Pepsi and Hindustan Lever Limited (HLL) joined hands in India to launch ice tea, a segment that is expected to grow into 5% to 10% of the Rs 60 billion ($1.37 billion) carbonated soft drinks market.

The two companies announced a 50/50 joint venture and launched Lipton ice tea through the alliance that pools their respective strengths to market, sell and distribute Lipton ready-to-drink teas and tea-based beverages in India.

Chairman of Pepsi India Holdings Pvt. Ltd Rajeev Bakshi and managing director, Foods, HLL, S Ravindranath, told a press conference that the arrangement combines Lipton brand equity with Pepsi bottling, sales and distribution strengths.

"Right now, the market for ice tea is non-existent, very small; we are creating a new category," Bakshi said. Lipton ice tea, would be available in a returnable 250ml glass bottle and 500ml PET, officials said.

The joint venture, Bakshi said, would focus on urban areas in the first two years. Lipton ice tea, targeted at the youth segment and positioned as "better for you and good for you" category, would be available initially in 17 cities.