China Law Blog

I don't know what tea the author is talking about.

Most Lipton I saw in China is Lipton Ice Tea, which is a sweetened light drink, not tea.

And there are teabagged Lipton tea. I don't think serious teadrinkers in China drink tea in teabag.

I have a feeling that the author is comparing apple with orange.

no link?? and not in blog roll.... common Dan, some of us are lazy about searching out links.

There won't be. Why? Because you're talking about totally different products. The Chinese process their GREEN tea very differently from how Indian/Ceylon sourced BLACK teas are processed. Its like comparing Red Wine and White Wine. Lipton's are a BLACK tea, sourced mainly from Sri Lanka.

Thanks for posting that. I went to the blog and was shocked at how many posters took real umbrage at the article, even willing to twist some facts. Bags of lipton have been served at common Chinese restaurants for years.

Lipton is obviously a powerhouse in China, and I think that what is more likely to happen is that a non-Chinese Asian tea company will become powerful as well, but perhaps a bit more upmarket than Lipton, kind of like Starbucks or Numi compared to Folgers. I know that Korean teas are becoming popular, and they are hardly "tea" in what seems to be the traditional Chinese sense of steeping leaves. For example, Korean black bean tea, and the popular fruit flavored jellies to be mixed with water (yes, a heresy, I know) that they sell in jars. When I used to search them out, it was difficult at first to find them outside of Korean specialty shops, for example in Hongqiao, Shanghai. Later I was able to find them in common Chinese supermarkets, and when I would serve them to Chinese, the jellied teas went over so well, I was pleasantly surprised.

One big problem with the Chinese tea market is the deliberate mislabeling and the prevalence of fake teas. If you are a standard consumer - like the vast majority of Chinese are - you simply do not have the ability or time to learn to really distinguish between what tastes "good" and is authentic and what tastes good and is a mix or a fake. The same thing goes for wine; there have been blind tests done where even the most serious and dedicated people in the industry did poorly on wine identification. So much ritual, showmanship, and regional romanticism is wrapped up in food and beverage consumption that it's hard to shake people out of their stupor. This applies to China and the world at large.

I found tea culture in China to be overrated. Lots of money being waved around, but comparing their better boutique teas to other countries, I must say that they have lost the beat. Even at some common Korean tea houses, one may find people who have hand prepared all the ingredients using various processes and serve them at an affordable price. I for one would love to see strong Korean ginger teas catch on.

I will add here that I am not Korean, just a tea drinker.

:-)

Well, as a Chinese, I can testify that very few Chinese drink Lipton tea.

And it's absolutely true that tea in Chinese market is total different from the world market. Chinese hate bagged tea, and Chinese never seriously think any foreign tea will taste good. There are big brands of tea in China, like mao jian, long jing, mo li hua tea. It's true that they don't operate like a modern business, but that's what Chinese drink. Any Chinese know what long jing is, and at least half of them can tell you the difference between ming qian long jing and regular long jing, but I hardly see anyone that can name a bagged tea brand.

Beverage market in China is generally very tough. Other than casual drinks like soda, you hardly see any foreign brand selling on Chinese market. Some red wine may be selling for a bit, but the vast majority still enjoy local beer/wine. The only market I can think of where a foreign beverage is active would be the beer market, but that's more of a nice work of capital manipulation instead of manufacturing and marketing.

It is like talking about how Budweiser is beating German beers and how fragmented German beer market is hurting the branding and sales of German beers.

The problem is, despite the fact 99% German beers are badly branded and little known outside Germany, Germans drink German beers and are satisfied with that.

So are Chinese teas.

I don't drink tea, but my students do. They like Lipton.

So far as I can tell this is a generational thing. Younger people in China are quick to embrace anything foreign as upmarket and trendy.

I have been invited to Chinese homes and I have always been served green tea. If I visit a university however it is a common sight to see stands selling a line of students pricey mixed tea drinks - all using Lipton.

The Chinese market is large and varied.

The question is not whether Lipton is the better tea. The question is whether Lipton has established a better brand, and the premiums that redound from doing so. This it most clearly has.

Despite the emotional reactions posted below the article, I thought that it was both accurate and well written. The wine analogy contained within it seemed most on point because wide variances do lead to staggering cost differences for both products.

All the uproar appears to validate Joe's comment (above) that the Chinese consumer prefers a fractured market where he or she has a great deal of choice.

For instance, in Hangzhou during the tea harvest, urbanites will make a day of it by going out to their favorite farms. At the farms they will have a fresh meal and tea while workers in the background are picking tea leaves in the terraces.

It's a lovely experience, which certainly beats what would likely be the alternative if the lands were all consolidated ... a factory tour.

Cheers!

I have to say branding is usually best when a product is not the greatest, but you can change its perception into being the best. (or at least the most common or most desired.) Much more fun to brand, and works better because of it.

http://www.marketingmagazine.co.uk/news/939219/Interbrands-Top-100-global-brands-2009/

Out of the top 100 brands today; somewhat worryingly, none are Chinese.

and a brief side note:

@Leo - Budweiser of course is an American steal of a Czech beer recipe, which then got made cheaper by adding rice to the mix. Probably has very little to do with German beer sales.

It's all very nice to read different reactions, it certainly gets emotional when talking about national food and beverages. As a half Italian I very well understand.

However most of your comments are all but what Dan was trying to get across. He was not talking about a big Chinese brand IN and FOR China but for outside market. He was not considering the techniques of making black tea in bags and wulong tea in small balls. He wasn't even thinking of making an emotional statement of when and how tea is being consumed weather in a flat in Shanghai or on the rims of a tea terrace in the countryside and if that is holding back branding at all.

Dan was simply trying to get closer to the question regarding: is any Chinese bottled tea or canned tea entrepreneur willing to challenge the global market? It's a post about branding difficulties.

My answer would be positive. I believe it might happen. The Chinese love their tea but do not identify themselves with one specific brand. It could happen though that some Chinese company steps up and does like the Italian brand Ermenegildo Zegna: in Italy very few people know it and in China it looks like Italians mostly wear Zegna all the time or that it is more famous than Armani. Wrong. But Zegna is branding and it is branding fine!

Then, after that, you are almost all right with your comments and details about the quantity of Chinese tea types, the cultural aspects etc.

Still, regarding German beer, I strongly refuse to believe that the 99% of the German beer brands are frustrated because not well branded: what about reluctance to mass production? Ever heard about small breweries that want to STAY small because they don't want to outgrow their tradition? That is fair and that is branding. Just another scale; what is wrong with small businesses?

@ Riccardo,
Finally a comment that gets to Dan’s point as well as the point of the FT article: branding. Notice not one of the tea elitists disputed the key fact (although not cited) Mr. Miller provided: “In China, Unilever’s Lipton brand has a market-leading share three times that of its closest local rival.” You may not consider Lipton a tea anymore than I consider Great Wall a wine, but both have been successful in their respective markets in China: tea and wine!

I would agree as well, that China will eventually have a well-recognized brand but I suspect that it will occur locally first before it begins to go global. China is still working out how to brand their products. Once they develop the level of appreciation and sophistication of marketing (and they will sooner than most think in my opinion) required to develop strong local brands en mass, I suspect we’ll also be seeing a significant rise in Chinese products that become global. I have always been impressed with brands that truly reach a global presence and lose their national legacies. I grew up thinking brands such as DANONE and Nestle were American simply because they were just as ubiquitous as local American brands. I wonder which Chinese brand will be the first to do the same?

"Bags of lipton have been served at common Chinese restaurants for years".

Not in China they haven't.

Benussi: My answer would be positive. I believe it might happen. The Chinese love their tea but do not identify themselves with one specific brand.

I seriously doubt that it's going to happen any time in the next twenty years. The problem is that for you to get an international brand, you have to have industrial tea production, and industrial tea production means lower margins for farmers and less employment for tea growers. Given that this will likely lead to rural instability, I think that there is going to be huge pressures to prevent consolidation of the tea industry.

An interesting story about that quintessentially Chinese product.

I suppose I am like many Americans who drink the stuff, I prefer black Kenyan tea for its strong flavor and kickass caffeine lift. Tastes are different in the mass market-at least this corner of it.

It is changing though. My local supermarket carries PGTips and something called Tetley's British Blend-which tells you that the mass market product is trending toward the tastes of the Angles and Saxons, rather than to a more discerning palate.

My preference runs to Williamson's Lifeboat Tea. It's strong enough to float a pair of handcuffs on.

One of the most telling comments on the Dragonbeat blog said quote: "Even the most famous chinese brands (Xiao Feiyang, Maotai, Wuliangye, Chunghwa, Panda, etc.) are seldom known outside China, unlike the world known brands such as Janie Walker, Hennesy, and Marbollo."

It's a mirror that reflects perception and knowledge.

It's a big old world, plenty of room for all.

Also you don't get into these sorts of issues if you have foods and beverage that depend heavily on processing. My suspicion is that the first international Chinese brand will be something like Wahaha (although that particular brand is in a legal mess).

Finally, it's a really bad idea to brand or go global for the sake of branding or going global.

Well,Lipton may be leading the next local 'brand' by 3 fold or whatever, but try to tell me what's the brand for 'long jing' or 'mao jian'?

No, in Chinese tea market, consumers don't buy 'Lipton tea' or any 'brand x tea', consumers buy 'Long Jing' or 'Wu Long', which may have 5000 'brands' for each tea, none of them are remotely close to Lipton, but that doesn't mean Lipton is the tea market leader.

To be more precise, you should say Lipton is the most successful and biggest brand for bagged tea, but you can't even suggest it's the major producer of tea in China. The fact is that probably over 90% of the Chinese tea market are occupied by those products that don't even need a brand.

Yet another instance of American stupidity and ignorance. Why would you compare some low-end mass-marketed crap tea like Lipton to authentic high-grade tea enjoyed only at speciality tea houses in certain locations of the world. You're talking about two completely different products with two different demographics. So, you have your mass-marketed crap Lipton tea. I prefer quality over quantity any day of the week.

I have to say that many of such articles and commentary on China in the west is myopic. I went over to the FT dragonbeat blog, and am, sadly, not at all surprised by the, to be blatant, ignorance of writers there. I think the argument based on teas is too simplistic. Where did they get their data? How did they define the market? etc. I wouldn't be surprised if the actual data and correct analysis of it showed that whatever point they were trying to make was ineffective.

Further, in terms of food brands, does it really matter that China have a world beater? Name a Japanese world famous food brand? Surely, nothing that ranks along with Coke or McD, but does it matter? Yet, Japan is still the #3 world economy.

So my point is, there are too many western pundits on china who really don't have a clue about China, and beyond that, what are even the significant issues revolving around china. Too many of them trying to draw conclusions that are really trying to, excuse the pun, read too much into tea leafs.

I think it's rather unfortunate that a discussion of tea yields such sweeping disparaging of "the west".

I would like to believe that I spent several years in "bizarro China", as that might help to explain many things, but I am sure I was in "genuine" China, and I know that tea bags are used by 老百姓, furthermore I have long since gotten over the surprise of seeing tea in Chinese restaurants. Perhaps not as popular upscale, but then I spend the vast majority of my time in very pedestrian places where, I insist, I bags. After reading the comments on the article and replies after mine above, I contacted a few people in China (ah, the magic of cellular and internet technology) who confirmed my reality. Whew!

Unless someone has proof that the author of the article fudged - or completely misrepresented - Unilever's market share, I am going to have to puzzle over the tone of some of the replies.

Does anyone have a link to the original idea the fellow mentioned?

Regarding the Chinese market I see there is some disagreement, but in the World market there is little doubt that China, being the origin of tea, has been left far behind by Indian and Sri Lankan products.

One of the books I read last year spoke of this from a historical perspective. I think it was one of the Carl Crow books: 400 Million customers.

Carl explains that in the early days of the colonies, Chinese teas were more appreciated in the metropolis than the black Indian teas, and when the shipments from China arrived in London the market would go crazy for the fresh tea. But then Mr. Lipton managed to turn that around by beating the Chinese shipments with his black Indian tea, making it more available and ultimately establishing the English taste for Black tea instead of green. London at the time was the most influential place, and the rest of the World followed suit.

I don't have the book with me now and there might be some inaccuracy here, but I think that is how the story went. According to Carl, ever since that moment the Chinese tea lost its chance to become No.1 in the Word. (in terms of sales, not of quality, that is)

Actually Dan,
There is one branded Chinese tea company and it is called Tenren, it is from Taiwan, and they have tea rooms all over the world, including New York and if memory serves me right, were setting up a tea room in the Seattle area. I have read about the "State of Tea in China", please allow me to add my viewpoint. I'm Bostonian, let me tell you we know something about tea. First The U.K. is one of the most competitive markets for tea, if you can sell there you can sell anywhere. Second, the USA market for Tea is very competitive, We have many brands of good teas, some from India, China and Sri Lanka, just to name a few. I work in Beijing and see many Chinese drinking Lipton Tea. I prefer Trader Joe's (have to really be from West Coast of USA to know what about that retail chain) because they just rebrand great quality tea. Also in Seattle we have Tazo Tea(owned I think by Starbucks), which again is just rebranded. So, maybe just like in my industry (mobile handsets) the Chinese when they go global realize they can not build a brand overnight and perhaps they have decided to first supply quality Tea, both green, Oolong, Black, White teas to Western distributors on an OEM basis. This would make sense. Chinese people have a passion for drinking tea but so do other countries, so let's not get into idealogical issues, the fact remains. Tenren is a global brand, it is a Chinese company (Taiwan) and has a long tradition of serving excellent tea with over 50 years in global markets, I drank their Black tea when I lived and worked there and can confirm it is very good. Okay, now I am going to sit back, take a sip my Trader Joe's good Sri Lankan Mango Black tea and say Ahhhhhhhhhhh.
Cheers,
Karl Weaver
Gemalto Beijing

Virtually every office I have ever been in China keeps boxes of Lipton tea bags in stock. Guests are ubiquitously served Lipton tea bags with little yellow labels. I'm not sure why it is offensive to assert that Lipton sells a ton of tea in China (and globally) and beats out every Chinese competitor. It's a fact, like it or not.

Also, ADSF, Japan has plenty of global food brands: Kikkoman, Kirin, Suntory, Asahi, Sapporo, Maruchan, Nissin Foods (Top Ramen), etc.