Unilever acquires Tazo tea brand from Starbucks for US$384m

USA – Unilever has entered a definitive agreement with beverages major Starbucks to acquire the assets of the Tazo brand including its signature recipes, intellectual property and inventory for US$384 million.

Following the transaction, Starbucks will drive a single tea brand strategy, focusing on its super premium tea brand, Teavana, with the aim of furthering its growth and innovation in the super premium tea category, according to the company.

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

The brand has a strong position in specialty black, green and herbal teas, as well as liquid concentrates focused on the chai latte segment.

Starbucks has committed to continue to invest in the growth, innovation and development of the Teavana brand of teas in its stores and in channels outside its stores.

For Unilever, the acquisition of Tazo adds to its recent investments into the specialty tea market, where it also recently acquired a UK-based specialty tea company Pukka Herbs, a maker of organic tea brands.

It also introduced in the UK a new brand of specialty teas called Pure Leaf, a Rainforest Alliance certified, ethnically sourced, single origin tea line of products from Kenya, Sri Lanka, Indonesia and India.

The fast-growing specialty tea segment made up 48% of the total US$1.6 billion at-home tea category in the US in 2016, and trends suggest it will become more prominent in the future, according to Unilever.

“With its strong appeal to millennials, TAZO is a perfect strategic fit for our US portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington’s,” said Kees Kruythoff, President, Unilever North America.

“TAZO’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity.

“TAZO represents another strategic addition which strengthens our tea portfolio towards high growth segments.

Its artfully crafted specialty teas perfectly complement our global tea business, which includes Lipton, Pure Leaf, PG Tips, T2 and our recent addition, Pukka,” said Kevin Havelock, President of Refreshment, Unilever.

According to Starbucks, the tea category continues to grow double-digits globally, with the company well on its way to building the Teavana business to over US$3 billion over the next five years.

In the past 12 months alone, Starbucks has sold more than US$1.6 billion of Teavana beverages in Starbucks stores.

It has also launched ready-to-drink premium Teavana Craft Iced Teas through its partnership with Anheuser-Busch InBev.

“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,” said Kevin Johnson, president and chief executive officer, 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.

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