This report first appeared in Gulf Marketing Review's January 2009 issue. The full report with statistics is available for download at the bottom of this page.

Background

With intention to focus on the hot beverages sector, we chose to focus on tea and coffee and in certain brands in specific; Folgers, Lipton, Maxwell House, Nescafe, Twining, Rabea Tea. Both the media coverage and the surveys were conducted for both the UAE and KSA markets for the time period of 20 October to 20 November 2008.

We also integrated the Ad Spend of some of the popular tea and coffee brands to gain a better picture of all marketing efforts and its out-take in terms of the public’s preferences. 539 and 602 respondents from the UAE and KSA respectively answered the question, ‘What do you prefer to drink?’ with choices being; Folgers, Lipton, Maxwell House, Nescafe, Twining, Rabea Tea, None of the above, Other tea brand and Other coffee brand. All respondents were 18 years of age and above and the results were divided by gender, age and nationality.

Media Coverage Measurements

There were 15 mentions of ‘coffee’ from UAE and KSA editorial media, while there were only 9 for ‘tea’. ‘Coffee’ achieved higher impressions and coverage size than ‘tea’. However, interestingly, media coverage for specific brands came out almost empty handed, with 1 mention for Folgers, 3 for Lipton and 0 for Maxwell House, Nescafe, Rabea Tea and Twining.

Content Analysis

Coffee

In mid-October, global stocks dove to five-year low with panic consuming investors. Coffee slid to a 17-month low and cocoa to an 11-month low, while white sugar hit a 10-month low. Their stocks rose again mid-November, supported by a recovery in stock markets, as investors’ attention turned to this weekend’s summit of the Group of 20 industrialized and emerging economies. The only mention of Folgers was on announcing 12 cents a share in increased restructuring costs.

Interestingly, India is expected to see a sharp rise in per capita coffee consumption in coming years and may become a net importer of coffee instead of an exporter. The reason for this is India’s growing middle class has increased the popularity of coffee shops.

Tea

Sri Lanka, a key exporter of tea, has appealed to ‘friendly countries’ to buy more of the brew to help the island weather the global financial crisis. Unilever, which makes Flora margarine and Lipton tea, among other things, said that it was losing share to retailers’ private label products. This came out directly after Unilever posted 63% earnings jump in Q3.

Ad Spend

Coffee and tea together constitute about half the overall food and beverages Ad Spend in 2007. 37% of all Ad Spend from food & beverages companies in the GCC came from tea, while 10% came from coffee. As for specific brands, Lipton came first with $27.5M, followed by Nescafe with $7.5M, Rabea with $5.7M and Maxwell House with $1.96M.

Lipton came first in terms of top spender for TV ads, newspaper ads, magazine ads and radio ads. Nescafe came second in TV and radio ads. Rabea came 3rd in TV ads and 2nd in magazine ads.

Survey Findings

Overall results as well as the significance of the demographics were evaluated from a sample size of 539 in the UAE and 602 in KSA to a question of preference of various coffee and tea brands.

UAE

Both females and males ranked Lipton first, followed by Nescafe and Twining. However, while 39.78% of females ranked Lipton first, 42.46% of males did. In terms of age, ’25-34’, ’35-44’ and ‘Over 45’ year olds all ranked Lipton first, followed by Nescafe and Twining. That was not the case for the ‘18-25’ year olds, who ranked Nescafe first, followed by Lipton and finally Twining. This indicates a single segment slice that Lipton does not dominate in.

Nationality results were mixed. While Arab Expats, Indians, Pakistanis, Africans and UAE Nationals ranked Lipton first, followed by Nescafe and Twining, Asians and Westerners differed. 51.61% of Asians favored Nescafe, while only 22.58% favored Lipton and 6.45% favored Twining. As for the Westerners, 37.04% favored Nescafe, while 11.11% favored Lipton, 18.52% favored Twining and another 18.52% favored another tea brand.

KSA

Both males and females ranked Lipton first, followed by Rabea Tea and finally Nescafe. Unlike the UAE market, where Nescafe almost always came 2nd, KSA residents seem to be loyal to tea. Worthy to note is that 19.43% of males showed preference for Nescafe, while only 15.28% of females did.

In terms of age, an exact pattern as that witnessed in the UAE is replicated. ’25-34’, ’35-44’ and ‘Over 45’ year olds all gave the same rankings of Lipton first, Rabea Tea second and Nescafe third. However, ’18-24’ year olds stood out where they ranked Nescafe 2nd and Rabea Tea 3rd.

The only nationalities worth considering based on the sample sizes are the Arab Expats and Saudis. Saudis maintained the overall ranking of placing Lipton in the lead, followed by Rabea Tea and then Nescafe. Arab Expats agreed on having Lipton first, but ranked Nescafe 2nd and Rabea Tea on 3rd place.

Conclusion

It seems clear from examining Ad Spend data, media coverage and survey findings, that tea and in specific Lipton takes the lead. While there were more ‘coffee’ mentions in the media, they were mostly insignificant side mentions. Most of the ‘tea’ mentions however, were direct and focused.

There were only 2 worthy to note points derived from the survey findings. The first being on the ’18-24’ year olds standing out in terms of their higher preference for coffee than their older counterparts. This might highlight to coffee brands as a segment to capitalize on, or for the ‘tea’ brands, as a segment to capture to complete their domination.

The other worthy point is the difference between responses in KSA and UAE markets. KSA respondents favored tea more than UAE respondents. KSA respondents also showed high preference for their local tea brand – Rabea Tea. While Rabea Tea remains popular in the UAE, it does not stand in comparison to its popularity in the KSA market. It was Twinings that took the place of Rabea Tea in the UAE market.

Coffee seems to be lagging behind. Twining for the KSA, Maxwell House for both KSA and UAE and finally Folgers for both markets as well, have very small slices and may not stand a chance to compete with the big boys of hot beverages; Lipton, Nescafe and Rabea Tea in the UAE and KSA markets.

PR work for hot beverages is virtually non-existent. Perhaps coffee brands can take advantage of that as it seems a long way for coffee to catch up to tea in the UAE and KSA markets.