Starbucks to sell Tazo tea brand to Unilever
04 November 2017
Coffee giant Starbucks announced it is selling Tazo tea to Unilver for nearly $400 million. Unilever, the consumer products behemoth with a line up of brands like Ben & Jerry's, Lipton, Pure Leaf and more, has agreed to acquire the Tazo brand and its related recipes, intellectual property and inventory from Starbucks for $384 million.
For Starbucks, which bought Tazo in 1999 for $8.1 million, the deal marks a more-than 47-times return on investment.
While Tazo sales have come in at $112 million over the last 12 months, Starbucks believes that it will be better-served with the development of the Teavana business, which recorded $1.6 billion in sales over the same time period thanks to beverages sold in stores and ready-to-drink packages.
The goal, according to Starbucks is to build Teavana into a $3-billion business in the next five years.
''With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever,'' Starbucks president and CEO Kevin Johnson said in a statement yesterday.
''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.''
Meanwhile, Starbucks reported revenue that missed analysts' expectations yesterday which pulled shares down over 3 per cent.
Starbucks' cafes have suffered due to slowing foot traffic at the mall and changing dining habits, as US consumers increasingly dine at home.
Starbucks' results were also dented in the last quarter, by several severe hurricanes that hit the US and led to store closures.
Global comparable-store sales were up 2 per cent, on a 2 per cent gain in the average amount customers were spending and a 1 per cent increase in the number of their transactions.
Discounting the impact of Hurricanes Harvey and Irma, which struck the US in September, global comparable sales rose 3 per cent.