Starbucks To Buy Teavana For $620 Million, Declines $800 Million Tea Tin Upsell

Image courtesy of (afagen)

If you’re not familiar with Teavana, they’re a chain of about 300 mall shops that sell exotic (and expensive) loose-leaf teas, along with pricey tea-holding tins and tea-making accessories. Starbucks, which already owns a tea brand (Tazo) sees something special in Teavana, and has purchased the company for $620 million in cash.

“We will do for tea what we did for coffee,” said Starbucks CEO Howard Schultz. Worldwide, there are about 18,000 Starbucks stores, but the company sees dollar signs in developing economies like China and India. Those are countries where people don’t traditionally drink very much coffee, because they prefer tea. They just might be interested in a gourmet tea bar that serves venti rooibos chai Frappuccinos. Or something.

It also just so happens that Starbucks is opening the first Tazo tea shop tomorrow. The chain plans to install tea bars in existing Teavana shops, and expand the chain to 500 stores in the next three years. Starbucks plans to serve and sell Teavana’s fancy loose-leaf products alongside their own in Starbucks shops.

Starbucks buying Teavana, eyes repeat of coffee success [Reuters]
Starbucks With Teavana Moves Schultz Beyond Coffee Roots [Bloomberg Businessweek]

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