Starbucks formally opened its
first Tazo-only store in Seattle
the day after it announced its
acquisition of Teavana.
A healthy turn
Teavana's acquisition advances Starbucks' healthy beverage
strategy while boosting revenue with high margins.
BY DAN BOLTON
S
tarbucks Coffee Co. had many good reasons and enough
cash to buy Peet's Coffee & Tea this year. Instead, in its
largest acquisition to date, the coffee company spent $620
million on Teavana Holdings, a 300-store, mall-based rival to
its $1.4 billion Tazo Tea division.
The next day it unveiled its first Tazo Tea Store—a 1,700sq.-ft., lavishly appointed tea lounge with exclusive designer
teaware, an innovative in-store custom blending station for tea
enthusiasts and upscale ambiance at a $12 per 4-ounce price
point (4 ounces of tea makes 20 pots, about 80 cups).
"The tea category is ripe for reinvention and rapid growth,"
announced Starbucks CEO Howard Schultz, who sounded
genuinely excited in conference calls with investors. "The
Teavana acquisition now positions us to disrupt and lead, just
as we did with espresso starting three decades ago."
Schultz's disruption is not limited to tea. A single Grande White
Chocolate Mocha contains a quarter of our daily recommended
calories. Customers are wary of excess sweets as food sales have
grown to 20 percent of coffee shop revenue. The Teavana deal
signals a strategic move toward health and wellness.
The green mermaid still swims in a sea of latte, but
acquisitions such as the $30 million juice retail venture
Evolution Fresh (now expanding into the Bay Area) and Tazo
Tea Stores share with Teavana an attractive health halo.
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HEALTH OFFERING
Teavana will operate as part of the Channel Development
and Emerging Brands group headed by Jeff Hansberry.
"Evolution Fresh, La Boulange and now Teavana demonstrate
how Starbucks will add brands that strengthen our core…
(with) a differentiated health and wellness offering in the
marketplace," Hansberry says.
Starbucks is experimenting with fruit-flavored green coffee
Refreshers, but coffee is not the successor to carbonated soda.
As soda sales decline, billions of dollars in "share of throat" are
up for grabs.
The Teavana acquisition "complements our existing Tazo
brand and gives us the unique opportunity to create a twotiered market position," Schultz continued.
Starbucks views with pride its bifurcation of specialty
coffee into distinct tiers.
Sales from its Seattle's Best Coffee unit may not be as Grandeiose as Starbucks, but the company has super-charged expansion
of these franchises in the past two years. Coffee drinkers can now
find better-than-average brew in more than 50,000 restaurants,
bookstores, theaters, convenience and fast-food stores, hotels
and airlines, as well as 20,000 grocery and mass market locations
such as Kmart. The first Seattle's Best drive-thru and walk-up was
announced last month, a 600 sq. ft. coffee-to-go place half the
