Lipton and Nestea Tea Off

When life gives you lemons, hurl them at your rival's lemonade stand. Absent that, save those lemons to squeeze into your next pitcher of iced tea. Ahhh, tea.

There's no denying that there's magic in the tealeaves. At least, that's what early market watchers thought when they read them for prophetic guidance. We know better these days. We just bag 'em, dip 'em, and toss 'em out. I'm talking about the tealeaves, of course. Not the errant company CEOs and corrupt headline-swigging analysts.

That said, we've been drinking tea for a long, long time now. History hurls us back to 2737 B.C. when Emperor Shen-Nung of China supposedly watched tealeaves fly into a boiling kettle on a blustery day. He sipped. He liked. A beverage was born.

While tea is still preferred warm in its Asian stronghold, 85% of the tea consumed stateside is served iced. You can thank Richard Blechynden for that cool twist. While lacking the royalty of the Chinese emperor before him, Blechynden is credited with the discovery of iced tea when a heat wave during the World's Fair in St. Louis in 1904 prompted him to dump a load of ice into the hot tea he was serving. 

While there is just one type of tea plant, there are more than 3,000 varieties of teas. Everything from the climate to the soil to the altitude of the harvest will dictate subtle differences in the black, green, and oolong teas that we have grown to savor.

The Nestea plunge
Fueled by its globetrotting excellence, Nestle(Nasdaq: NSRGY) claims to produce approximately half of the world's processed teas, with its Nestea brand leading the way. Owning 50% of any global market is significant, but this is even more impressive because the only beverage with a higher consumption rate is water. Yes, water. Not coffee. Sorry Coca-Cola(NYSE: KO).

Nestea's popular "Take the Nestea Plunge" campaign, in which thirsty recipients of the iced tea drink splashed backwards into an inviting swimming pool, probably went a long way towards establishing iced tea as the refreshment of choice on a hot summer day.

With tea bags and soluble drink mixes adding ready-to-drink versions to the iced tea product line, Nestea also rolled out liquid concentrate versions for those keen on their BYOW (bring your own water) ways.

But is Nestea the biggest iced tea brand in the country? Not exactly. While the brand's prominence lured Coca-Cola to the beverage's ready-to-drink flagship offerings and its fruity Nestea COOL line, there's another major player in town to reckon with.

For the love of Lipton
Lipton tea is big business -- so big that parent, Unilever(NYSE: UL), doesn't go it alone. The food giant teams up with pop star Pepsi(NYSE: PEP) to produce, market, and distribute its ready-to-drink iced teas, including Lipton BRISK. So, yes, Pepsi and Coca-Cola do battle over more than just carbonated fizz.

While Lipton also takes up shelf space with soup mixes and side dishes, the brand is most readily associated with tea. Lipton is not nearly as influential as Nestle is on a global basis, but when it comes to iced tea consumed in this country, Lipton is the thirst-quenching powerhouse.

According to the Beverage Market Corporation, Lipton commanded 35.6% of the ready-to-drink iced tea market three years ago. Nestea was a distant second with its 23.7% slice. And just like the cola wars, iced tea drinkers can be fiercely loyal to their refreshment of choice.

But Nestea and Lipton aren't alone.

The brand new age
Inspired by new fruity flavors and extracts, brands like Snapple, AriZona, and SoBe opened the iced tea market to young drinkers in the 1990s. And if it's any indication that tea is where it's at, consider the major food conglomerates that have bought into the trend.

Cadbury Schweppes (NYSE: CSG) swallowed Snapple. Pepsi is sipping SoBe. And Celestial Seasonings merged into Hain Celestial (Nasdaq: HAIN).

There is no one brand that rules the retail space the way, say, Starbucks(Nasdaq: SBUX) has in the java-fueled world. Excuse the Ford(NYSE: F) pun, but there is no model tea. Upstarts and established beverage giants are scrambling for a market as fragmented as the thousands of varieties of teas they serve.

That's fine. There are plenty of tea drinkers to go around. 

Put it all together
Lacking the caffeinated punch of coffee but backed by a series of favorable health reports due to its natural antioxidants, tea's popularity holds strong. Emperor's Shen-Nung's creation may have been blowing in the wind nearly 5000 years ago, but it's clearly here to stay.

With ancient tea's icy sibling turning 100 years young next summer, maybe Nestea and Lipton drinkers can agree on one thing -- that the popularity of the iced beverage will only continue to grow. How do we know? The tealeaves tell us so.

Most of the tea we consume is grown in exotic, high altitude locations. Want to read the tealeaves? Our Travel Center can help get you there. 

Rick Munarriz mentioned seven publicly traded companies today, and, thirsty as he can get, he doesn't own shares in any of them. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.