A rowdy tea party is brewing in the soft drink industry as companies crank up already-intense competition in the rapidly growing market for bottled green tea.
With canned coffee and carbonated drinks showing little growth, and perhaps even a decline, beverage makers have decided to put their future in the hands of the traditional Japanese beverage.
Shipments by the three major makers of bottled green tea are expected to grow about 20 percent over last year, when an unusually hot summer drove the green tea market up 32 percent year-on-year to some 409 billion yen, according to some industry estimates.
“We’ve finally entered the green tea era,” Hachiro Honjo, chief executive of top green tea bottler Ito En Ltd., declared to analysts at a recent meeting.
“The industry is now said to be embroiled in a green tea war,” Honjo said. “Makers are actively introducing products as the market expands to 1 trillion yen.”
Ito En, the pioneer of canned and bottled green tea, released a new version of its mainstay Oi Ocha in May for the product’s first major makeover in 20 years.
While the company projects sales of Oi Ocha this year to climb 9 percent to 73 million cases, or 129 billion yen, Honjo said he believes it will reach 80 million cases.
“This year, Oi Ocha will probably beat Coca-Cola to become the No. 2 soft drink brand in Japan,” he boldly predicted. The tea was the third best-selling brand last year after Coca-Cola and Georgia canned coffee, also a product of Coca-Cola (Japan) Co.
But Coca-Cola (Japan) has no intention of letting that happen. In fact, Coke hopes to beat Ito En at its own game with a new green tea called Hajime (start or origin), released in March.
Hajime will be the company’s most important launch this year, with Coca-Cola hoping to make the drink the top green tea brand in Japan.
Kirin Beverage Corp. also released a new version of its green tea, Nama-cha, this spring.
“The firm that rules the green tea segment will rule the whole soft drink market,” said Kenichi Yamashita, Kirin Beverage’s Nama-cha manager.
He said the firm had a “record budget” for promotional activities and another marketing offensive went into full swing just before summer. “Competition is getting fierce; we cannot lose,” he said.
The green tea market was dominated by Ito En until 2000, when Kirin scored an instant hit with Nama-cha.
Kirin attributed its success to the way it presented green tea as fashionable and sophisticated, shattering its long-held image as a drink for the elderly.
“Seeing our success, other makers also launched green tea drinks,” Yamashita said. “Green tea is one of the few drinks that can target all consumers at all hours of the day.”
While the markets for canned coffee and carbonated beverages are much larger, their sales are expected to decline this year, and the industry believes green tea holds more promise.
Industry officials attribute their rosy expectations to Japan’s growing health-consciousness. Not only is green tea devoid of sugar, it is high in catechin, which is said to be an antioxidant.
Some industry officials also note that the rapidly fading practice of female office workers serving tea has also helped push up demand for the bottled form.
But Naoto Okinaka, general manager of the beverage and food division at Suntory Ltd., takes a more philosophical view of green tea’s ascent.
The boom is just another social trend following a decade of economic stagnation that has shaken up Japan’s postwar values.
People’s tastes have become more conservative, and many are taking a new look at their roots as Japanese, he said. “I think drinking green tea has a soothing effect for the Japanese.”
He said the company’s latest smash hit, Iemon green tea, released last year, resulted from its success in projecting green tea as a traditional, nostalgic drink rather than as a modern and trendy beverage as spun by the marketing team for Nama-cha.
Last year, 34.2 million cases of Iemon were sold, a first-year sales record for a soft drink brand, according to the company.
“For soft-drink makers, survival depends on whether they have a mega-brand in the green tea segment,” Okinaka said.
But the surge in sales of bottled green tea has not necessarily been a boon for tea growers in Japan.
Last year, the price of tea leaves used for bottled drinks shot to record levels, thanks to the strong demand. But this year, prices have been moving in the lower ranges.
Industry insiders say this is because some drink makers have been hoarding too much for inventory.
“The popularity of green tea drinks is a welcome thing for tea farmers,” said Minoru Takano, a senior official at the Japanese Association of Tea Production, an industry group. “But they are not sure whether it means stable growth in demand for their leaves.”
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