RPT-Suntory, Nestle to join up in US green tea market

Mon Apr 21, 2008 11:12pm EDT

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TOKYO, April 22 (Reuters) - Japanese drinks maker Suntory Ltd and Swiss food giant Nestle SA (NESN.VX) plan to begin joint sales of green tea drinks in the United States, where the number of health-conscious consumers is growing.

Suntory said it will give exclusive sales rights for its "Iemon" brand of green tea drinks to Nestle, which will handle sales from May using its retail network in the United States, where the green tea market has been expanding by 20 percent a year.

The company said it would aim for initial sales of 2 billion yen ($19.4 million) a year of its green tea drinks, which will be priced at $2.50 per 360ml bottle. The firms will initially sell the drinks at upscale supermarkets on the west coast.

"Fizzy drinks are struggling, but green tea is doing pretty well there," said Suntory spokesperson Naoko Tsuda. "Because of the recent health-consciousness, many have started trying green tea."

Obesity has become common in the United States. The market for unsweetened green tea has grown to some 150 billion yen a year, about one-third of the total tea market including English tea, Suntory said.

Counting on a surge in green tea demand, Japanese tea maker Ito En Ltd (2593.T) entered the U.S. market with its "Tea's Tea" green tea drinks in 2002.

Sales of its green tea-related products hit $23.7 million in the year that ended in April 2007, according to Ito-En.

Suntory said it was also considering entering the European market but has not made any concrete plans yet. (Reporting by Mariko Katsumura; Editing by Hugh Lawson)

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