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Starbucks Sells Tazo Tea Brand to Unilever

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To sharpen its focus on an up-leveled tea strategy, Starbucks Corporation announced it is selling the Tazo Tea brand to Unilever. The Dutch-British transnational consumer goods giant will acquire the assets of the Tazo brand including its signature recipes, intellectual property and inventory for USD $384 million. In turn, Starbucks will drive a single tea brand strategy and focus with its super premium tea brand, Teavana.

Founded in 1994, and purchased by Starbucks in 1999 for USD $8.1 million, Tazo tea is sold primarily in grocery, mass and convenience channels, offered in formats including packaged teas, K-Cup pods, and bottled ready-to-drink teas.

Starbucks will continue to invest in the growth, innovation and development of the Teavana brand of teas in its stores and in channels outside its stores. The tea category in Starbucks stores continues to grow double-digits globally, with Starbucks aiming to build the Teavana business to more than USD $3 billion over the next five years. In the past 12 months, Starbucks has sold more than $1.6 billion of Teavana beverages in Starbucks stores, launched RTD premium Teavana Craft Iced Teas through its partnership with Anheuser-Busch InBev and plans to enter the packaged tea category in 2018.

“Over the past five years, we have established Teavana as our primary global brand focused on the premium tea segment. With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever,” says Kevin Johnson, president and CEO of Seattle, Washington-based Starbucks. “We continue to see significant growth in our tea business through our Teavana brand, and this transition supports our strategy to elevate the premium tea experience for our customers.”

The transaction is expected to close during the fourth calendar quarter of 2017, with complete transition between the two companies by the end of calendar year 2018, subject to regulatory approval.

Unilever is co-headquartered in Rotterdam, Netherlands and London, United Kingdom, and Unilever USA is based in Englewood Cliffs, New Jersey. The company’s products include food, beverages, cleaning agents and personal care products.

Following the announcement that it is selling Tazo Tea, Starbucks reported fourth quarter and fiscal year revenues and earnings. Fourth-quarter consolidated net revenues reached USD $5.69 billion, down 0.4% from the prior-year quarter. GAAP operating income dropped 16.7% from the year-ago quarter, to $1 billion. Non-GAAP income grew 2.8%, to $1.1 billion. Global comparable store sales increased 2% with US comps up 3% (adjusted for Hurricane Harvey and Irma impact) and China comps growing 8%. During the quarter, Starbucks opened 603 net new stores globally bringing total store count to 27,339 across 75 countries.

For the fiscal year, consolidated net revenues grew 5% versus the prior year, to USD $22.4 billion. GAAP operating income slipped 0.9%, to $4.1 billion. Non-GAAP income grew 7.8% compared to the prior-year, to $4.4 billion. Global comp stores sales increased 3%, US comps rose 3% and comps in China grew 7% (driven by a 5% increase in transactions).

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