In: Operations Management
Sweet leaf tea
In March 2010, Clayton Christopher announced to his employees and all of the fans of sweet Leaf tea that he was leaving the company and handing leadership to an outsider, Dan Costello. Clayton’s final act was to send an email to his employees praising their performance and integrity, which helped grow sweet leaf tea to the number one ready to drink tea at whole foods. In his email, he wrote that after his departure he hoped: We will not sacrifice the magic of this brand and thus jeopardize the love affair we have created with our consumers in order to save a few dollars on our path up the mountain.
Tea Drinkers Heaven
The ready to drink tea market was consistently ranked as one of
the fastest growing new product entries in the early twenty- first
century. In 2007 total sales if tea equaled $6.85 billion, almost a
third od which were ready to drink ( RTD) or bottled tea. Tea is
high in antioxidants, has health boosting properties and is either
all natural or organic which might be the reason more people were
move from traditional carbonate drinks to healthy options like
Sweet Leaf Tea . between 2003-and 2008 the RTD category grew by 65
%. In the southern United States, tea has long been a popular
beverage choice. It is usually served cold and sweetened. It can be
found in any restaurant, mom and pop store or at a road- side stop.
From moonshine to big time Clayton Christopher and David Smith were
always fans of sweet tea and loved their Grandma’s recipe. But they
couldn’t find any good bottled tea that tasted as good as what
Grandma made. Their grandma made sweet tea by brewing teabags
for3-4 minutes. Then she would pour that freshly brewed tea over
ice and add natural sugarcane to make it sweet. In 1997 they
founded Sweet Leaf Tea ( SLT) to fill this void, and hoped that
others would enjoy their Grandma’s recipe as much as they did.
Initially their production and marketing more closely resembled
that of a moonshine producer than that of the multi Million- dollar
brand it today. They used giant crawfish pans to boil the water and
pillowcase as giant tea bags to brew the tea. To distribution the
bottled beverages they had an old fun down van. Clayton and David
moved Sweet leaf Tea from Beaumont to Austin, Texas after a couple
of years and started using an automated system to make the tea.
But, they always remained true to their grandma’s recipe. Sweet
Leaf Tea’s only competitive advantage was its superior flavor
compared to other ready to drink teas like Arizona, Snapple,
Lipton, and Nestea. In 2008 SLT had $12 million in revenue and was
available in 30 percent of the US market. In March 2009, Nestle
Waters purchase as third of Sweet Leaf Tea for $16.5 Million. With
large investment from Nestle waters also came a new president, Dan
Costello a former executive at Nestle Waters North America. Growing
their brand Beverages tend to be low-involvement products, but also
a unique in that everyone has a favorite drink, which make it very
personal Sweet Leaf Tea had to find ways to develop a following of
customers
without a big advertising budget. They focused on sampling at music
Festivals, products placement on shows like MTV’s Real World and
CBS’s big Brother as well as Making sure they had a clear brand
personality. Clayton and David worked with Lyon Advertising to
create a brand personality that would represent who they were, laid
back and fun, but did not forget Clayton’s Grandma Mimi. SLT could
build a large fun base they needed people to try their product. In
an interview conducted by Inc. Magazine Clayton stated “ Sampling
is the best form of marketing You’ve got to get the product past
people’s lips. In 2002 they started partnering with music festivals
like Austin City Limit ( ACL ) lollapalooza, South by south West
(SXSW) and country Thunder. The folks attending the festivals were
thirsty and willing to try new drinks. This also allowed then to
target their core target audience – young (25-45) laid back hip,
and health conscious beverage drinkers. Initially, ninety percent
of their advertising budget went to sampling (Inc). Focusing their
sampling program during music festivals allowed them to target
masses of people at a time when they were thirsty such as the dead
of summer in Texas, Chicago and Arizona. SLT realized very early,
however , that they needed to be on store shelves if they wanted
their customers to find and buy the product. Selling their product
at a few music festivals a year wouldn’t be enough to keep them in
business. Their first major store partnership was with whole foods
(WF) in 2002, which launched them on store shelves in the greater
Texas market. Adi Wilk, the former marketing manager at SLT stated
that the Whole Food Partnership “lifted the brand” in 2006 whole
food expanded the SLT market to all of their stores in the US.
Along with the Whole Foods partnership they also found distribution
through partnerships with 7-11 stores, placement in Texas school
vending machines, and at army bases. This allowed fans that may
have tried SLT at lollapalooza to find it in Chicago, or people
that traveled to Austin for ACL or SXSW to find it in New York at
their local whole Foods stores. SLT’s communication strategy had
traditionally focused on connecting to their customers their
partnership with WF, however, helped them grow the brand by being
on the shelves of national chain store and also helped them connect
to other distributors. But more importantly was that SLT the built
a strong connection with their customers, with most of them willing
to search far and wide for a bottle for SLT. This truly helped them
become a successful company. In 2008, with an infusion of money
from Catterton partner, a Connecticut - based private equity firm,
and Nestle Waters North America Inc, SLT had expanded their
marketing beyond sampling and store partnerships. In 2009 they had
three major advertising updates- 1) they launched a new website (2)
hired a dedicated Twitter Write (3) and added a team of Facebook
managers for the fan page. SLT empowered every employee to be a
spokesperson for the brand- with even their receptionist talking a
core part in their Twitter and Facebook posts.
Communications Role
Initially the core communication for Sweet Leaf Tea, was through
direct to customer marketing at music festivals. The owners,
Clayton and David, were at the Music Festivals handing out their
product. This allowed customers to meet the people behind the
beverage and link friendly faces to a good beverage. Also the
association with music festivals may have helped the brand develop
the Cool and Fun image they were pushing. Once SLT had expanded
beyond the central Texas market they needed to find a way to stay
connected to their customers and keep that direct to customer
communication active. The infusion of money from
both Catterton partners and Nestle waters allowed them to expand
their communication strategy beyond music festivals and their core
website. Their Facebook fans matched the same target audience they
first had a t music festivals. Their blog, Facebook, and Twitter
pages allowed them to continue that face to face communication
Clayton and David started at the music festivals, but in the
digital world. Their Facebook and Twitter communication reflected
the brand and the Culture of the Company. At the time, these two
sites were used for announcement about the brand or to communicate
special evet taking place during music festivals. As an example
during 2009 SXSW they also used Twitter to announce a free concert
and used Facebook to get people to RSVP to the event. In one week
they had 4,500 people registered on Facebook for the free concert.
Another advertising advance SLT made in 2009 was using mobile
technology to get consumers to search for their product and receive
free sample. SLT was one of the first companies to give away real
samples using Gowalla Gowalla was a location game that encouraged
people to find a virtual item in a real-world place. Gowalla
allowed then to use virtual sampling of a product and connect it to
real world sampling.
Questions :
1- What are the strength and weakness of SLT’s corporate Culture in the terms id communications, as described in the case ? 2- Considering the relationship the brand had with its audience, should Clayton have reached out to customers to announce he was leaving ? 3- What challenges do you see for SLT’s new management ? 4- What role should corporate communication paly at SLT to help the company advance its strategic goals? 5- As clayton’s replacement would you change the way SLT communicated with its customers, or who was allowed to ? why or why not ?
1. The strengths of SLT's culture is the involvement of every employee in communication and delivering a positive image of the company and its prodcts to the prospective customers, strong connect with the customers through opportunities of face to face interactions at first and through digital means later and the use of digital media to augment the reach to the customers far and wide.The weakness is the financial dependence on the partners for expanding their business which will strengthen their position and increase their stakes in the company, making the owners' position less significant.
2. Yes. His announcement should have added to the brand loyalty of the customers to the SLT products, who would associate them with Clayton whenever they enjoy a traditionally brewed tea, creating a lasting impression on their minds.
3. SLT's new management will have to maintain the same warmth in the relationship with the customers to create the same magic that Clayton created when he met with customers. Another task will be to maintain the same sense of belongingness among the employees through empowerment to be a brand ambassador and a spokesperson of the company as earlier. The last and the most important task will be to retain the same passion for tea making, where profitability comes second to the wonderful customer experience.
4. The digital media should be involved more and more in contacting the customers, but the last stage of customer interaction should be in traditional face to face way, as promoted by Clayton. This would bring life to the experience,and enable the company to achieve the best of both worlds, efficiency of customer outreach and personalised and unadultrated experience of grandma's tea. This combined approach should be helpful in realising the strategic goals of the company.
5. The existing way of communication is perfectly in line with the company's values, guiding principles and customer focus. Only addition should be the increased efforts to reach out to the customers in more effective way, both online and offline to bring them face to face with company products and let them sample them with that unique personalised experience to become a fan for life.