Unilever Snags Tazo Tea From Starbucks For $384M

Adjust Comment Print

Despite announcing in July the decision to close all 379 Teavana brick-and-mortar outlets, Starbucks extended the brand with the February launch of Teavana Craft Iced Teas. The brand pulled in $112.5 million in revenue over the previous year and UL believes that there is room for more growth. The brand, which is sold mainly in conventional grocery and convenience retail channels, produces a range of tea products, including packaged tea, K-Cup pods and bottled ready-to-drink (RTD) beverages.

Founded in 1994 by a team that included Steven Smith and purchased by Starbucks in 1999 for $8.1 million, Tazo was once a specialty tea brand in its own right.

"With its strong appeal to millennials, Tazo is a ideal strategic fit for our US portfolio", Kees Kruythoff, President, Unilever North America said.

In turn, Starbucks will drive a single tea brand strategy and focus with its super premium tea brand, Teavana.

On an earnings call on Thursday, Johnson shared that the company will focus on streamlining setups while investing in business in China, which is anticipated to reinforce half of growth next fiscal year.

Starbucks posted total revenue in the quarter, ended October 1, of $5.7 billion, flat with the year-ago period.

Global comparable sales growth, a key industry metric, came in at 2 percent, driven by a 2 percent gain in the average amount customers were spending and a 1 percent increase in the number of their transactions. Separately, the coffee-shop giant missed revenue and same-store sales forecasts for the quarter, sending shares lower after hours. The company attributed the performance in part to Hurricanes Irma and Harvey. Net revenue was US$5.7 billion, short of the estimate of US$5.8 billion. Sales at same stores increased 2% while a growth of 3.3% was expected. It now expects long-term annual earnings per share growth for at least 12 percent, down from 15 percent to 20 percent. The tea category in Starbucks stores continues to grow double-digits globally, with Starbucks well on its way to building the Teavana business to over $3B over the next five years.