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Tazo and Kraft Announce Licensing Agreement

Tazo Tea Company, a wholly owned subsidiary of Starbucks Corporation, and Kraft Foods Global, Inc. are forming a relationship to significantly accelerate growth of the Tazo brand into grocery channels across the U.S.

The new licensing agreement will result in the potential placement of Tazo products in thousands of locations in new grocery channels over the next year. The Tazo tea brand is a leader in natural food stores around the country and, in recent years, has expanded to select distribution in major grocery chains and independents. This agreement will greatly accelerate that process. Specific terms of the agreement were not disclosed.

It also capitalizes on the strengths of the two companies by combining Tazo’s expertise in creating, sourcing and blending the highest quality specialty tea products, with Kraft’s extensive knowledge of marketing, selling and distributing packaged foods to grocery customers.

“We’re excited to team up with Tazo because both our companies share a passion for quality and innovation that we believe will be a winning combination,” said Liz Smith, group vice president and president, U.S. Beverages and Grocery Sectors, Kraft Foods. “Through this partnership, Kraft can leverage its unparalleled expertise in the grocery channel to successfully build the Tazo grocery line nationwide. Tazo will provide Kraft with an all-natural, super-premium tea brand, one that has built its reputation on the artful blending of the world’s finest teas and botanicals.”

“Since Tazo’s beginnings in 1994, our vision has been to fundamentally upgrade the tea experience by creating a super-premium tea brand,” said Tal Johnson, president of Tazo. “This agreement is an exciting next step in enhancing our growing grocery presence and a significant move toward building a new super-premium tea category in mainstream grocery channels.” He points out that tea is the most widely consumed prepared beverage in the world, except in North America. This is changing as more Americans are drinking tea, making tea a growth category at retail. “Tazo has never been healthier and this agreement will only strengthen our current position.”

Tazo’s extensive and exotic variety of filterbags, full-leaf, tea lattes, and iced and juiced bottled teas are found internationally in more than 7,500 Starbucks stores, as well as restaurants, cafes, resorts, grocery, specialty and natural food stores. Tazo artfully blends its tea in its Portland, Ore. facility and purchases only premium quality tea and botanicals from around the world for its products.

Tea Industry Heating Up According To Sage

The demand for specialty tea in the U.S. has reached record sales according to the latest edition of the Tea Is “Hot” Report published by Sage Group International. According to the report some conventional tea offerings battle with flat or declining sales, yet most specialty tea categories are experiencing double-digit growth, especially in US natural foods supermarkets. “Annual growth of 15% or higher is not uncommon for many specialty tea lines. Specialty tea entrepreneurs are launching hundreds of new beverages, non-beverage tea products, a tea trade show and multi-unit retail outlets,” according to Brian Keating, publisher of the report. The new report includes detailed category quantifications from Report contributor SPINS, Inc. (www.spins.com) for chai, green, organic, yerba mate and many other specialty teas and packaging formats sold through natural foods supermarkets and mass-market distribution channels. Additionally, Mintel’s (www.mintel.com) Global New Products Database contributed detailed quantifications of beverage and non-beverage consumer tea product introductions.

The 5th edition Tea Is “Hot” Report notes the emerging specialty tea industry exhibits many characteristics that the health food and specialty coffee industries showed when transitioning from fad-to-trend. “The rise in American consumption of specialty tea represents more than a new beverage segment. A loyal tea culture is emerging that fuses diverse global cultures, beverage styles and brewing technologies. The new American tea culture places value on stress reduction, premium quality products and exotic accouterments,” noted Keating. Sage Group research suggests much of this consumer interest in specialty tea is being driven by scientific findings linking tea consumption and improved health.

Sage Group forecasts U.S. tea sales will top $10 billion by 2010 with a majority of dollar sales being derived from specialty teas. Over the next three years, Sage Group sees a dramatic rise in multi-unit dedicated tea chains (retail / foodservice hybrids) and a boom in use of tea as an ingredient in non-beverage consumer products. “America’s 76 million baby boomers view tea as universally friendly for the entire family. This health-conscious demographic is just starting to explore specialty tea culture in beverages, skincare and neighborhood cafes. The potential consumer dollars available for specialty tea purchases over the next decade is significant,” says Keating, whose company has been studying the American tea and allied industries for 25 years.

The 5th edition Tea Is “Hot” Report is 275 pages of specialty tea category statistics, interviews with leading experts, and analysis of tea-based intellectual property, science and emerging applications. Additional in-depth coverage of specialty tea types, tea patents, marketplace opportunities and business resources rounds out this bi-annual trade publication. Tea Is “Hot” Report was the first tea trade report to cover chai, organic tea, tea retailers and many other niche segments of the specialty tea industry. A detailed 5th Ed. Tea Is “Hot” Report table of contents and ordering information is available at www.usteareport.com, Tel: (1)(206) 282-1789.

Tea & Coffee - May/June, 2004

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