews with industry insiders have indicated that there is a feeling amongst retailers and distributors that these industry giants have a high rate of turnover which leads to inconsistent relationships and low levels of trust.
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 Gerald E. Martin, VP of Marketing and Sales at Polar Beverages in Worcester, Mass., has described a lack of continuity in the management of brands at Coca-Cola. According to Mr. Martin, Coca-Cola is always searching for the new hot item. They diversify to the point of neglecting certain brands.
‚ Our delivery guys joke that they need to close the doors to the truck when they see the Coca-Cola guys. They tend to look at what we’re doing and buy whatever the next hot thing is from us. Then they inevitably end up neglecting it because they already have such a successful main product. It’s exactly what happened with Vitamin Water.
We raised the brand and brought it to what it was then Coca-Cola bought it from us and sales started to decline.”
-- Gerald Martin, VP of Marketing and Sales, Polar Beverages

Even though we operate in a ‚red, white, and blue‛ industry in which Coca-Cola and Pepsi are dominant players with greater resources, we aim to nurture and grow the Nestea brand by creating a shared culture of productivity and progress both internally and externally.
Low Turnover Rate:
In order to set ourselves apart from companies like Coca-Cola, create continuity, and save money on training costs, we will prioritize ensuring a low turnover rate for the employees managing Nestea. We will do this by:
 Seeking employees who show a commitment to growing the brand and who are able to articulate a long-term vision for their own potential career with us. We will support them in their goals through continuing education, regular performance reviews, and ensuring that they are motivated to succeed through empowerment.
 Establishing a rotation program for employees which will allow them to learn about different positions within the management of Nestea. This will ensure broad understanding of organizational goals and help motivate employees to stay interested in their work.
Relationships:
As indicated in our values, we believe that relationships are key in this industry, especially between buyers and salespeople.
The standards for these relationships must begin with the employees of DPC.
 We will nurture our employee’s understanding of the marketplace through opportunities for trainings, conferences, and industry-wide gatherings.
 As part of our orientation, we will speak to the importance of establishing and maintaining strong relationships throughout all of our distribution channels.
 We will ensure staff-wide communication with frequent company-wide newsletters, and meetings between management and staff. We will also keep employees updated on industry trends and practices through the newsletter.
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At Diversified Products Corporation, we are committed to sound business and corporate social responsibility. In order to help the greater community, we have prioritized two different areas of focus that are aligned with our Nestea product.
CommunitiTEA Barbecues:
 Nestea will sponsor summer barbecues in deserving neighborhoods in the top 20 largest cities in the United States from June through August. These are also the cities in which Nestea’s gallon jugs and the par tea cooler will be launched.
 Applicants (individuals or community groups) will submit essays about how they have helped their neighborhood improve and winners will be selected by a committee of employees and local community leaders.
 This effort will align with Nestea’s new image as the preferred drink of summer barbeques. Also, the concept of neighborhood revitalization can be directly linked with Nestea’s improved quality and revitalized brand image.
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Water Conservation:
 Because Nestea is primarily composed of water, a limited natural resource, Diversified Products Corporation is committed to water conservation.
 While DPC will not directly use water at our facilities in the production of Nestea, our bottling partners will. Therefore, we will work with these bottling partners to ensure that they have the means to recycle this limited resource. Currently the precedent is set for this goal because almost 85% of Coca-Cola’s bottlers have water treatment standards that are at a level that is more stringent than the local standards and we will be using many of these facilities.
 We also plan to donate 10% of our previous year’s income every year to the World Water Council
( www.worldwatercouncil.org
), an organization that brings experts and organizations together to ‚promote awareness, build political commitment, and trigger action on critical water issues at all levels.‛ 45

Nestea has the potential for quickly becoming an extremely valuable asset within the DPC brand portfolio. To ensure that our revitalization efforts are successful, we must make sure all our improvements move the brand in the right direction.
With a cohesive and comprehensive strategy, Nestea will be able to regain market share in the highly competitive
RTD tea industry. During the next two years, we will focus on changing the brand perception of Nestea from low quality to high quality, and increasing overall sales through the introduction of new products.
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