Starbucks Buying Teavana
Starbucks, which dropped the word “coffee” from its logo last year, already owns the Tazo tea brand and last year bought Evolution Fresh Inc. for $30 million and Bay Bread LLC this year for $100 million. The company is also expanding its retail presence in the U.S. beyond Starbucks cafes with a Tazo shop and a new, smaller design for its Seattle’s Best Coffee locations, which it plans to take nationwide.
“We have to be as good, as relevant, as forward thinking, as innovative on the things that we present to our customers,” Schultz said in an interview last month in Houston. “Our core business as a retailer is not going to be defined solely by the experience that we create in our stores.”
Teavana investors will receive $15.50 a share in cash, Seattle-based Starbucks and Atlanta-based Teavana said in a statement. The takeover is expected to close by the end of the year and will add about 1 cent to earnings per share in Starbucks’s fiscal 2013, the companies said.
“This Teavana store concept is going to give them immediate access to prime storefonts and the ability to cater to that whole new consumer base,” said Jason Moser, an Alexandria, Va.-based analyst at the Motley Fool. “They’re going to take this and make it their own.”
“There’s no questions as to the popularity of tea as a beverage,” Moser said.
The “immediate opportunity” is to sell Teavana products in Starbucks stores, Peter Saleh, an analyst at Telsey Advisory Group in New York, said in an interview. “Maybe Teavana has a better brand recognition” than Tazo, he said.
Teavana has about 300 stores in the U.S., Canada and Mexico, and recently opened a location in Kuwait. Starbucks plans to accelerate the chain’s international openings and also sell Teavana in grocery stores, Starbucks Chief Financial Officer Troy Alstead, said in an interview.
“Tea has been part of our core from the beginning,” Alstead said. “It’s the second-most consumed beverage in the world, second only to water. We should be leading in tea.”
Tazo Tea, which Starbucks bought in 1999, and Teavana are “complementary brands” and the company has not yet decided if they will sell both in Starbucks cafes, he said. Tazo sales are about $1.4 billion a year, he said.