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Lyons Tetley profile: Lyons circles the square teabag.

On paper, the concept looked pretty simple. In practice, it turned out to be fiendishly difficult. After burning enough midnight oil to fill a supertanker, the best idea that the marketing brains had come up with was to change the shape of the traditional square bags. The trouble then was that once the seed had been planted it took almost another nine years to sprout.

You have to remember that the square teabag devised by the original Mr Tetley, and introduced into the United Kingdom from the United States back in 1953, had served the industry pretty well, once it had established its credibility in the marketplace; in the early days there were persistent rumors that the bags contained only the sweepings from the factory floors.

"That was particularly unfair, because the reason for the teabag's subsequent success was that the tea used in the bags had, in fact, to be very good," says Ian Prutton, deputy marketing director of Lyons Tetley Ltd.

At any rate, the teabag market really began to take wing in the 60's, at which time Tetley's was occupying a very good slot in a market dominated by the big companies with PG Tips, Typhoo and Lyons Quick-Brew. In the following decade, heavy TV promotion had steadily driven up the teabag share, so that at the beginning of the 80's, sales finally overtook the packet teas. (Tetley had been bought by Lyons and, as part of J. Lyons, Lyons Tetley had been absorbed into the Allied Brewery group in 1978.)

It was an era in which Brooke Bond had confirmed its brand leadership in teabags as well as traditional loose teas, but packers were having to face the fact that tea had been in slow and steady decline from the 60's through the 70's, as the competing soft drinks steadily invaded the U.K. beverage market. In the 80's the rate of decline began to taper off from 4% a year to 1%, but the trend was still down and, what was more, the cheaper own-label teabags were also making inroads.

"It was a problem for all manufacturers, and not just for us," says Prutton. "For our part, we decided that the only source of growth was likely to be gains made at the expense of competitors." Accordingly, in 1982 the company began the long process of looking for a new and totally distinctive teabag. Triangles, hexagons, octagons and all the other -gons being rejected, out of several brainstorming sessions the idea of a round teabag was born. "The old shape was a constant factor for all packers, after all."

The initial investigation was carried out in purely engineering terms, and the idea was shelved because it emerged that it would involve changing the whole packing plant at a cost of millions of pounds sterling in capital expenditure. "It just didn't seem feasible at the time," Prutton recalls.

But two years later the Tea Division's managing director, Bob Holdings, concluded that the first problem to be tackled in reviving long-term prospects was the matter of repositioning the product. The idea still needed to be thoroughly researched, though, and this threw up a daunting practical difficulty.

To test-market round teabags you obviously need a substantial supply of round teabags to start with. And existing machines could only turn out the usual square variety.

In the end, 30,000 round bags, each containing the correct blend of tea, had to be painstakingly cut out and assembled by hand. However, once they were ready the company was ready to embark on the necessary trials. "The results of these first tests was startling and very exciting," says Prutton. In brief, the round shape was significantly preferred to the square.

The tests had been conducted with the help of a 200-strong panel of frequent users of Tetley, PG Tips, Quick Brew and Typhoo. Every member was given a plain white box containing 80 bags, and asked to use them instead of their normal brand. At the end of a week the first product was taken away and the second substituted. After this, the researchers switched batches in a variety of other combinations, with the gratifying final result that at a statistically significant level of over 95%, the preference came out in favor of the round bags by 55% to 34%.

Even more astonishingly, more panel members thought that the round bags actually made a better cup of tea, and the disc shape was felt to brew more quickly. Some 9% gave the bags' shape as a reason for their choice, but it was the overall feeling about the performance of the bags and the quality of the final product which scored highest marks.

It probably looked just too good to be true, so in the fall of 1985 the company ordered a second round of tests along the same lines as the first. The results were almost identical.

The engineers were told to start working on designs for equipment that would match the speed of the square-bag machines, which can turn out 2,000 bags a minute at peak performance. Whatever the R & D teams finally produced, however, was liable to involve the company in huge capital investment in new production plant and machinery, so that the decision on whether to switch from the tried-and-true square bag to the round version would have to include that factor.

Nor was that all. Another part of the dilemma facing Lyons Tetley was that at the time the new launch was being contemplated, the well-established Tetley brand was turning over a healthy $147 M, which meant in turn that the change would involve accepting and then acting on an exceptionally high-risk strategic plan.

"In effect, we were suggesting tinkering with a highly valuable asset," recalls Prutton, "so we had to be sure on every single point. We couldn't afford any loss of production speed, and in the end it took four years to crack the technical problems."

In this intervening period Lyons Tetley undertook further crucial market studies to determine whether the round bag would increase Tetley's share by attracting enough new Tetley users to offset losses by former customers deterred by the new shape; how long the novelty was likely to last; would gains in market share pay for the cost of the relaunch. They chose to do this using the Simulated Test Market system (STM) which involved monitoring the actual purchasing behavior of a specially recruited panel of 240 housewives in five key areas.

"Most of these tests are run for about 12 weeks; we ran ours for 20," explains Prutton. To keep competitors in ignorance and guard the company's market lead, Lyons Tetley also imposed a screen of secrecy effective enough to make the CIA dark green with envy.

Another 200,000 round teabags were prepared and packed in properly printed and branded boxes. The panelists were given briefing sessions which included the showing of a TV commercial, and in the end 76% of them liked the product well enough to buy it a crucial second time against competing brands. Moreover, the additional 8-week test period showed that the repeat-purchase rate held up over four months.

Once all the data had been correlated, the single most vital finding was that the company was not only extremely unlikely to lose market share by changing to round bags, but that the switch would probably enjoy a long-lasting share gain, justifying the cost of a relaunch.

It took 18 months to build and install the new packaging equipment, and the launch was scheduled for the summer of 1989. In the period of grace this allowed there was more market research, more promotional planning, more corporate nail-biting.

In July, 6.5 million samples were dropped in the South of England, with a 38 [cents] coupon and 16 free bags. Almost immediately, brand share began to rise, turning a slow decline into a 15% rise by the end of the year. In January 1990 the brand went national, and by April the average 4-week cumulative penetration for Tetley was 37% up on the same period in 1989. In October last year, Tetley finally overtook Brooke Bond's square PG Tips as national brand leader.

One small point seems to need clearing up. Do the round bags really make a better cup of tea, I ask. Ian Prutton grins. "There's no proof at all that they do, and our technical people certainly say that it's not a claim that we could make. But a lot of people seem to feel that they do. Could it be that the circular shape makes them sit better within the cup, and that aids infusion?"

PHOTO : The future of teabags is round for Lyons Tetley Ltd.

PHOTO : Ian Prutton, deputy marketing director, Lyons Tetley. " ...a high-risk strategy."
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Lyons Tetley Ltd. changed from square to round tea bags
Author:Clark, Richard
Publication:Tea & Coffee Trade Journal
Date:Feb 1, 1992
Words:1465
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